<PAGE>
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
                                                                  
                                    Form 10-Q

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                       For the period ended March 31, 1998

Commission File Number 2-89530

                        FLORIDA EAST COAST INDUSTRIES, INC.
            (Exact name of Registrant as specified in its charter)

           FLORIDA                                    59-2349968
(State or other jurisdiction of                     (IRS Employer
incorporation or organization)                    Identification No.)

                One Malaga Street, St. Augustine, FL    32085-1048
              (Address of principal executive offices)  (Zip Code)

Registrant's telephone number, including area code  (904) 829-3421

                                                                  
            1650 Prudential Drive, Jacksonville, FL 32207
(Former name, former address, and former fiscal year, if changed since last
 report)

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.
 
           Class                          Outstanding at March 31, 1998
Common Stock, $6.25 par value                    9,071,590 shares
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                   FLORIDA EAST COAST INDUSTRIES, INC.
                  CONSOLIDATED CONDENSED BALANCE SHEETS
                         (Dollars in thousands)
                                                      March 31    December 31
                                                        1998          1997
                                                     (Unaudited)
                                                     -----------  -----------
ASSETS

Current assets:
  Cash and cash equivalents                           $ 41,355     $ 30,845
  Short-term investments                                 1,507          258
  Accounts receivable, net                              27,589       31,045
  Materials and supplies                                11,377       11,789
  Other                                                  7,918        7,987
                                                      --------     --------
     Total current assets                               89,746       81,924

Other investments                                       70,249       72,041

Properties, less accumulated depreciation and
 amortization                                          672,020      663,672

Other assets and deferred charges                        9,529        7,853
                                                      --------     --------
                                                      $841,544     $825,490
                                                      ========     ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                    $ 21,810     $ 20,580
  Income taxes                                           8,603        4,630  
  Accrued property taxes                                 3,583        1,008
  Accrued casualty and other reserves                    5,230        5,143
  Other accrued liabilities                              2,366        3,005
                                                      --------     --------
     Total current liabilities                          41,592       34,366

Deferred income taxes                                  134,591      133,884

Reserves and other long-term liabilities                 8,383        8,365

Shareholders' equity:
  Common stock, $6.25 par value; 9,360,000 shares
  authorized; 9,271,361 shares issued and 9,071,590
  shares outstanding                                    57,946       57,946
  Capital surplus                                        2,856        2,856
  Retained earnings                                    601,513      594,132
  Accumulated other comprehensive income                 4,018        3,296
  Less:
    Treasury stock at cost (199,771 shares)             (9,355)      (9,355)
                                                       --------     --------
       Total shareholders' equity                      656,978      648,875
                                                       --------     --------
                                                      $841,544     $825,490
                                                       ========     ========
                         (See accompanying notes)

                    FLORIDA EAST COAST INDUSTRIES, INC.
    CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
             (Dollars in thousands except per share amounts)
                               (Unaudited)

                                                        QUARTER ENDED MARCH 31
                                                         1998           1997
                                                         ----           ----
OPERATING REVENUES:
  Transportation                                       $ 46,808      $  44,403
  Realty - Land Sales                                       269          5,892
         - Rents & Other                                  9,680          9,143
                                                       --------      ---------
     Total revenues                                      56,757         59,438

OPERATING EXPENSES:
  Transportation                                         33,018         31,033 
  Realty                                                  6,609          5,569
  Realty Sales                                               71          6,413
  General and Administrative                              6,805          5,331 
                                                       --------      ---------
     Total expenses                                      46,503         48,346

Operating profit                                         10,254         11,092

OTHER INCOME (EXPENSE):
  Dividends                                                 131             95
  Interest income                                         1,336          1,305
  Interest expense                                          (86)           (91) 
  Gains on sales and other disposition of properties        191             95
  Other (net)                                             1,445            889 
                                                       --------       --------
   Total other income                                     3,017          2,293

Income before income taxes                               13,271         13,385

INCOME TAXES:
 Current                                                  4,727          5,425
 Deferred                                                   257           (405)
                                                       --------       --------
  Total income taxes                                      4,984          5,020
                                                       --------       --------

Net income                                             $  8,287       $  8,365

Retained earnings:
 Balance at beginning of year                           594,132        557,621
 Cash dividends                                            (906)          (905)
                                                       --------       --------
Balance at end of period                               $601,513       $565,081
                                                       ========       ========
Per Share Data:
 Cash dividends                                        $   0.10       $   0.10
                                                       ========       ========
 Earnings per common share                             $   0.91       $   0.92
                                                       ========       ========
                          (See accompanying notes)

                         FLORIDA EAST COAST INDUSTRIES, INC.
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Dollars in thousands)
                                     (Unaudited)

                                                       QUARTER ENDED MARCH 31

                                                            1998        1997
                                                            ----        ----
Cash flows from operating activities:
 Net income                                             $  8,287    $  8,365
 Adjustments to reconcile net income to cash generated:
  Depreciation and amortization                            6,539       5,974
  Gain on disposition of assets                             (191)        (95)
  Realized gains on investments                           (1,286)       (544)
  Deferred taxes                                             257        (405)
  Changes in operating assets and liabilities:
    Accounts receivable                                    3,456       3,388  
    Other current assets                                     481         569
    Other assets and deferred charges                     (1,676)     (1,592)
    Accounts payable                                       1,230      (1,053)
    Income taxes payable                                   3,973       5,421
    Estimated property taxes                               2,575       2,592  
    Other current liabilities                               (552)     (1,216)
    Reserves and other long-term liabilities                  18          (8)
                                                        --------    --------
Net cash generated by operating activities                23,111      21,396

Cash flows from investing activities:
 Purchases of properties                                 (15,022)    (16,366)
 Purchases of investments:
  Available-for-sale                                      (6,295)     (5,128)
  Held-to-maturity                                             0      (5,983)
 Maturities and redemption of investments:
  Available-for-sale                                       9,295       6,253
  Held-to-maturity                                             0       1,980
 Proceeds from disposition of assets                         327       1,432
                                                        --------    --------
Net cash used in investing activities                    (11,695)    (17,812)

Cash flows from financing activities:
 Payment of dividends                                       (906)       (905)
                                                        --------    --------
Net cash used in financing activities                   $   (906)   $   (905)

Net increase in cash and cash equivalents                 10,510       2,679
Cash and cash equivalents at beginning of quarter         30,845      23,602
                                                        --------    --------
Cash and cash equivalents at end of quarter             $ 41,355    $ 26,281
                                                        ========    ========
Supplemental disclosure of cash flow information:
 Cash paid during the quarter for income taxes          $     11   $     134 
                                                        ========    ========
 Cash paid during the quarter for interest              $     86    $     91
                                                        ========    ========

                            (See accompanying notes)


                        FLORIDA EAST COAST INDUSTRIES, INC.
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                             (Dollars in thousands)
                                  (Unaudited)

1.   In the opinion of the Company, the accompanying unaudited consolidated
     condensed financial statements contain all adjustments (consisting of
     normal recurring accruals) considered necessary to present fairly the
     financial position as of March 31, 1998 and December 31, 1997, and the
     results of operations and cash flows for the three-month periods ended
     March 31, 1998 and March 31, 1997.

2.   The results of operations for the three months ended March 31, 1998
     are not necessarily indicative of the results that may be expected
     for the full year.

3.   The Company has retained certain self-insurance risks with respect to
     losses for third-party liability, property damage and group health
     insurance coverage provided employees.  The Company is the defendant
     and plaintiff in various lawsuits resulting from its operations.  In the
     opinion of management, adequate provision has been made in the financial
     statements for the estimated liability which may result from disposition
     of such lawsuits.

     The Company is subject to proceedings arising out of environmental laws
     and regulations, which primarily relate to the disposal and use of fuel
     and oil in the transportation business.  It is the Company's policy
     to accrue and charge against earnings environmental cleanup costs when
     it is probable that a liability has been incurred and an amount can be
     reasonably estimated.

     The Company is currently a party to, or involved in legal proceedings
     directed at the cleanup of four Superfund sites.  The Company has accrued
     its allocated share of the total estimated cleanup costs for these four
     sites.  Based upon management's evaluation of the other potentially
     responsible parties, the Company does not expect to incur additional
     amounts even though the Company has joint and several liability.  Other
     proceedings involving environmental matters, such as alleged discharge of
     oil or waste material into water or soil, are pending against the
     Company.

     It is difficult to quantify future environmental costs because of many
     issues relating to actions by third parties or changes in
     environmental regulation.  However, based on information presently
     available, management believes that the ultimate disposition of
     currently known matters will not have a material effect on the financial
     position or liquidity of the Company in any one period. Environmental
     liabilities of $2.0 million for both March 31, 1998 and December 31,
     1997, respectively, will be paid over an extended period, and the timing
     of such payments cannot be predicted with any confidence.
     
     Gran Central Corporation, a wholly-owned subsidiary of the Company, 
     entered into an agreement with the State of Florida Department of
     Transportation to furnish all land necessary for the construction of the
     N.W. 106th Street Interchange on the Homestead Extension of the Florida
     Turnpike and to subsidize the Department for 15 years to cover
     any annual operating deficit related to the interchange which is not
     covered by toll revenues.  The maximum assessment amount over the 15
     years would be approximately $9.3 million with no annual assessment to
     exceed $1.1 million.  No assessments have been made to date.

4.   The revenue recognition policies are:

     Transportation Revenues:  Revenues are substantially recognized upon
     completion of transportation services at destination.

     Realty Land Sales:  Revenue is recognized upon closing of sales contracts
     for sale of land or upon settlement of legal proceedings such as
     condemnations.

     Rental Income:  Revenue is recognized upon completion of rental and lease
     contracts.  The Company uses the straight-line basis for recording the
     revenues over the life of the lease contract.

5.   Because a large percentage of the Company's properties are long-lived,
     asset replacement will be at a higher cost and will take place over many
     years.  The acquisition of new assets will result in higher depreciation
     charges and, in the case of realty, higher taxes and operating costs.

     Generally accepted accounting principles require the use of historical 
     costs in preparing financial statements.  This approach disregards the 
     effect of inflation on the replacement cost of property and equipment.
     The Company is a capital-intensive company and has approximately $917
     million (original cost) invested in such assets as of December 31, 1997.
     The replacement costs of these assets, as well as the related depreciation
     expense, would be substantially greater than the amounts reported on the
     basis of historical costs.

6.   The Company adopted the provisions of Statement of Financial Accounting
     Standards No. 130, "Reporting Comprehensive Income", effective January
     1, 1998. This Statement establishes standards for reporting and display
     of comprehensive income and its components. Comprehensive income for the
     three months ended March 31, 1998 and 1997 was $9,009 and $7,906,
     respectively. This amount differs from net income due to changes in the
     net unrealized holding gains generated from available-for-sale securities.


                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
          CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                              RESULTS OF OPERATIONS
                                                                  
                                    OVERVIEW
                                    
Florida East Coast Industries, Inc.'s (FECI) operating revenues for the quarter
ended March 31, 1998 reflected a decrease of approximately $2.7 million when
compared to the quarter ended March 31, 1997. Operating costs in the first
quarter 1998 decreased approximately $1.8 million when compared to the first
quarter 1997. As a result, operating profits decreased by approximately $.8
million when comparing first quarter 1998 with first quarter 1997.

The decrease of approximately $2.7 million in operating revenues was primarily
attributable to the decrease in realty revenues related to realty sales of
approximately $5.6 million offset by increases in transportation revenues,
realty rents and other revenues of approximately $2.4 million and $.5 million,
respectively.

The decrease of $1.8 million in operating costs was primarily attributed to a
decrease in realty segment's realty sales of approximately $6.3 million offset
by increases in transportation costs of approximately $2.0 million; realty
operating costs of approximately $1.0 million, and general and administrative
costs of approximately $1.5 million.


                                    ANALYSIS
                                    
Revenues - Transportation revenues increased approximately $2.4 million or 5.4%
when comparing first quarter 1998 with first quarter 1997. The number of 
shipments handled by the rail segment increased by approximately 3,425
shipments or 3.1% in the first three months of 1998 compared to same period
1997. This increase of 3.1% was comprised of increases in rock shipments of
4.6%; automotive shipments of 20.3%, and intermodal shipments of 3.3% offset
by a decline in all other carload shipments of 10.6%.

Realty revenues declined by approximately $5.1 million in the first three months
of 1998 versus 1997. This was primarily attributed to the decline in realty
sales revenues of $5.6 million. Sales of realty properties in the first quarter
of 1997 were principally comprised of a single disposition of approximately 
$4.8 million. Realty income, other than realty sales, increased approximately
$.5 million.

Operating Costs - Operating costs increased $1.8 million in the first quarter
1998 versus same period 1997. This increase was comprised of a decrease in
realty sales of approximately $6.3 million offset by increases in transportation
costs of approximately $2.0 million; realty operating costs of approximately
$1.0 million, and general and administrative costs of $1.5 million. The decrease
in realty sales of approximately $6.3 million is primarily attributable to the
single disposition of property in the first quarter 1997 of approximately $6.0
million.

Transportation costs increased approximately $2.0 million. This increase was
comprised of increases of approximately $.6 million in fringe benefits primarily
related to health insurance accruals; $.7 million in casualty and insurance;
$.3 million in property taxes, and $.4 million in other transportation costs.

Realty operating costs increased approximately $1.0 million. This increase was
comprised of approximately $.4 million in property management expenses; $.5 
million in depreciation expense, and $.1 million in other realty operating
costs.

General and administrative costs increased approximately $1.5 million. This
increase was comprised of $.4 million in fringe benefits primarily related to
health insurance accruals; $.5 million for computer-related services; $.3
million for casualty and insurance, and $.3 million for other administrative
expenses.

Other Income - Other income increased approximately $.7 million in first quarter
1998 when compared to same period 1997. This increase is primarily attributable
to $.6 million related to the capital gains from sales of securities in the
Company's investment portfolio, and a net of $.1 million in other income less
interest expense.

Net Income - Net income remained approximately the same for the first three
months of 1998 when compared to the first three months of 1997.

Recent Events - On April 15, 1998, the Board of Directors of Florida East Coast
Industries, Inc. determined that it would be in the best interest of the
Company and its shareholders to seek approval at its Annual Meeting to be held
on May 20, 1998, of a 4-for-1 stock split to holders of record on the record
date of June 1, 1998, and to increase the authorized number of shares of the
Company's Common Stock from 9,360,000 shares to 50,000,000 shares to facilitate
the split and provide shares for other corporate purposes.

Registrant has no foreign operations.
                                  
                         LIQUIDITY AND CAPITAL RESOURCES
                                    
                                    
FECI's principal sources of liquidity include cash generated by operations;
earnings on invested cash; and earnings on its investment portfolio,
consisting largely of U.S. Treasury securities with maturities less than
twelve months.
                                    
Current cash generations are used for capital expenditures in the
transportation and realty sectors and for payment of dividends.  The
investment portfolio is informally dedicated to major real estate development.

Cash and short-term investments increased $11.8 million to $42.9 million at
March 31, 1998 from $31.1 million at year-end.  The investment portfolio
decreased $1.8 million to $70.2 million at March 31, 1998 from $72.0
million at year-end 1997.  The Company's working capital position changed
from a ratio of 2.4 to 1.00 at year-end 1997 to a ratio of 2.2 to 1.00 at
March 31, 1998.

There was no significant change in debt, reserves, or other liabilities
during the three-month period and capital projects at March 31, 1998
amounted to approximately $47.2 million authorized and outstanding from
$34.0 million authorized and outstanding at December 31, 1997.  Of the $47.2
million of capital projects, approximately 59% represents development
projects.

                           PART II - OTHER INFORMATION
                                    
                                    
Item 1.         Legal Proceedings

There are no other legal or regulatory proceedings pending or known to be
contemplated which, in the opinion of the General Attorney of the Registrant,
are other than normal and incidental to the kinds of businesses conducted by
the Registrant.
                       
                                   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.
                                    
                                    
                                                                  
                                 FLORIDA EAST COAST INDUSTRIES, INC.
                                            (Registrant)



Date:  May 13, 1998                        /s/ T. N. Smith
                                 _____________________________________     
                                 Vice President, Secretary & Treasurer

                   
                   
                   
Date:  May 13, 1998                      /s/ J.R. Yastrzemski
                                _________________________________
                                            Comptroller