SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549

                               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, 1998

                       PRECISION STANDARD, INC.

        (Exact Name of Registrant as Specified in its Charter)

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

                        12000 East 47th Avenue
                               Suite 400
                        Denver, Colorado 80239
               (Address of Principal Executive Offices)
                            (303) 371-6525                    
      (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                 3,977,596 shares
Common Shares                    Outstanding at November 9, 1998











PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

               PRECISION STANDARD, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS

                                                

                                ASSETS

                                        September 30,    December 31,
                                            1998            1997
                                        (Unaudited)                 

Current assets:
  Cash and cash equivalents            $   295,764       $   369,334
  Accounts receivable, net              17,876,027        10,138,430
  Inventories                           17,357,342        17,047,983
  Prepaid expenses and other               472,438         1,045,564

        Total current assets            36,001,571        28,601,311

Property, plant and equipment,
   at cost:
  Leasehold improvements                10,883,469        10,826,369
  Machinery and equipment               18,996,768        19,298,310
                                        29,880,237        30,124,679

Less accumulated depreciation          (18,704,139)      (17,991,714)

        Net property, plant and
          equipment                     11,176,098        12,132,965

Other non-current assets:
  Prepaid pension costs                  3,193,015         4,106,609
  Intangible assets, net of
     accumulated amortization              727,336           741,241
  Related party receivable                 269,824           269,824
  Deposits and other                       483,537           480,593
                                         4,673,712         5,598,267

        Total assets                   $51,851,381       $46,332,543


            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,
                                            1998            1997
                                        (Unaudited)                  

Current liabilities:
  Current portion of debt               $23,872,122      $24,784,318
  Accounts payable and accrued
   expenses                              29,322,519       31,728,406

          Total current liabilities      53,194,641       56,512,724

Workers' compensation reserve             3,631,734        3,631,734
Deferred income tax liability             2,525,231        2,525,231
          Total non-current
           liabilities                    6,156,965        6,156,965

          Total liabilities              59,351,606       62,669,689

Stockholders' equity:
  Common stock, $.0001 par value,
  300,000,000 shares authorized,
  3,877,777 and 3,614,872 shares
  issued and outstanding at
  September 30, 1998 and December 31,
  1997, respectively.                           378              361

  Additional paid-in capital              4,764,207        4,764,224
  Accumulated deficit                   (12,024,429)     (20,862,729)
  Foreign currency translation
   adjustments                             (240,381)        (239,002)
  Total stockholders' deficit            (7,500,225)     (16,337,146)

         Total liabilities and
          stockholders' deficit         $51,851,381      $46,332,543

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




               PRECISION STANDARD, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                                              

                                           Three           Three
                                        Months Ended    Months Ended
                                        September 30,   September 30,
                                            1998            1997   
                                        (Unaudited)     (Unaudited)

Net sales                               $32,091,484     $28,742,054
Cost of sales                           (26,003,071)    (29,122,479)
     Gross profit                         6,088,413        (380,425)

Selling, general and
  administrative expenses                (3,925,239)     (4,939,046)
Bad debts recovery (expense)                100,000           2,936
Research and development expense                  0        (250,977)
     Income (loss) from operations        2,263,174      (5,567,512)

Other income (expense):
  Interest expense                         (990,922)       (351,919)
  Other, net                                215,696         (44,005)
     Income (loss) before income taxes    1,487,948      (5,963,436)

Income tax benefit (expense)                 30,743         (38,308)

     Net income (loss)                  $ 1,518,691     $(6,001,744)


Weighted average number of common
shares outstanding
  Basic                                   3,852,973       3,147,527
  Diluted                                 3,967,126       3,147,527

Net income (loss) per common share:
  Basic                                 $      0.39     $     (1.91)
  Diluted                               $      0.38     $     (1.91)





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







               PRECISION STANDARD, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                              

                                           Nine           Nine
                                        Months Ended   Months Ended
                                        September 30,  September 30,
                                            1998           1997    
                                        (Unaudited)    (Unaudited)

Net sales                               $105,764,656   $ 99,475,469
Cost of sales                            (84,520,159)   (95,367,437)
   Gross profit                           21,244,497      4,108,032

Selling, general and
  administrative expenses                (13,389,507)   (15,363,285)
Bad debts recovery (expense)                 350,000          2,873
Research and development expense            (124,999)      (744,706)
   Income (loss) from operations           8,079,991    (11,997,086)

Other income (expense):
  Interest expense                        (2,294,955)    (1,002,010)
  Other, net                               3,073,019       (370,339)
   Income (loss) before income taxes       8,858,055    (13,369,435)

Income tax expense                           (19,755)      (149,308)

   Net income (loss)                    $  8,838,300   $(13,518,743)

Weighted average number of common
shares outstanding
  Basic                                    3,764,355      3,185,169
  Diluted                                  3,942,512      3,185,169

Net Income (loss) per common share
  Basic                                 $       2.35   $      (4.24)
  Diluted                               $       2.24   $      (4.24)



            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,
                                            1998              1997
                                         (Unaudited)       (Unaudited)

Cash flows from operating activities:
  Net income (loss)                     $ 8,838,300       $ (13,518,743)
  Adjustments to reconcile
     net income (loss) to net cash
     provided (used in) from operating
     activities:
  Depreciation and amortization           1,625,370           1,827,240 
  Pension cost in excess of
     funding                                      0           1,085,669 

  Gain on sale of division               (3,137,319)                  0 

  Changes in assets and liabilities:
          Accounts receivable            (8,504,783)         (3,312,037)
          Inventories                    (1,937,758)          2,127,578 
          Prepaid expenses and
           other assets                     484,680          (1,590,570)
          Prepaid pension costs             913,594                   0 
          Intangible assets                       0            (645,631)
          U.S. Government request for
           equitable adjustment, net              0            (283,743)
          Deposits and other                 (2,944)            536,031 
          Accounts payable and
           accrued expenses              (1,358,153)          4,580,654 
          Accrued warranty expense                0            (238,721)
          Estimated losses on
           contracts in progress                  0            (108,775)
          Self-insured workers'
           compensation reserve                   0             (66,167)
     Net cash (used in) operating
     activities                          (3,079,013)         (9,607,215)

Cash flows from investing activities:
     Capital Expenditures                  (872,361)           (386,725)
     Proceeds from sale of division       4,790,000                   0 
     Net cash provided by (used in)
     investing activities                $3,917,639         $  (386,725)



            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,
                                            1998             1997
                                        (Unaudited)      (Unaudited)
Cash flows from financing activities:

  Borrowings under revolving
     credit facility                    $       0        $ 27,704,941

  Net repayments under short-term
     obligations                         (912,196)        (12,932,702)

  Principal payments under
     long-term obligations                      0          (5,960,857)

     Net cash provided by (used in)
     financing activities                (912,196)          8,811,382

  Effect of exchange rate
    changes on cash                             0                (642)

Net increase (decrease) in cash
  and cash equivalents                    (73,570)         (1,183,200)

Cash and cash equivalents
  beginning of period                     369,334           1,183,200

Cash and cash equivalents
  end of period                         $ 295,764         $         0

Supplemental disclosure of cash
  flow information:
  Cash paid during the period for:
     Interest                          $1,817,856         $ 1,597,188
     Income taxes                               0             159,000

Supplemental disclosure of
  non-cash investing activities:
  Capital lease obligations incurred
  for new equipment                    $  143,135         $    28,674


            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, 1998 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 1997 Form 10-K.

2.   INVENTORIES

     Inventories consist of the following:

                                   September 30,    December 31,
                                      1998             1997
                                   (Unaudited)                 

      Work in-process              $23,235,243      $25,385,996
      Finished goods                 3,032,172        3,125,830
      Raw materials and supplies     4,645,845        5,987,419
      Total                        $30,913,260      $34,499,245

      Less progress payments
        and customer deposits      (13,555,918)     (17,451,262)
                                   $17,357,342      $17,047,983

3.   EARNINGS PER COMMON SHARE

     Net Income (Loss) per Common Share - In February 1997, the
     Financial Accounting Standards Board ("FASB") issued Statement
     of Financial Accounting Standards ("SFAS") No. 128, EARNINGS
     PER SHARE.  SFAS No. 128 revises the methodology to be used in
     computing earnings per share ("EPS") such that the
     computations required for primary and fully diluted EPS are to
     be replaced with "basic" and "diluted" EPS.  Basic EPS is
     computed by dividing net income by the weighted average number
     of shares outstanding during the period.  Diluted EPS is
     computed in the same manner as fully diluted EPS, except that,
     among other changes, the average share price for the period is
     used in all cases when applying the treasury stock method to
     potentially dilutive securities.  All share and per share
     information included in these financial statements have been
     restated to give effect to the adoption of SFAS No. 128.

     The following table represents the net income (loss) per share
     calculations for the nine months ended September 30, 1998 and
     1997:

     1998
     Net income                                 $ 8,838,300
     Weighted Average Shares                      3,764,355
     Basic Net Income Per Share                        2.35
     Dilutive Securities:
          Options                                     6,008
          Warrants                                  172,150
     Diluted Weighted Average shares              3,942,512
     Diluted Net Income Per Share                      2.24

     1997
     Net Loss                                   (13,518,743)
     Weighted Average Shares                      3,185,169
     Basic Net Loss Per Share                         (4.24)
     Dilutive securities:
       *Options                                           0
       *Warrants                                          0
      Diluted Weighted Average Shares             3,185,169
      Diluted Net Loss Per Share                      (4.24)

     The following table represents the net income (loss) per share
     calculations for the three months ended September 30, 1998 and
     1997:

     1998
     Net Income                                 $ 1,518,691
     Weighted Average Shares                      3,852,973
     Basic Net Income Per Share                        0.39
     Dilutive Securities:
      Options                                        13,199
      Warrants                                      100,955
     Diluted Weighted Average Shares              3,967,126
     Diluted Net Income Per Share                      0.38

     1997
     Net Loss                                    (6,001,744)
     Weighted Average Shares                      3,147,527
     Basic Net Loss Per Share                         (1.91)
     Dilutive Securities:
      *Options                                            0
      *Warrants                                           0
     Diluted Weighted Average Shares              3,147,527
     Diluted Net Loss Per Share                       (1.91)

     *Potentially dilutive securities outstanding for 1997 were
     excluded from EPS because they were antidilutive.


4.   NOTES PAYABLE
                                      September 30,   December 31,
                                          1998            1997
                                       (Unaudited)                

      Revolving credit facility        $16,340,352     $16,427,130

      Senior Subordinated Loan           6,200,000       6,700,000
     
      Note due to individual repaid
      in 1st quarter, 1998                   1,202         277,202

      Other obligations
      collateralized by security
      interests in certain
      equipment                          1,330,569       1,379,986

      Total debt                       $23,872,123     $24,784,318


     On August 8, 1997, the Company entered into a three-year
     revolving credit facility with a new lender.  The amount of
     funds available to borrow under the $20 million revolving
     credit facility is tied to percentages of accounts receivables
     and inventory and, as a result of certain subordination
     provisions, may not exceed $17 million.  Therefore, available
     funds will fluctuate on a daily basis.

     All scheduled principal amortization for the Senior
     Subordinated loan has been deferred for the three-year term of
     the 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.

     The above loans are collateralized by substantially all of the
     assets of the Company and have various loan covenants.  At
     September 30, 1998, the Company may be deemed to have been in
     violation of certain financial ratio tests required by its
     loan agreements; however, no debt service obligations are at
     issue and the Company has received a waiver from its lender
     for any such violations of its covenants.  Although the
     Company's primary lender continues to fund, there is no
     assurance that the Company will not be in violation of its
     debt covenants in the future, that the Company will have
     sufficient availability under its revolving credit facility to
     fund operations or that the bank will continue to fund under
     the current arrangements.

5.   CONTINGENCIES

     United States Government Contracts - The Company, as a U.S.
     Government contractor, is subject to audits, reviews, and
     investigations by the government related to its negotiation
     and performance of government contracts and its accounting for
     such contracts.  Failure to comply with applicable U.S.
     Government standards by a contractor may result in suspension
     from eligibility for award of any new government contract and
     a guilty plea or conviction may result in debarment from
     eligibility for 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 any such
     audits, reviews or investigations of the Company by the
     Government will not have a materially adverse effect on the
     Company's consolidated results of operations, financial
     position, or cash flows.

     On March 20, 1998, the U.S. Government released a request for
     proposal (RFP) for the workload performed by the Sacramento
     Air Logistic Center, including work related to its KC-135
     aircraft.  The Company's Pemco Aeroplex subsidiary currently
     performs a portion of the programmed depot maintenance of the
     KC-135 workload included in the RFP.  On June 17, 1998, the
     Company submitted a protest to the General Accounting Office
     ("GAO") challenging the combination, or "bundling," of the KC-
     135 workload with other unrelated workloads in the RFP.  On
     September 25, 1998, the GAO found in favor of the protest
     filed by Pemco.  The GAO recommended that the Air Force
     resolicit the contract to comply with the requirements of
     federal laws and regulations, and awarded the Company its
     protest costs and attorneys' fees.

     Notwithstanding the GAO decision, the Air Force announced its
     award of the bundled workload to Ogden Air Logistics Center on
     October 9, 1998, stating that it was proceeding with the
     award.  If the Air Force's action stands, the KC-135 workload
     could be included in the contract awarded to Ogden ALC upon
     expiration of the Company's contract.  October 13, 1998, Pemco
     filed a complaint in U.S. District Court, Northern District of
     Alabama against the Air Force seeking declaratory relief, an
     injunction, and an order requiring the Air Force to comply
     with applicable federal laws as recommended by the GAO.  The
     Company's KC-135 contracts are discussed in the Company's Form
     10-K filed for the year ending December 31, 1997.

     Litigation - A purported class action was brought against the
     Company and its Pemco Aeroplex subsidiary in May, 1997 on
     behalf of those persons hired as replacement workers during
     the strike by Pemco's United Auto Worker ("UAW") union
     employees and who were terminated upon settlement of such
     strike.

     The Company's Pemco Aeroplex subsidiary, successor to Hayes
     International, is a defendant in several suits seeking damages
     and indemnity for claims arising from an Airworthiness
     Directive issued by the FAA.  That Directive restricts the
     cargo capacity of Boeing 747 aircraft converted pursuant to an
     STC for such conversions.  Hayes International had performed
     engineering for the development of the STC.

     On November 3, 1997, a Jefferson County, Alabama jury returned
     a verdict against the Company's Pemco Aeroplex subsidiary in
     the amount of $1 million compensatory and $3 million punitive
     damages.  Various post-trial motions resulted in the trial
     court reducing the verdict to $1 million in compensatory
     damages.  Pemco and the plaintiff have both appealed this
     decision.  An accrual was established in the fourth quarter of
     1997 for the compensatory damage award pending outcome of the
     appeal.

     On October 9, 1998, the Company was served with a complaint
     filed by Sterling Airways A/S in Bankruptcy ("Sterling") in
     the District Court for the City and County of Denver, Colorado
     alleging breach of contract.  The complaint seeks payment for
     parts and materials supplied to the Company's Danish
     subsidiary Pemco World Air Services A/S, which was placed in
     involuntary bankruptcy in November 1997.  The complaint
     alleges that the Company guaranteed certain obligations to
     Sterling and seeks damages of approximately $1.4 million.  On
     November 2, 1998, the Company filed a motion to dismiss the
     complaint.

     In addition to the above, the Company is involved in various
     legal proceedings arising in the normal course of business. 
     Management does not believe the ultimate outcome of all such
     litigation will have a material adverse effect on the
     consolidated financial position or results of operations.

     Environmental Compliance - In December, 1997, the Company
     received an inspection report from the Environmental
     Protection Agency ("EPA") which cited certain violations of
     environmental laws.  The Company has taken action to correct
     items raised by the inspection.  On April 2, 1998, the Company
     received a complaint and compliance order from EPA proposing
     penalties of $225,256.  The Company disagrees with the
     citations and intends to contest the citations and penalties,
     but nevertheless recorded an accrual in the fourth quarter of
     1997 for the above penalties and certain other related
     charges.

     Other - The Company has received a demand from the assignee of
     a supplier of computer software and support services seeking
     payment of approximately $700,000 under a contract for
     computer software and support services.  The Company has never
     installed or utilized any of this software and has never
     received any support services. The Company has contacted the
     software provider in an attempt to determine whether
     alternative software useful to the Company can be provided and
     this matter resolved in a mutually satisfactory manner.

     In November, 1997, the Company's Danish subsidiary, Pemco
     World Air Services A/S, was placed in involuntary bankruptcy
     in Denmark.  On September 30, 1998, the Company received
     notice from the bankruptcy estate that the trustees would
     assert a claim in the amount of approximately $2 million
     against the Company for the alleged negative equity of the
     Danish subsidiary. Based on preliminary information provided
     to the Company in October 1998, additional claims have been
     filed by creditors against the bankruptcy estate.  While these
     additional claims could be as much as $14 million, the Company
     believes, based on partial information, that $11 million of
     these additional claims is comprised of one or more claims by
     a former customer of the Danish subsidiary seeking
     consequential damages.  Based on the information currently
     available, the Company believes that such claims may or may
     not be assertable against the Company.
     
     The Company has previously accrued a reserve of $1.3 million
     for claims arising out of the Denmark operation.

6.   STOCKHOLDERS' EQUITY

     At September 30, 1998 the Company had 300,000,000 authorized
     shares of $.0001 par value common stock, with 3,877,777 shares
     outstanding.

     At a special meeting held on April 15, 1998 and effective on
     that date, the Company's shareholders approved a 1-for-4
     reverse stock split of the common shares.  There was no change
     in the number of authorized shares or par value of the common
     stock.  Each four issued shares of the common stock were
     automatically converted to one share of Common Stock and
     fractional shares were exchanged for one full share.  As of
     April 15, 1998, 3,692,993 shares of Common Stock were issued
     and outstanding.

     All per share data herein have been restated to reflect the
     reverse stock split.

7.   TRANSACTIONS AFFECTING SUBSIDIARY OPERATIONS

     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 granted that
     supplier's request and appointed trustees to operate the
     facility.  As a result of the subsidiary being placed in
     involuntary bankruptcy, PWAS has been excluded from the
     Company's 1998 consolidated financial statement presentation.
     Related to the deconsolidation, the Company continues to
     maintain a reserve of $1.3 million for potential claims which
     may be made against the Company.

     Net sales, expenses, and net loss of PWAS which are included
     in the consolidated statements of operations for the nine
     months ended September 30, 1997 are as follows:

                                    1997

          Net Sales              $8,924,111
          Expenses               11,302,348
          Net Loss               (2,378,237)

     On January 29, 1998, the Company completed the sale of the net
     assets of its Hayes Targets division in Leeds, Alabama.  The
     sale yielded net proceeds of approximately $4,790,000 and
     resulted in a gain of $3.1 million, after adjustments.

     Net sales and operating income contributed by the Hayes
     operation for nine months ended September 30, 1998 was not
     material and for nine months ended September 30, 1997 was as
     follows:
                                     1997

          Net Sales               $1,541,000
          Operating Income           201,000

8.   COMPREHENSIVE INCOME

     The Company adopted Statement of Financial Accounting
     Standards ("SFAS") No. 130 on January 1, 1998, which
     establishes standards for reporting and display of
     comprehensive income and its components.  Comprehensive income
     is a measure of all nonowner changes in equity of an
     enterprise that result from transactions and other economic
     events of the period.  The Company did not have any material
     differences in net income and comprehensive income for the
     quarters ended September 30, 1998 or 1997.

9.   PENDING ACCOUNTING PRONOUNCEMENTS

     The AICPA has issued Statements of Position 98-1, ACCOUNTING
     FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
     INTERNAL USE. This statement requires capitalization of
     external direct cost of materials and services; payroll and
     payroll-related costs for employees directly associated; and
     interests costs during development of computer software for
     internal use (planning and preliminary costs should be
     expensed).  Also, capitalized costs of computer software
     developed or obtained for internal use should be amortized on
     a straight-line basis unless another systematic and rational
     basis is more representative of the software's use.

     This statement is effective for financial statements for
     fiscal years beginning after December 15, 1998 (prospectively)
     and is not expected to have a material effect on the
     consolidated financial statements.



ITEM 2.

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

INTRODUCTION

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

During the third quarter of 1998, the Company continued its return
to profitability.  The Company reported operating income of $1.5
million for the three months ended September 30, 1998 and a
combined operating income of $8.8 million for the first nine months
of 1998.  Total income before taxes for the first, second and third
quarters of 1998 was $4.6 million, $2.8 million, and $1.5 million,
respectively, for a combined total income before taxes of $8.8
million.  This includes profits of $3.1 million from the sale of
Hayes Targets division in the first quarter of 1998, after
adjustments for other expenses.

RESULTS OF OPERATIONS

Three months ended September 30, 1998
versus three months ended September 30, 1997

Revenues for the third quarter of 1998 improved from the third
quarter of 1997, increasing approximately 12% from $28.7 million in
1997 to $32.1 million in 1998.  Both government and commercial
sales increased during the third quarter of 1998.  Government sales
increased approximately 3% from $18.2 million in 1997 to $18.8
million in 1998, and commercial sales increased 27% from $10.5
million in 1997 to $13.3 million in 1998.  The Company's mix of
business between government and commercial customers moved from 36%
commercial and 64% government in 1997 to 41% commercial and 59%
government for the corresponding period in 1998.

Government sales in the third quarter of 1998 increased
approximately $600,000 due to increased workload under government
contracts at the Birmingham facility.  Commercial sales increased
approximately $2.8 million in the third quarter of 1998 due
primarily to increased workload under commercial contracts at the
Dothan facility.

The ratio of cost of sales ($26.0 million in 1998; $29.1 million in
1997) to net sales ($32.1 million in 1998; $28.7 million in 1997)
decreased from 101% in the third quarter of 1997 to 81% in 1998. 
The decrease in the cost of sales was the result of restructuring
efforts undertaken during 1997 and 1998, increased operating
efficiency, and strike-related costs recognized in the third
quarter of 1997.

Selling, general and administrative expenses ("SG&A") decreased
from $4.9 million in the third quarter of 1997 to $3.9 million in
1998, and decreased as a percentage of sales from 17% in 1997 to
12% in 1998.  These decreases were primarily due to the Company's
reduction of overhead expenses and corporate management changes.

Interest expense was $1.0 million in third quarter 1998 versus $0.4
million in 1997.  The increase is primarily due to increases in
borrowings required to support the increase in sales and workload
during the quarter.

Nine months ended September 30, 1998
Versus nine months ended September 30, 1997

Revenues in the first nine months of 1998 increased from $99.5
million in 1997 to $105.8 million in 1998.  Both government and
commercial sales increased as compared to the nine month sales of
1997.  Government sales increased 5% from $56.7 million in 1997 to
$59.5 million in 1998.  Commercial sales increased 8% from $42.8 in
1997 to $46.3 million in 1998.  The Company's mix of business
between government and commercial customers remained consistent at
43% commercial and 57% government in 1997 and 44% commercial and
56% government in 1998.

The increase in government sales was primarily due to increased
sales under government contracts at the Dothan and Birmingham
facilities, offset, in part, by a reduction in sales at the
Company's Space Vector subsidiary.

The ratio of cost of sales ($84.5 million in 1998; $95.4 million in
1997) to net sales ($105.8 million in 1998; $99.5 million in 1997)
decreased from 96% in 1997 to 80% in 1998.  The decrease in the
cost of sales was the result of restructuring efforts undertaken
during 1997 and 1998, increased operating efficiency, and strike
related costs recognized in the first nine months of 1997.

SG&A decreased from $15.4 million in the first nine months of 1997
to $13.4 million in 1998, and decreased as a percentage of sales
from 16% in 1997 to 13% in 1998.  These decreases were primarily
due to the Company's reduction of overhead expenses and corporate
management changes.

Interest expense increased to $2.3 million in the first nine months
of 1998 versus $1.0 million in 1997 due to increased sales and
workload, which required additional borrowings under the Revolving
Credit facility.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash resources continued to be strained in 1998
primarily due to delays in progress payments for amounts billed to
the U.S. Government, increased workloads under government and
commercial contracts, and costs associated with the strikes at the
Birmingham and Dothan facilities which were resolved in 1997.

The following is a discussion of the significant items in the
Company's Consolidated Statement of Cash Flows for the nine months
ended September 30, 1998 and 1997, after adjustments from the sale
of the Hayes Targets division's assets.

Accounts receivable increased $8.5 million in the first nine months
of 1998 due to increased workloads under the Company's government
and commercial contracts.

Net inventories increased by $1.9 million in the first nine months
of 1998 primarily due to a reduction in progress payments.  (See
Note 2 to Financial Statements).  Capital expenditures were $.9
million during the first nine months of 1998.  The Company also
paid down its short term obligations by approximately $0.9 million
for the nine months ending September 30, 1998.

Accounts payable and accrued expenses decreased approximately $1.4
million in the first nine months of 1998.  The decrease reflects
the Company's continued efforts to reduce trade debt.

In the first nine months of 1998, the Company's operating
activities used $3.1 million in cash.  In addition, investing
activities provided net cash of $3.9 million and $0.9 million was
used for financing activities.  In the first nine months of 1997,
$9.6 million of cash was used for operating activities, $0.4
million was used for investing activities, and $8.8 million was
generated by financing activities.

During 1996, 1997 and 1998, inflation and changing prices have had
no significant impact on the Company's net sales or revenues or on
income from continuing operations.

BACKLOG

The following table presents the Company's backlog (in thousands of
dollars) at September 30, 1998 and 1997:

                                   1998              1997

     U.S. Government             $144,012          $127,834
     Commercial                    22,070            20,930      
                                 $166,082          $148,764

The above numbers for 1998 and 1997 have been adjusted to exclude
backlog related to the Hayes Targets division sold in January 1998,
and the Danish subsidiary closed in November 1997.  Based on this
adjustment, as of September 30, 1998, 87% of the Company's backlog
related to work for the U.S. Government versus 86% for the period
ended September 30, 1997. The Company's government backlog
increased $16 million primarily related to additional aircraft
input under the Company's government contracts at the Birmingham
facility.

                                      1998              1997

     Firm, unfunded Backlog      $ 45.1 million     $ 40.1 million

     Estimated sales to be
     derived from backlog
     contracts                   $264.0 million     $260.0 million

The $264 million of estimated backlog is associated with option
periods and new government contracts.

CONTINGENCIES

See Note 5 to the Consolidated Financial Statements.

YEAR 2000 ISSUES

Background

Some computers, software and other equipment include programming
code which abbreviates calendar year data using only two digits. 
As a result, some equipment could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900, rather
than 2000.  These problems are widely expected to increase in
frequency and severity as the year 2000 approaches and are commonly
referred to as the "Millennium Bug" or "Year 2000 Problem."

Assessment

The Year 2000 Problem could affect computers, software and other
equipment used by the Company.  Accordingly, the Company is
reviewing its internal computer programs and systems to ensure that
such programs and systems will be Year 2000 compliant.  The Company
presently believes that its computer systems will be Year 2000
compliant in a timely manner.  However, while the Company has not
completed its Year 2000 compliance assessment, it presently
estimates that the cost of these efforts could exceed $1 million.
Such costs would be paid out of the Company's cash flow from
operations and/or through financing sources.

Internal Infrastructure

Initial assessment of the Company's existing computer systems has
revealed that a portion of its existing software programs are not
Year 2000 compliant.  The Company believes that it has identified
most of the major computers, software applications and related
equipment used in connection with its internal operations that must
be modified, upgraded or replaced to minimize the possibility of a
material disruption to its business.  The Company anticipates
upgrading or replacing the necessary systems by the end of the
third quarter of 1999.  While there is no guarantee that the
Company will reach Year 2000 compliance by such deadline, the
Company believes that it is applying the resources and effort
sufficient to do so.

Systems Other Than Information Technology Systems ("Non-IT
Systems")

In addition to computers and related systems, the operation of the
Company's office and facilities equipment, such as fax machines,
photocopiers, telephone switches, security systems, elevators and
other common devices, may be affected by the Year 2000 Problem. 
The Company has been assessing the potential effect of the Year
2000 Problem on its office and facilities equipment.  The Company
has relatively few date-sensitive systems in place, and most major
non-IT systems are the responsibility of landlords and other
service providers.  It is currently estimated that any requirements
for replacement or modification to non-IT systems will not have a
material effect on the Company's business, financial condition or
results of operations.

Customers and Suppliers

The Company does not foresee any serious Year 2000 Problems
occurring with its vendors and customers.  Although the Company has
not yet received any written assurances of compliance, it is
requesting statements of Year 2000 compliance from its vendors. 
While it is not possible to predict all issues which could arise
relating to a supplier, the Company believes that it has multiple
sources for most of the materials and supplies it presently
procures from vendors or third party contractors.  Unless a
national or global problem occurs, the Company believes it will be
able to continue production while it seeks to rectify any supplier
issues that may arise.  Because the Company's primary customers
include the U.S. Government and large corporations with substantial
financial resources, the Company believes that these customers are
taking appropriate steps to protect themselves, and indirectly, the
Company from business losses resulting from Year 2000 issues.

Most Likely Consequences of Year 2000 Problems

The Company expects to identify and resolve all Year 2000 Problems
that could materially adversely affect its business, financial
condition or results of operations.  However, the Company believes
that it is not possible to determine with complete certainty that
all Year 2000 Problems affecting the Company have been identified
or corrected.  The number of devices that could be affected,
directly or indirectly, and the interactions among these devices
are simply too numerous to ensure 100% compliance.  Accordingly,
the Company cannot accurately predict how many failures related to
the Year 2000 Problem will ultimately occur or the severity,
duration or financial consequences of such failures.  As a result,
the Company expects that there is some risk of the following
consequences:

     -    A significant number of operational inconveniences and
          inefficiencies for the Company and its customers that may
          divert management's time and attention and financial and
          human resources from its ordinary course of business
          activities; and

     -    A number of serious system failures that may require 
          significant efforts by the Company or its customers to
          prevent or alleviate material business disruptions.

Contingency Plans

The Company is currently developing contingency plans to be
implemented as part of its efforts to identify and correct Year
2000 Problems affecting its internal systems.  Depending on the
systems affected, these plans could include (1) accelerated
replacement of affected equipment or software, (2) short-to-medium-
term use of backup equipment and software, (3) increased work hours
for Company personnel or the use of contract personnel to correct
any Year 2000 Problems which may arise, (4) manual backup systems
to forestall any interruption of operations resulting from the
failure of automated systems, (5) and other similar approaches.  If
the Company is required to implement any of these contingency
plans, such plans could have a material adverse effect on the
Company's business, financial condition or results of operations.

As noted above, however, the Company does not presently believe
that the Year 2000 Problem will have a material adverse effect on
the Company's business, financial condition or results of
operations.

FORWARD LOOKING STATEMENTS

With the exception of historical facts, statements contained in
Management's Discussion and Analysis are forward looking
statements.  Statements contained herein concerning anticipated
results of operations, award of contracts, the outcome of pending
and future litigation, the outcome of audits, reviews and
investigations by the U.S. Government, the outcome of claims filed
with the U.S. Government, estimates of backlog, the outcome of
claims related to the Danish subsidiary, the Company's intent to
take certain action in the future, the impact of Year 2000 issues
on the Company's operations, and the Company's ability to achieve
Year 2000 compliance 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, estimates of time and
money to assess and address Year 2000 issues, the continuing
availability of experienced personnel to deal with Year 2000
issues, the timely availability of software patches from existing
suppliers of software, the ability of third parties to complete
their own remediations of Year 2000 issues on a timely basis, the
ability to identify and implement contingency plans to deal with
Year 2000 issues, unanticipated problems identified in the
Company's ongoing Year 2000 compliance review, and actions with
respect to utilization and renewal of contracts.






                     PRECISION STANDARD,INC.
                        OTHER INFORMATION

PART II.

Item 1    Legal Proceedings

          In November, 1997, the Company's Danish subsidiary, Pemco
          World Air Services A/S, was placed in involuntary
          bankruptcy in Denmark.  On September 30, 1998, the
          Company received notice from the bankruptcy estate that
          the trustees would assert a claim in the amount of
          approximately $2 million against the Company for the
          alleged negative equity of the Danish subsidiary. Based
          on preliminary information provided to the Company in
          October 1998, additional claims have been filed by
          creditors against the bankruptcy estate.  While these
          additional claims could be as much as $14 million, the
          Company believes, based on partial information, that $11
          million of these additional claims is comprised of one or
          more claims by a former customer of the Danish subsidiary
          seeking consequential damages.  Based on the information
          currently available, the Company believes that such
          claims may or may not be assertable against the Company.

          On October 9, 1998, the Company was served with a
          complaint filed by Sterling Airways A/S in Bankruptcy
          ("Sterling") in the District Court for the City and
          County of Denver, Colorado alleging breach of contract. 
          The complaint seeks payment for parts and materials
          supplied to the Company's Danish subsidiary Pemco World
          Air Services A/S, which was placed in involuntary
          bankruptcy in November 1997.  The complaint alleges that
          the Company guaranteed certain obligations to Sterling
          and seeks damages of approximately $1.4 million.   On
          November 2, 1998, the Company filed a motion to dismiss
          the complaint.
  
          The Company has previously accrued a reserve of $1.3
          million for claims arising out of the Denmark operation.

Item 2    Changes in Securities

          (See Note 6 of the Consolidated Financial Statements)

Item 3    Defaults Upon Senior Securities

          (See Note 4 of the Consolidated Financial Statements)

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

          27   Financial Data Schedule

          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:       11/18/98          By:   /s/ Matthew L. Gold     
                                   Matthew L. Gold
                                   Chairman, President and
                                   Chief Executive Officer
                                   and Director
                                   (Principal Executive Officer
                                   and Principal Financial and
                                   Accounting Officer)