SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549

                           FORM 10-Q/A
                  AMENDMENT NO. 1 TO FORM 10-Q

           QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended                  Commission File No. 0-13829
September 30, 1997

                    PRECISION STANDARD, INC.

     (Exact Name of Registrant as Specified in its Charter)

        Colorado                        84-0985295             
(State of Incorporation)    (I.R.S. Employer Identification No.)

                        1225 17th Street
                           Suite 1800
                     Denver, Colorado 80202       
            (Address of Principal Executive Offices)

                        (303) 292-6565                            
      (Registrant's telephone number, including area code)

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 [ ]

The number of shares outstanding of each of the issuer's classes of
common shares, as of the close of the period covered by this
report:

Class of Securities             Outstanding Securities
$.0001 Par Value                12,596,807 shares
Common Shares                   Outstanding at September 30, 1997

The undersigned Registrant hereby amends the following items,
financial statements, exhibits or other portions of its Form 10-Q
for the period ended September 30, 1997 as set forth below:




PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

               PRECISION STANDARD, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS

                                                

                                ASSETS

                                        September 30,    December 31,
                                            1997            1996
                                        (Unaudited)                 

Current assets:
  Cash and cash equivalents            $         0       $ 1,183,200
  Accounts receivable, net              12,873,761         9,435,612
  Inventories (see Note 3)              20,878,200        23,183,608
  Prepaid expenses and other             2,405,454           894,128
  Deferred taxes                         4,347,098         4,347,098

        Total current assets            40,504,513        39,043,646

Property, plant and equipment,
   at cost:
  Leasehold improvements                10,561,831        10,508,585
  Machinery and equipment               18,600,769        18,306,506
                                        29,162,600        28,815,091

Less accumulated depreciation           17,539,891        15,730,794

        Net property and equipment      11,622,709        13,084,297

Other assets:
  Intangible assets, net of
     accumulated amortization            4,377,345         3,731,714
  Related party receivable                 269,824           269,824
  Deposits and other                     1,079,306         1,627,252
  Deferred taxes                         1,517,349         1,517,349
                                         7,243,824         7,146,139

        Total assets                   $59,371,046       $59,274,082


            The accompanying notes are an integral part of
               these consolidated financial statements.

                              


               PRECISION STANDARD, INC. AND SUBSIDIARIES
                CONSOLIDATED BALANCE SHEETS (CONTINUED)

                 LIABILITIES AND STOCKHOLDERS' EQUITY

                                        September 30,    December 31,
                                            1997            1996
                                        (Unaudited)                  

Current liabilities:
  Current maturities of long-term
   debt (see Note 5)                    $   524,148      $ 2,339,692
  Accounts payable and accrued
   expenses                              30,644,458       26,577,336
  Accrued warranty expenses                 575,135          858,856
  Estimated losses on contracts
   in progress                                    0           87,766

          Total current liabilities      31,743,741       29,863,650

Long-term debt, net of current
  maturities (see Note 5)                21,731,338       11,104,410
Long-term portion of self-insured
  workers' compensation reserve           3,631,734        3,697,901
Unfunded accumulated benefit
  obligation                              1,480,237        1,480,237
          Total liabilities              58,587,050       46,146,198

Stockholders' equity:
  Common stock, $.0001 par value,
   300,000,000 shares authorized,
  12,596,807 and 12,522,646 issued
  and outstanding at September 30,
  1997 and December 31, 1996,
  respectively.                               1,257            1,252

  Common stock purchase warrant           4,200,000        4,200,000
  Additional paid-in capital                399,328          399,333
  Retained earnings                      (1,231,465)      12,287,278
  Translation adjustments                   249,199          160,013
  Minimum pension liability adjustment   (2,834,323)      (3,919,992)
  Total stockholder's equity                783,996       13,127,884
              
        Total liabilities and stock-
           holders' equity              $59,371,046      $59,274,082

            The accompanying notes are an integral part of
               these consolidated financial statements.




               PRECISION STANDARD, INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF INCOME
                                                           

                                           Three           Three
                                        Months Ended    Months Ended
                                        September 30,   September 30,
                                            1997            1996    
                                        (Unaudited)     (Unaudited)

Net sales                               $28,742,054     $ 38,088,420
Cost of sales                           (29,122,479)     (28,816,362)
     Gross profit                          (380,425)       9,272,058

Selling, general and
  administrative expenses                (4,939,046)      (5,363,663)
Bad debts recovery (expense)                  2,936         (184,393)
Research and development expense           (250,977)         (70,043)
     Income (loss) from operations       (5,567,512)       3,653,959

Other income (expense):
  Interest expense                         (351,919)        (868,861)
  Other, net                                (44,005)       2,850,240
     Income (loss) before income taxes   (5,963,436)       5,635,338

Income tax expense                          (38,308)      (1,591,160)

     Net income (loss)                  $(6,001,744)     $ 4,044,178


Income (loss) per common share
(see Note 4):
 Primary:
  Before extraordinary item             $      (.48)    $       .26
  Extraordinary item                                               

    Total                               $      (.48)    $       .26

Fully diluted:
  Before extraordinary item             $      (.48)    $       .26
  Extraordinary item                                               

    Total                               $      (.48)    $       .26

Weighted average number of common
shares outstanding                       12,590,106     15,759,114


            The accompanying notes are an integral part of
               these consolidated financial statements.



               PRECISION STANDARD, INC. AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF INCOME
                                                                       

                                            Nine          Nine
                                        Months Ended   Months Ended
                                        September 30,  September 30,
                                            1997           1996     
                                        (Unaudited)    (Unaudited)

Net sales                               $ 99,475,469   $100,444,533
Cost of sales                            (95,367,437)   (84,763,335)
   Gross profit                            4,108,032     15,681,198

Selling, general and
  administrative expenses                (15,363,285)   (13,308,340)
Bad debts expense                              2,873       (130,008)
Research and development expense            (744,706)      (298,522)
   Income from operations                (11,997,086)     1,944,328

Other income (expense):
  Interest expense                        (1,002,010)    (2,547,900)
  Other, net                                (370,339)     2,967,588
   Income before income taxes            (13,369,435)     2,364,016

Income tax expense                          (149,308)    (2,300,045)

   Net income (loss)                    $(13,518,743)  $     63,971

Income (loss) per common share
(see Note 4):
 Primary:
   Before extraordinary item            $      (1.07)  $       .004
   Extraordinary item                                              

    Total                               $      (1.07)  $       .004

Fully diluted:
   Before extraordinary item            $      (1.07)  $       .004
   Extraordinary item                                              

    Total                               $      (1.07)  $       .004

Weighted average number of common
shares outstanding                        12,680,003     15,949,524


            The accompanying notes are an integral part of
               these consolidated financial statements.



               PRECISION STANDARD, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF CASH FLOWS
                                                   
                                           Nine              Nine
                                        Months Ended      Months Ended
                                        September 30,     September 30,
                                            1997             1996
                                        (Unaudited)       (Unaudited)
Cash flows from operating activities:
  Net income (loss)                     $(13,518,743)     $    63,971
  Adjustments to reconcile
     net income (loss) to net cash
     provided from operating
     activities:
  Depreciation and amortization            1,827,240        2,218,042
  Pension cost in excess of 
     funding                               1,085,669          448,403
  Provision for losses on 
     receivables                                   0          295,070
  Provision for deferred taxes                     0        2,081,458
  Loss on disposition
     of equipment                                  0           73,321

  Changes in assets and liabilities:
          Accounts receivable             (3,312,037)       5,760,153
          Inventories                      2,127,578        3,870,290
          Prepaid expenses and
           other assets                   (1,590,570)         (80,361)
          Intangible assets                 (645,631)        (125,490)
          U.S. Government request for
           equitable adjustment, net        (238,743)     (12,307,110)
          Deposits and other                 536,031         (500,915)
          Accounts payable and
            accrued expenses               4,580,654       (1,113,998)
          Accrued warranty expense          (283,721)        (162,813)
          Estimated losses on
            contracts in progress           (108,775)        (103,922)
          Self-insured workers'
            compensation reserve             (66,167)               0
          Total adjustments                3,911,528          352,128
     Net cash provided by
     operating activities                 (9,607,215)         416,099

Cash flows from investing activities:
     Capital expenditures                   (386,725)      (1,066,344)
     Proceeds from sale of equipment               0          394,733
     Net cash used in
     investing activities               $ (9,993,940)    $   (671,611)

            The accompanying notes are an integral part of
               these consolidated financial statements.



               PRECISION STANDARD, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

                                           Nine             Nine
                                        Months Ended     Months Ended
                                        September 30,    September 30,
                                            1997             1996
                                        (Unaudited)      (Unaudited)
Cash flows from financing activities:
  Proceeds from issuance of
     common stock                       $         0      $      2,579

  Borrowings under revolving
     credit facility                     27,704,941         1,500,000

  Repayments under revolving
     credit facility                    (12,932,702)       (1,500,000)

  Principal payments under
     long-term obligations               (5,960,857)         (393,753)

     Net cash used in
     financing activities                 8,811,382          (391,174)

     Effect of exchange rate changes
     on cash and cash equivalents              (642)          (38,827)

Net decrease in cash
  and cash equivalents                   (1,183,200)         (685,513)
  
Cash and cash equivalents
  beginning of period                     1,183,200         1,411,929

Cash and cash equivalents
  end of period                         $         0      $    726,416

Supplemental disclosure of cash
  flow information:
  Cash paid during the period for:
     Interest                           $ 1,597,188       $   407,151
     Income taxes                           159,000            99,720
Supplemental disclosure of
  non-cash investing activities:
  Capital lease obligations incurred
  for new equipment                     $    28,674       $   109,253

  Capitalization of accrued
    interest                            $         0       $ 2,207,799

            The accompanying notes are an integral part of
               these consolidated financial statements.




            PRECISION STANDARD, INC. AND SUBSIDIARIES
                  NOTES TO FINANCIAL STATEMENTS

1.   CONSOLIDATED FINANCIAL STATEMENTS

     The consolidated interim financial statements included in this
     report have been prepared by the Company without audit.  In
     the opinion of management, all adjustments necessary for a
     fair presentation are reflected in the interim financial
     statements.  Such adjustments are of a normal and recurring
     nature.  The results of operations for the period ended
     September 30, 1997 are not necessarily indicative of the
     operating results for the full year.  The interim financial
     statements should be read in conjunction with the audited
     financial statements and notes thereto included in the
     Company's 1996 10-K.

2.   SIGNIFICANT ACCOUNTING POLICIES

     Translation of Non-U.S. Currency Amounts - Assets and
     liabilities of non-U.S. subsidiaries that operate in a local
     currency environment are translated to U.S. dollars at the
     exchange rate for the end of the accounting period.  Income
     and expenses are translated at average rates of exchange.
     Translation adjustments are accumulated in a separate
     component of stockholders' equity.

3.   INVENTORIES

     Inventories consist of the following:

                                   September 30,    December 31,
                                      1997             1996
                                   (Unaudited)                 

      Work in-process              $35,286,952      $43,555,521
      Finished goods                 3,149,900        3,524,575
      Raw materials and supplies     6,270,074        5,307,562
      Total                        $44,706,926      $52,387,658

      Less progress payments
        and customer deposits      (23,826,847)     (27,917,381)
      Less allowance for estimated
        losses on contracts in
        progress                        (1,879)      (1,286,669)
                                   $20,878,200      $23,183,608

4.   EARNINGS PER COMMON SHARE

     The computation of loss per common share in 1996 and 1997 is
     based on the weighted average number of outstanding common
     shares.  The inclusion of stock options and stock warrants
     would be antidilutive.
                               -8-
     In February 1997, the Financial Accounting Standards Board
     ("FASB") issued Statement of Financial Accounting Standards,
     ("SFAS") No. 128 (the "Statement"), Earnings per Share.  This
     Statement establishes standards for computing and presenting
     earnings per share ("EPS").  This Statement will simplify the
     standards for computing earnings per share previously found in
     APB Opinion No. 15, Earnings per Share, and will make them
     comparable to international EPS standards.

     This Statement is effective for financial statements issued
     for periods ending after December 15, 1997, including interim
     periods and requires restatement of all prior-period EPS data
     presented.  The Company will adopt the Statement at December
     31, 1997.  Because all contingent shares of Common Stock (i.e.
     options and warrants) are anti-dilutive at September 30, 1997
     and 1996, there would be no effect on the reported earnings
     per share under SFAS No. 128 for these periods.

5.   NOTES PAYABLE
                                      September 30, December,31,
                                          1997         1996     
     Short-term debt consists of
     the following:

     Term Credit facility             $         0    $  607,799
     Senior Subordinated Loan                   0       900,000
     
     Note due to individual, bears        277,202   $   377,173
     interest at 10% collateralized
     by a security interest in
     certain equipment

     Other obligations                    246,946       454,720
     collateralized by security
     interests in certain
     equipment                                                 
                                      $   524,148   $ 2,339,692
     Long term debt consists of
     the following:                                    
     Term Credit facility                       0     4,400,000
     Senior Subordinated Loan           6,700,000     6,300,000
     Revolving Credit facility         14,772,239             0

     Other obligations,                   259,099       404,410
     collateralized by security
     interests in certain
     equipment                                                 
                                      $21,731,338   $11,104,410
     Total short term and long term   $22,255,486   $13,444,102
     debt

     On August 8, 1997 the Company entered into a three-year
     revolving credit facility with a new primary lender that
     allows the Company to borrow up to $20 million.  This new loan
     is expected to provide the Company with greater flexibility. 
     As part of this transaction, the Company repaid its $5 million
     Term Credit facility under the Credit Agreement with Bank of
     America and a $500 thousand portion of its Senior Subordinated
     loan under the Loan Agreement. The amount of funds available
     to borrow under the new revolving credit facility is tied to
     percentages of accounts receivables and inventory of domestic
     operations only.  The total borrowing availability ranged from
     $14.7 million to $16.9 million during the period from August
     8 through September 30, 1997.  Interest on the new revolving
     credit facility accrues at prime rate plus 1.5% with
     provisions for reductions in the interest rate based on
     specific operating performance targets.  Interest is accrued
     and charged to the loan balance on a monthly basis.  All
     scheduled principal amortization for the portion of the Senior
     Subordinated loan that remains in place has been deferred for
     the three-year term of the new revolving credit facility.  The
     Senior Subordinated loan will be repaid over five installments
     commencing on August 31, 2000, due each subsequent quarter
     through June 30, 2001.

     As a result of renegotiated terms and conditions of its debt
     and warrant agreements in March 1997, the new agreements in
     part provided for forgiveness of approximately $1.3 million of
     accrued but unpaid interest which is being recognized
     prospectively as a yield adjustment.

        
     The above loans are collateralized by substantially all of the
     assets of the Company and have various covenants which limit
     or prohibit the Company from incurring additional
     indebtedness, disposing of assets, merging with other
     entities, declaring dividends, or making capital expenditures
     in excess of certain amounts in any fiscal year. 
     Additionally, the Company is required to maintain various
     financial ratios and minimum net worth amounts.  As a result
     of losses from operations in the third quarter, the Company
     may be in violation of such covenants and one or both of its
     lenders may elect to declare the Company's loans to be in
     default.  The Company has informed its lenders of the
     violations and has received permanent waivers of any default
     from violations of the loan covenants occurring as of
     September 30, 1997.  (See also, Part I, Item 2 "Management's
     Discussion and Analysis - Liquidity and Capital Resources" and
     Part II, Item 3 "Defaults Upon Senior Securities").
         

6.   CONTINGENCIES
     
     On November 3, 1997, the jury in Stevenson v. Pemco Aeroplex,
     Inc. and Rick Windsor returned a verdict against the Company's
     Pemco Aeroplex subsidiary in the amount of $1 million
     compensatory and $3 million punitive damages.  The case was
     filed in the Circuit Court of Jefferson County, Alabama by an
     employee who alleged a supervisor had engaged in tortious
     conduct under Alabama law by making sexual advances against
     her.  Pemco was sued under the theory of respondeat superior
     which holds an employer liable for the actions of its
     employees undertaken in the course of employment and theories
     of negligent supervision and training.  However, the jury
     found in favor of the supervisor and discharged him from any
     liability.  It is the Company's position that Pemco's
     liability is derivative of the supervisor's and thus if he is
     not liable to the plaintiff, Pemco likewise has no liability. 
     Post-trial motions seeking to vacate the verdict or,
     alternatively, to obtain a new trial will be filed.  The
     Company has not accrued a loss contingency for the damages as
     of September 30, 1997.  This verdict could have a material
     adverse effect on the Company's financial position and
     liquidity if the Company is not successful in asserting its no
     liability position.

     The Company is preparing a Request for Equitable Adjustment
     (REA) related to its H-3 helicopter contract with the U.S.
     Government.  The primary grounds for this REA are delays in
     government furnished material (GFM), increased cost of pilot
     services, and late delivery of technical data.  The Company's
     independent management consultant has determined a preliminary
     rough order of magnitude of the cost impact under the H-3
     contract.  Based on this assessment, the Company has recorded
     a receivable of $238,000 net of reserves in the first quarter
     of 1997.  The Company believes that the evidence in support of
     the proposed REA is objective, verifiable and reasonable in
     view of the work performed and the increased costs are not the
     result of any deficiencies in the Company's performance. 
     However, should the Company's REA ultimately be disallowed by
     the U.S. Government, which event the Company deems unlikely,
     the Company would realize a pre-tax reduction of revenue of
     $238,000.


ITEM 2.

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

INTRODUCTION

The following discussion should be read in conjunction with the
Company's consolidated financial statements and notes thereto
included herein.

   
During 1997, the Company has continued to incur substantial losses
from operations resulting in significant reduction in stockholders'
equity.  These losses have been the result of strike-related costs
from the nine-month work stoppage which ended in March 1997 at the
Birmingham facility; continuing losses at the Copenhagen facility
and ongoing through put problems associated with the KC-135
contract for the U.S. Government.  The losses have resulted in
serious cash liquidity issues for the Company.  Both losses and
liquidity issues will place the Company in breach of substantially
all of its financial covenants associated with its debt.  The
Company has obtained permanent waivers of any breaches occurring as
of September 30, 1997 from each of its lenders.  While the Company
has entered into a debt financing agreement with a new lender,
renegotiated certain terms of its debt agreements and warrant
agreement, amended its KC-135 government contract and is proceeding
with overhead reductions, additional capital resources may be
required before December 31, 1997.   There can be no assurance,
however, that additional capital resources will be available to the
Company.
    

RESULTS OF OPERATIONS

Three months ended September 30, 1997
Versus three months ended September 30, 1996

Revenues of $28.8 million for the third quarter of 1997 decreased
24% or $9.3 million compared to the third quarter of 1996.

Government sales of $18.3 million were down 37% or $10.6 million
versus prior year's quarter.  Commercial sales of $10.5 million
were up 14% or $1.3 million versus prior year's quarter.  The
Company's mix of business between government and commercial
operations shifted to 64% government and 36% commercial in the
third quarter of 1997 versus 76% government and 24% commercial in
1996.

Government revenues decreased as compared to 1996 because of
recognition in 1996 of $11.5 million pertaining to the KC-135 claim
settlement with the Government (see "KC-135 Contract") and a
decrease in sales at the Targets Division of $0.7 million and the
Space Vector Division of $1.2 million.  Partially offsetting was
recognition of over and above costs on the KC-135 contract which
the Company is allowed to bill as incurred as a result of the re-
negotiation of contract provisions with the Government during 1996. 
Revenues from KC-135 Programmed Depot Maintenance ("PDM") aircraft
redeliveries were essentially unchanged with seven aircraft
redeliveries in both the third quarter 1997 and 1996.

Commercial revenues increased as compared to 1996 because of
revenue growth at the Copenhagen facility of $1.6 million
attributable to the performance of maintenance and cockpit upgrades
for KLM Airlines and an increase of $1.0 million at the Clearwater
Nacelle operation.  Partially offsetting was a $1.8 million
decrease in revenue at the Dothan facility attributable to a work
stoppage by the International Machinist Union which occurred August
24 through September 14, 1997.

The ratio of cost of sales to sales was 101% in the third quarter
of 1997 as compared to 76% for the same period in 1996.  Without
the benefit of the $11.5 million claim recovery from the government
(see "KC-135 Contract" discussion), the 1996 ratio  was 108%.  The
resultant decrease in the gross loss as compared to the 1996
results without the claim recovery is due to the additional pricing
concessions on the KC-135 contract in respect to work in process
beginning September 30, 1996 partially offset by $1.0 million of
additional costs recognized during the third quarter of 1997 due to
strike related costs at the Birmingham facility.

The lack of profitability in the quarter is primarily due to
redelivery of KC-135 aircraft that did not benefit from price
adjustments and cost sharing provisions (See KC-135 contract), the
aforementioned recognition of strike-related costs, the work
stoppage and a reduction of a claim recovery at the Dothan facility
along with continuing losses at the Copenhagen operations.

The Company incurred more than $6.5 million in incremental strike
related costs during the UAW work stoppage at the Birmingham
facility.  While the majority of those costs were incurred in 1996,
approximately $4.7 million will be accounted for throughout 1997 as
aircraft incurring those costs are redelivered and booked into
revenue.  These amounts are primarily attributable to the high cost
of contract labor, training, housing and transportation costs for
replacement workers, as well as increased security costs during the
strike period.

Selling, general and administrative expenses decreased from $5.4
million in the third quarter of 1996 to $4.9 million in 1997 and
decreased as a percentage of sales from 20% in the third quarter of
1996 adjusted for the $11.5 million claim recovery included in
sales to 17% in 1997.

Interest expense was $0.4 million in the third quarter of 1997
versus $0.9 million in the third quarter of 1996.  The decrease is
primarily attributable to the paydown of outstanding debt in the
fourth quarter of 1996.  The effective average interest rate in the
third quarter of 1997 on the Company's debt was 10.0% versus 10.7%
in 1996.

The Company recorded a net of $2.9 million of other income in the
third quarter of 1996.  Approximately $3.3 million of the Company's
settlement with the U.S. Government was classified as other income;
$1.8 million as reimbursement for withholding tax penalties and
$1.5 million for excessive interest costs, both of which were
incurred by the Company due to the cash constraints caused by the
cost impacts cited in the Company REAs (see "KC-135 Contract"). 
The Company also recorded approximately $0.2 million of payroll tax
penalties in the third quarter of 1996.

The Company recorded $1.6 million of state and federal income tax
expense in the third quarter of 1996 and reduced its deferred tax
assets by $1.5 million. The change in deferred tax assets resulted
primarily from the expiration of federal net operating loss
carryforwards and the liquidation of inventory which has been
reserved.

Nine months ended September 30, 1997
Versus nine months ended September 30, 1996

Revenues of $99.5 million for the first nine months of 1997
decreased 1% or $0.9 million from the comparable period in 1996. 
Government sales of $56.7 million were down 16% or $10.8 million
versus same period 1996.  Commercial sales of $42.8 million
increased 30% or $9.9 million versus same period 1996.  The
Company's mix of business between government and commercial
customers shifted to 57% government and 43% commercial in 1997 from
67% government and 33% commercial in 1996.

Government sales decreased in the first nine months of 1997 versus
1996 primarily due to the $17.2 million recognized in 1996 as a
result of the claim settlement with the Government (see "KC-135
Contract").  Sales were also down in the Targets division by $2.0
million and the Space Vector division by $1.9 million.  Partially
offsetting these decreases is a $11.2 million increase in KC-135
revenues as a result of changes in the contract provision which
allows over and above costs to be billed as incurred.  The Company
redelivered twenty-four KC-135 programmed depot maintenance
aircraft in both the 1997 and 1996 periods.

Commercial sales increased in the first nine months of 1997
primarily due to maintenance and cargo conversion sales increases
at both the Dothan facility of $5.5 million and the Copenhagen
facility of $2.0 million.  Nacelle sales activity at the Clearwater
facility also increased $2.2 million.

The ratio of cost of sales to sales was 96% for the first nine
months of 1997 as compared to 84% for the same period in 1996.  The
1996 ratio without the benefit of the $17.2 million claim recovery
from the Government (see "KC-135 Contract") was 102%.  The
resultant improvement in gross profit as compared to 1996 results
without the claim recovery is due to the additional pricing
concession on the KC-135 contract in respect to work in process
beginning September 30, 1996 partially offset by $4.4 million of
additional costs recognized in the first nine months of 1997 due to
strike-related costs at the Birmingham facility.

The Company incurred more that $6.5 million in incremental strike
related costs during the UAW work stoppage at the Birmingham
facility.  While the majority of those costs were incurred in 1996,
approximately $4.7 million will be accounted for throughout 1997 as
aircraft incurring those costs are redelivered and booked into
revenue.  These amounts are primarily attributable to the high cost
of contract labor, training, housing and transportation costs for
replacement workers, as well as increased security costs during the
strike period.

Selling, general and administrative ("SG&A") expense increased from
$13.3 million in the first nine months of 1996 to $15.4 million in
1997.  SG&A decreased as a percentage of sales from 16% in 1996
(adjusted for the $17.2 million claim recovery included in sales)
to 15% in 1997.  SG&A increased primarily due to outside
legal/consultant costs associated with legal actions, labor
negotiation and other matters.

Research and development expense increased $0.4 million in the
first nine months of 1997 and 1996 primarily due to increased
efforts on aircraft modification programs.

Interest expense decreased from $2.5 million in the first nine
months of 1996 to $1.0 million in 1997, primarily because of the
repayment of $15 million of debt in the fourth quarter of 1996. The
effective average interest rate on the Company's debt in the first
nine months of 1997 was 10.0% versus 10.7% in 1996.

Other income and expense changed from $3.0 million income in the
first nine months of 1996 to $0.4 million expense in 1997.  The
other expense in 1997 is primarily payroll tax penalties incurred
in the second quarter.  The Company recorded a net of $3.0 million
of other income in the first nine months of 1996.  Approximately
$3.3 million of the Company's settlement with the U.S. Government
was classified as other income; $1.8 million as reimbursement for
withholding tax penalties and $1.5 million for excessive interest
costs, both of which were incurred by the Company due to the cash
constraints caused by the cost impacts cited in the Company's REAs
(see "KC-135 Contract").  The Company had recorded approximately
$0.4 million of the reimbursed payroll tax penalties in 1996.

The Company recorded $0.1 million of state income tax expense in
the first nine months of 1997 versus $2.3 million of state and
federal income tax expense in 1996.  No federal income tax benefit
has been recorded in 1997 due to the lack of probability of
realization against future taxable income.  The Company recorded
$2.3 million of state and federal income tax expense in 1996 and
reduced its deferred tax assets by $2.1 million.  The change in
deferred tax assets resulted primarily from the expiration of
federal net operating loss carryforwards and the liquidation of
inventory which had been reserved.  The Company also increased its
valuation allowance in 1996 for certain state net operating loss
carryforwrds which have been disallowed based on the findings of an
Alabama state tax audit.

KC-135 Contract

In October of 1996, the Company reached an agreement with the U.S.
Government with respect to all outstanding Requests for Equitable
Adjustment (REA) on both its 1990 and 1995 KC-135 contracts.  The
Company and the Government negotiated to resolve all disputes
associated with the Government's untimely provision of government
furnished material, the incidence of major structural repair work
greatly in excess of that contemplated at the time of contract
formation, post contract increases in inspection requirements,
consequent delay and disruption costs and other associated costs.
The Company believes that the factors cited above caused the
Company to incur at least $34.8 million in additional costs up to
the date of the settlement with the Government. Pursuant to the
terms of the settlement agreement, the Company received $25.0
million in cash from the U.S. Government in October 1996, $24.6
million of which was recorded as a current receivable at September
30, 1996.  In anticipation of a settlement with the Government, the
Company previously had recorded $4.1 million of this settlement as
revenue in 1995, $0.8 million as revenue in the first quarter of
1996 and $4.9 million as revenue in the second quarter of 1996. 
The Company recorded $14.8 million of the balance of the settlement
as revenue and other income in the third quarter of 1996, with the
remaining $0.4 million to be recorded in the fourth quarter of
1996, as it relates to aircraft redelivered after September 1996. 
The Company classified $3.3 million of the $14.8 million settlement
recorded in the third quarter as other income, designating $1.8
million as reimbursement for withholding tax penalties and $1.5
million for interest costs, both of which were incurred by the
company due to the cash constraints caused by the excessive cost
impacts cited in the Company's REAs.  The remaining $11.5 million
of the $14.8 million was recorded as revenue in the third quarter
of 1996.

The Company also reached an agreement with the U.S. Government for
additional pricing in respect of aircraft in process at September
30, 1996 and forward, to compensate the Company for the cost impact
of the directed and constructive changes to the contract cited
above.  The Government also exercised its option of Programmed
Depot Maintenance (PDM) of the KC-135 aircraft for the 1998 fiscal
year, beginning on October 1, 1997.  The Company's contract for the
1997 and 1998 option years was amended to include additional
pricing for the aforementioned directed and constructive changes to
the contract and incorporated a fixed-price incentive firm target
type provision to the contract, which contains limited cost/benefit
sharing provisions.   The U.S. Government delivered forty-five
aircraft to the Company under the first year of the contract,
thirty-four aircraft under the first option year and twenty
aircraft in the second option year of the contract.  To date, the
Government has scheduled twenty-one aircraft to be delivered for
PDM work under the third option year of the contract, which began
on October 1, 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company initially borrowed funds from its primary lender, Bank
of America National Trust and Saving Association ("Bank of
America"), beginning in 1988 pursuant to a Credit Agreement that
provides for a term credit facility and a revolving credit facility
(the "Credit Agreement"), and a Senior Subordinated Loan agreement
(the "Subordinated Agreement").  In connection with these
agreements, the Company issued to Bank of America a warrant to
purchase shares of the Company's Common Stock (the "Warrant").  On
August 8, 1997, the Company executed an agreement with a new
primary lender for a revolving credit facility that is expected to
provide the Company with greater flexibility.  As part of this
transaction, the Company repaid in full the term credit facility
under the Credit Agreement and a portion of the Subordinated
Agreement.  The Subordinated Agreement was amended on August 8,
1997 to provide that all scheduled principal amortization for the
portion of the Subordinated Loan that remains in place has been
deferred for the three-year term of the new revolving credit
facility.  The Subordinated Loan will be repaid over five
installments commencing on  August 31, 2000, due each subsequent
quarter through June 30, 2001.

In October of 1996, the Company paid $15.0 million of principal to
Bank of America from the proceeds of the settlement with the U. S.
Government, with $2.8 million applied to the Subordinated
Agreement, $4.2 million to the term credit facility and $8.0
million to fully repay the revolving credit facility.  In March of
1997, the Credit Agreement, the Subordinated Agreement and the
Warrant were each amended, effective as of December 31, 1996.  At
the time of such amendments, no funds were outstanding under the
revolving credit facility and $5.0 million of principal was
outstanding under the term loan facility.  As amended, the Credit
Agreement provided for 6 installments of $100,000 to be paid
against the principal amount during 1997 with the $4.4 million
balance due January 31, 1998.  The rates of interest on the Credit
Agreement were variable, depending upon the general level of
interest rates and the timing and nature of elections which the
Company is entitled to make in respect to renewals of outstanding
debts or increments of additional debt.  For the years ended
December 31, 1996 and 1995, the effective interest rates for the
term credit facility were 10.52% and 9.88%, respectively.  The
Subordinated Agreement, as amended, provided that the $7.2 million
principal balance be repaid in sixteen equal quarterly installments
commending September 30, 1997 and ending on June 30, 2001.  The
Credit Agreement and the Subordinated Agreement also provided for
the forgiveness of approximately $1.3 million of accrued but unpaid
interest in 1996.  The Company recognized approximately $0.6
million of the forgiven interest in 1996 and anticipates
recognizing the remaining $0.7 million over the years 1997 through
2001.  During 1997, the Company will recognize $.3 million
allocated equally to each quarter.  The balance of the $.4 million
will be taken pro-rata over the period 1998 through 2001.

The Warrant, as amended, permits Bank of America to purchase from
the Company 4,215,753 shares of the Company's Common Stock at an
aggregate purchase price of $0.237205492 per share, subject to
certain adjustments for changes in the Company's Common Stock and
for dilutive issuances dating back to 1988, any time before
September 9, 2000.  The Company believes that no events that would
trigger a material adjustment in the number of shares issuable upon
exercise of the Warrant have occurred.

   
The Company is required to repurchase the Warrant over a period of
six quarters beginning August 31, 1997 with cash or by the issuance
of Common Stock with a value equal to the redemption price.  The
redemption price for three-eights of the total Shares which was due
on August 31, 1997 and all future installments is the higher of (i)
$1.1135 per Share, such amount being equal to the difference
between the exercise price and the average market price of the
Common Stock for the 30 trading days following the date which was
15 trading days prior to the date the Company filed its financial
results for the third quarter of 1996 and the exercise price, or
(ii) the difference between the exercise price and the average
market price of the Common Stock for the 25 trading days preceding
the date which is five trading days prior to the date on which the
redemption is actually paid.  In addition, interest accrues on the
unpaid installments in the form of cash and/or shares of Common
Stock.  The amount of interest is equal to the sum of (i) $75,000
in cash (or the number of shares which is the result of dividing
$75,000 by the average market price of the Common Stock for the 25
trading days immediately preceding the date which is five trading
days prior to August 31, 1997, or $1.4537 per share), payable
immediately, plus (ii) .0004 of a share of Common Stock per
unredeemed Warrant share per day from the respective installment
date until the redemption is made.  Such interest is paid quarterly
10 days after the first day of each calendar quarter. Such interest
may be paid in the form of Common Stock only if such stock is then
registered and freely tradable; otherwise, the cash equivalent must
be paid, calculated as the market value of the stock as of the last
day of the calendar quarter.  The Company may exercise its right to
repurchase the Warrant with shares of Common Stock, only if the
Shares when issued are the subject of an effective registration
statement and immediately publicly tradeable.  While the Company
presently intends to exercise its right to repurchase the warrant
with shares of Common Stock, it may elect to repurchase all or a
portion of the Warrant with cash.  The first installment of the
repurchase, which was due August 31, 1997 and the second
installment due October 31, 1997, have not yet been paid because
the shares of stock underlying the Warrant have not yet been
registered with the Securities and Exchange Commission.
    

Matthew L. Gold has been Chairman of the Board, President and Chief
Executive Officer of the Company since January 1987.  In connection
with the Warrant, Mr. Gold agreed that he would not sell any Shares
or other securities of the Company held by him or any affiliate
during any of the periods beginning 35 trading days prior to each
installment date and ending on each installment date unless such
transaction does not exceed 1,000 Shares or an equivalent number of
other securities of the Company on each trading day.

The Company intends to replace its outdated, multi-type financial
information systems with enterprise-wide systems from Oracle.  The
hardware, software and implementation costs will be approximately
$2.5 million to be incurred over a two year period.  The costs of
the system are being financed by various vendors over periods of
three to five years.  The Company does not anticipate making any
other significant capital expenditures in the foreseeable future.

CASH FLOW

The following is a discussion of the significant items in the
Company's Consolidated Statement of Cash Flow for the nine (9)
months ending September 30, 1997 and 1996.
          
The Company's pension expense as determined by its actuary for the
year 1997 is $1.45 million as compared to $1.0 million in 1996. 
The Company has made no pension contributions in 1997 and $.3
million in 1996.  Based on the actuarial report for fiscal year
ending December 31, 1996, and plan year beginning January 01, 1996
the ERISA funding is 100.5%.  The Company anticipates that no
minimum pension contributions will be required because of favorable
investment results in 1997.

The Company reduced its deferred tax assets in 1996 by $2.1 million
primarily from utilization of federal net operating loss carry-
forwards, liquidation of reserved inventory and disallowance of
state net operating loss carry-forwards.

The Company's accounts receivable increased in the first nine
months of 1997 largely due to the over and above cost billings on
the KC-135 contract which were allowed to be billed as incurred
starting in the fourth quarter 1996, as well as the overall
increases in  commercial sales volume.  Receivables decreased in
1996 primarily due to fewer KC-135 aircraft redeliveries as
compared to December of 1995, and the timing of such redeliveries.

Inventories decreased in 1997 due to a net reduction in work-in-
process which is a result of redelivery of KC-135 aircraft which
carried substantial losses including strike-related costs in
inventory at December, 1996.  Costs are carried in inventory until
booked to cost of sales as aircraft are redelivered.

The 1997 increase in prepaid expense is primarily due to $0.6
million increase at the Copenhagen Operations and $0.3 million of
prepaid interest to Bank of America as a part of the August, 1997
refinancing.

Intangible assets have increased in 1997 due to costs associated
with the Bank of New York debt financing.  These costs will be
amortized over the term of the debt.

The U.S. Government request for equitable adjustment reflects the
H-3 claim receivable in 1997 (See Financial Statement note 6) and
the KC-135 contract claim in 1996 (See KC-135 contract above).

Deposits and other have decreased in 1997 due to reduced workers
compensation premium deposits and utilization of deposits
associated with contract personnel costs.  The 1996 variance was
due to timing of workers compensation deposit premiums.

The Accounts Payable and Accrued Expense increase in 1997 is due
primarily to increases in vendor payables resulting from continuing
cash constraints.  The decreases in Accounts Payable and Accrued
Expense in 1996 is primarily a result of $2.2 million of interest
that was reclassified to debt.

Inflation and changing prices have had no significant impact on the
Company's net sales or income from operations.

BACKLOG

The following table presents the Company's backlog (in thousands of
dollars) at September 30, 1997 and 1996:

                                    1997          1996

          U.S. Government          $127,915      $111,483
          Commercial                 31,236        16,873
                  Total            $159,151      $128,356

As of September 30, 1997 and 1996, 80% and 87% of the Company's
backlog related to work for the U.S. Government.  The Company's
Government backlog increased $35 million primarily related to a
contract for sounding rocket launches awarded to its Space Vector
operation and $25 million for the 1998 KC-135 option year.
Approximately $39.1 million of the 1997 backlog and $39.7 million
of the 1996 backlog is firm but not funded.

CONTINGENCIES

As previously discussed, a material adverse effect on the Company's
financial position and liquidity could result if the verdict in the
Stevenson v. Pemco Aeroplex, Inc. and Rick Windsor case is upheld.

The Company, as a U.S. Government contractor, is routinely subject
to audits, reviews and investigations by the government related to
its negotiation and performance of government contracts and its
accounting for such contracts.  Under certain circumstances, a
contractor can be suspended or debarred from eligibility for
government contract awards.  The government may, in certain cases,
also terminate existing contracts, recover damages and impose other
sanctions and penalties.  The Company believes, based on all
available information, that the outcome of the U.S. Government's
audits, reviews and investigations will not have a materially
adverse effect on the Company's consolidated results of operation,
financial position or cash flows.

FORWARD LOOKING STATEMENTS

With the exception of historical facts, statements contained in
Management's Discussion and Analysis of Financial Conditions and
Results of Operations are forward looking statements.  Statements
contained herein concerning anticipated results of operations, the
outcome of pending and future litigation, the outcome of audits,
reviews, and investigations by the U.S. Government, the outcome of
REA's filed with the U.S. Government, and the Company's intent to
take certain actions in the future are forward looking statements,
the accuracy of which cannot be guaranteed by the Company.  These
forward looking statements are subject to a variety of business
risks and other uncertainties, including but not limited to the
effect of economic conditions, the impact of competitive products
and pricing, new product development, the actual performance of
work under contract, customer contract awards and actions with
respect to utilization and renewal of contracts.



                     PRECISION STANDARD,INC.

                        OTHER INFORMATION

PART II.

Item 1    Legal Proceedings

          On June 27, 1997, the Company and its Pemco Aeroplex
          subsidiary was served with a civil complaint filed by the
          United States of America in U.S. District Court for the
          Northern District of Alabama, Southern Division.  The
          complaint alleged violation of the False Claims Act
          ("FCA") and contract claims based on mistake of fact and
          unjust enrichment with respect to the 1991 sale of
          certain C-130 aircraft wings by the government to Pemco,
          and sought $1.5 million as the alleged value of the wings
          and treble damages under the FCA.  On July 25, 1997,
          Pemco filed a motion to dismiss the complaint based on
          failure to allege facts which establish a cause of
          action, and other grounds.  The case was dismissed on
          September 3, 1997 for failure to state a claim under the
          FCA and lack of jurisdiction.  On November 12, 1997, the
          Company received notice that the U.S. would appeal the
          decision to the U.S. Court of Appeals for the 11th
          Circuit.

          In American International Airway, Inc. v. GATX Capital
          Corporation, et al., U.S.D.C., N.D. Cal., the owner of
          two aircraft converted under a Supplementary Type
          Certificate for 747 cargo conversions owned by GATX and
          others, sued GATX and various other defendants seeking
          damages.  As a result of an Airworthiness Directive
          issued by the FAA in January 1996, aircraft which has
          been so converted were restricted to carrying reduced
          payloads.  The Company's Pemco Aeroplex subsidiary has
          been named as one of seven defendants in the case because
          of allegedly improper engineering work performed in the
          1980's by its predecessor, Hayes International.  The
          complaint, which was served on Pemco on February 5, 1997,
          alleges violations of the Racketeer Influenced and
          Corrupt Organization Act (RICO), conspiracy, and
          negligence against Pemco.  Pemco has filed a motion to
          dismiss the complaint which was denied in part and
          granted in part by the U.S. District Court, Northern
          District of California on October 15, 1997.  The Court
          granted the motion with respect to the claim for civil
          conspiracy, but granted the plaintiff leave to amend the
          complaint.  Pemco believes the allegations made against
          it have no factual basis and intends to vigorously defend
          this claim.

          On October 28, 1997, the Company was served with a
          complaint filed by the Birmingham Airport Authority in
          the Probate Court of Jefferson County, Alabama seeking
          condemnation of a portion of the Pemco Aeroplex leasehold
          in Birmingham, Alabama.  The property involved in such
          condemnation proceeding is approximately 4 acres.  The
          Airport Authority has commissioned an appraisal of the
          property at issue.  Prior to actual inspection of the
          property, the Airport Authority offered Pemco
          approximately $20,000 in compensation for the impacts due
          to condemnation.  Pemco estimates that the impact to its
          operation resulting from condemnation of such property
          would be substantially in excess of $20,000 and is in the
          process of determining the cost to Pemco.

             
          On November 3, 1997, the jury in Stevenson v. Pemco
          Aeroplex, Inc. and Rick Windsor returned a verdict
          against the Company's Pemco Aeroplex subsidiary in the
          amount of $1 million compensatory and $3 million punitive
          damages.  The case was filed in the Circuit Court of
          Jefferson County, Alabama by an employee who alleged a
          supervisor had engaged in tortious conduct under Alabama
          law by making sexual advances against her.  Pemco was
          sued under the theory of respondeat superior which holds
          an employer liable for the actions of its employees
          undertaken in the course of employment and theories of
          negligent supervision and training.  However, the jury
          found in favor of the supervisor and discharged him from
          any liability.  It is the Company's position that Pemco's
          liability is derivative of the supervisor's and thus if
          he is not liable to the plaintiff, Pemco likewise has no
          liability.  A post-trial motion seeking to vacate the
          verdict or, alternatively, to obtain a new trial has been
          filed and a hearing on the motion has been set for
          January 16, 1998.
              

             
          On November 11, 1997, a supplier filed a request for
          bankruptcy against Pemco World Air Services A/S (PWAS),
          the Company's Danish subsidiary.  On November 20, 1997,
          the Maritime and Commercial Court in Copenhagen, Denmark
          granted the request and appointed trustees to operate
          PWAS.  The Company has guaranteed certain obligations of
          PWAS.
              

          Various claims alleging employment discrimination,
          including race, sex, age and disability, have been made
          against the Company and its subsidiary, Pemco Aeroplex,
          Inc., by current and former employees at its Birmingham
          and Dothan, Alabama facilities in proceedings before the
          Equal Employment Opportunity Commission and before state
          and federal courts in Alabama.  Workers' compensation
          claims brought by employees of Pemco Aeroplex, Inc. are
          also pending in Alabama state court.  The Company
          believes that no one of these claims is material to the
          Company as a whole and that such claims are more
          reflective of the general increase in employment-related
          litigation in the U.S. and Alabama than of any actual
          discriminatory employment practices by the Company or any
          subsidiary.  Except for workers' compensation benefits as
          provided by statute, the Company believes these claims
          have no factual basis and intends to vigorously defend
          itself in all litigation arising therefrom.

Item 2    Changes in Securities

          None

   
Item 3    Defaults Upon Senior Securities

          At September 30, 1997 the Company may be deemed to have
          been in violation of certain financial ratio tests
          required by its bank credit agreements with respect to
          working capital, tangible net worth and losses in a
          quarter.  The Company has informed its lenders of the
          violations and has obtained permanent waivers of any
          violations occurring as of September 30, 1997.
    

Item 4    Submission of Matters to a Vote of Security Holders

          None

Item 5    Other Information

          None

             
Item 6    Exhibits and Reports on Form 8-K

          a)   Exhibits

               None

          b)   Reports on Form 8-K
    
               None 





                         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.




                                   PRECISION STANDARD, INC.




Date:         12/19/97             By:  /s/ Richard J. Hendricks
                                         Richard J. Hendricks
                                         Vice President-Finance
                                         (Principal Financial
                                         and Accounting Officer)