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
June 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                 3,878,413 shares
Common Shares                    Outstanding at August 6, 1998



PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

            PRECISION STANDARD, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                                
                   ---------------------------

                             ASSETS
                             ------

                                  June 30,       December 31,
                                    1998            1997
                                  Unaudited)
                                 ----------    -----------

<S>                            <C>              <C>
Current assets:
  Cash and cash equivalents    $   391,849      $    369,334
  Accounts receivable, net      14,041,414        10,138,430
  Inventories                   17,551,964        17,047,983
  Prepaid expenses and other       544,972         1,045,564
                               -----------       -----------
        Total current assets    32,530,199        28,601,311
                               -----------       -----------
Property, plant and equipment,
   at cost:
  Leasehold improvements        10,885,531        10,826,369
  Machinery and equipment       18,389,007        19,298,310
                               -----------       -----------
                                29,274,538        30,124,679
Less accumulated depreciation  (18,109,420)      (17,991,714)
                               -----------       -----------
        Net property, plant and
          equipment             11,165,118        12,132,965
                               -----------       -----------
Other non-current assets:
  Prepaid pension costs          3,497,547         4,106,609
  Intangible assets, net of
     accumulated amortization      731,971           741,241
  Related party receivable         269,824           269,824
  Deposits and other               483,924           480,593
                               -----------       -----------
                                 4,983,266         5,598,267
                               -----------       -----------
        Total assets           $48,678,583       $46,332,543
                               ===========       ===========

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

</TABLE>


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

<TABLE>
<CAPTION>

              LIABILITIES AND STOCKHOLDERS' EQUITY
              ------------------------------------

                                   June 30,        December 31,
                                     1998            1997
                                  (Unaudited)
                                  -----------      ------------

<S>                              <C>              <C>
Current liabilities:
  Current portion of debt        $21,105,325      $24,784,318
  Accounts payable and accrued
   expenses                       30,435,209       31,728,406
                                 -----------      -----------
          Total current
             liabilities          51,540,534       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       57,697,499       62,669,689

Stockholders' equity:
  Common stock, $.0001 par value,
  300,000,000 shares authorized,
  3,775,401 and 3,614,872 shares
  issued and outstanding at
  June 30, 1998 and December 31,
  1997, respectively.                    378              361

  Additional paid-in capital       4,764,207        4,764,224
  Accumulated deficit            (13,543,120)     (20,862,729)
  Foreign currency translation
   adjustments                      (240,381)        (239,002)
                                 -----------      -----------
  Total stockholders' deficit     (9,018,916)     (16,337,146)
                                 -----------      -----------
         Total liabilities and
          stockholders' deficit  $48,678,583      $46,332,543
                                 ===========      ===========
</TABLE>


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


            PRECISION STANDARD, INC. AND SUBSIDIARIES
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
                                
                 -------------------------------

<TABLE>
<CAPTION>
                                     Three           Three
                                  Months Ended    Months Ended
                                    June 30,        June 30,
                                      1998            1997
                                  ------------    -----------
                                  (Unaudited)     (Unaudited)

<S>                              <C>             <C>
Net sales                        $39,219,256     $35,715,685
Cost of sales                     30,703,666      34,443,050
                                 -----------     -----------
     Gross profit                  8,515,590       1,272,635

Selling, general and
  administrative expenses         (4,940,712)     (5,388,449)
Bad debts recovery (expense)         250,000             (62)
Research and development expense         (14)       (248,285)
                                 -----------     -----------
     Income (loss)
       from operations             3,824,864      (4,364,161)

Other income (expense):
  Interest expense                  (636,561)       (324,697)
  Other, net                        (380,878)       (255,758)
                                 -----------     -----------
     Income (loss) before
       income taxes                2,807,425      (4,944,616)

Income tax expense                   (25,498)        (45,000)
                                 -----------     -----------
     Net income (loss)           $ 2,781,927     $(4,989,616)
                                 ===========     ===========

Weighted average number of common
shares outstanding
  Basic                            3,748,234       3,195,481
                                 ===========     ===========
  Diluted                          3,920,617       3,195,481
                                 ===========     ===========
Net income (loss) per common share:
  Basic                          $      0.74     $     (1.56)
                                 ===========     ===========
  Diluted                        $      0.71     $     (1.56)
                                 ===========     ===========

</TABLE>


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




            PRECISION STANDARD, INC. AND SUBSIDIARIES
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
                                
                   ---------------------------

<TABLE>
<CAPTION>

                                      Six            Six
                                  Months Ended   Months Ended
                                    June 30,       June 30,
                                     1998           1997
                                 ------------   ------------
                                 (Unaudited)    (Unaudited)

<S>                              <C>           <C>
Net sales                        $73,673,172    $70,733,415
Cost of sales                     58,517,088     66,244,958
                                 -----------    -----------
   Gross profit                   15,156,084      4,488,457

Selling, general and
  administrative expenses         (9,464,268)   (10,424,239)
Bad debts recovery (expense)         250,000            (62)
Research and development
  expense                           (124,999)      (493,729)
                                 -----------    -----------
   Income (loss)
     from operations               5,816,817     (6,429,573)

Other income (expense):
  Interest expense                (1,304,033)      (650,091)
  Other, net                       2,857,323       (326,334)
                                 -----------    -----------
   Income (loss) before
     income taxes                  7,370,107     (7,405,998)

Income tax expense                   (50,498)      (111,000)
                                 -----------    -----------
   Net income (loss)             $ 7,319,609    $(7,516,998)
                                 ===========    ===========
Weighted average number of common
shares outstanding
  Basic                            3,707,371      3,185,169
                                 ===========    ===========
  Diluted                          3,917,531      3,185,169
                                 ===========    ===========
Net Income (loss) per common share
  Basic                          $      1.97    $     (2.36)
                                 ===========   ============
  Diluted                        $      1.87    $     (2.36)
                                 ===========   ============
</TABLE>

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




            PRECISION STANDARD, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENT OF CASH FLOWS
                                
                --------------------------------

<TABLE>
<CAPTION>

                                       Six               Six
                                   Months Ended     Months Ended
                                 June 30, 1998     June 30, 1997
                                   (Unaudited)       (Unaudited)
                                  -------------     -------------

<S>                              <C>               <C>
Cash flows from operating
   activities:
  Net loss                       $ 7,319,609       $(7,516,998)
  Adjustments to reconcile
     net income (loss) to net cash
     provided (used in) from operating
     activities:
  Depreciation and amortization    1,026,016         1,239,771
  Pension cost in excess of
     funding                               0           725,003

  Gain on sale of division        (3,135,940)                0

  Changes in assets and liabilities:
          Accounts receivable     (4,670,170)       (1,155,705)
          Inventories             (2,132,380)       (2,593,280)
          Prepaid expenses and
           other assets              412,147          (722,461)
          Prepaid pension costs      609,062                 0
          U.S. Government request for
           equitable adjustment, net       0          (238,743)
          Deposits and other          (3,332)        1,201,115
          Accounts payable and
            accrued expenses        (490,522)        8,731,977
          Accrued warranty expense         0          (200,403)
          Self-insured workers'
            compensation reserve           0           (66,167)
                                 -----------    --------------
     Net cash (used in) operating
     activities                   (1,065,510)         (595,891)
                                 -----------    --------------
Cash flows from investing activities:
     Proceeds from sale
       of division                 5,000,000                 0
     Capital expenditures           (232,982)         (238,310)
                                 -----------    --------------
     Net cash provided by (used in)
     investing activities         $4,767,018         $(238,310)
                                 -----------    --------------
</TABLE>


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






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

<TABLE>
<CAPTION>


                                      Six              Six
                                   Months Ended     Months Ended
                                    June 30,         June 30,
                                      1998             1997
                                   (Unaudited)      (Unaudited)
                                  ------------     ------------

<S>                            <C>              <C>
Cash flows from financing activities:

  Net repayments under short-term
     obligations               $ (3,678,993)    $         0

Principal payments under
     long-term obligations                0        (311,255)
                               ------------     -----------
     Net cash (used in)
     financing activities        (3,678,993)       (311,255)
                               ------------     -----------
  Effect of exchange rate
    changes on cash                       0         (37,744)
                               ------------     -----------

Net increase (decrease) in cash
  and cash equivalents               22,515      (1,183,200)

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

Cash and cash equivalents
  end of period                $    391,849      $        0
                               ============      ==========
Supplemental disclosure of cash
   flow information:
  Cash paid during the period for:
     Interest                  $  1,260,669      $  557,236
     Income taxes                         0         159,000

Supplemental disclosure of
  non-cash investing activities:
  Capital lease obligations incurred
  for new equipment            $          0      $   28,674
</TABLE>

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



            PRECISION STANDARD, INC. AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED 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 June 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.

     The Company's consolidated financial statements for the year
ended December 31, 1997 has been adjusted to deconsolidate the
financial results of Pemco World Air Services A/S, the Company's
Danish subsidiary.  In November 1997, the Danish subsidiary was
closed and placed in involuntary bankruptcy.  However, the 1997
interim quarterly statement of operations for the second quarter
has not been adjusted and includes the financial results of the
Danish subsidiary for such period.  (See Note 7)

2.   INVENTORIES

     Inventories consist of the following:

                                     June 30,       December 31,
                                      1998            1997
                                   (Unaudited)
                                  -----------      ------------

      Work in-process              $21,305,018      $25,385,996
      Finished goods                 3,034,287        3,125,830
      Raw materials and supplies     4,469,096        5,987,419
                                   -----------      -----------
      Total                        $28,808,401      $34,499,245

       Less progress payments
        and customer deposits      (11,256,437)     (17,451,262)
                                   -----------      -----------
                                   $17,551,964      $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 six months ended June 30, 1998 and
1997:

     1998
     Net income                                 $ 7,319,609
     Weighted Average Shares                      3,707,371
     Basic Net Income Per Share                        1.97
                                                -----------
     Dilutive Securities:
          Options                                     2,412
          Warrants                                  207,748
     Diluted Weighted Average shares              3,917,531
     Diluted Net Income Per Share                      1.87
                                                -----------
     1997
     Net Loss                                    (7,516,998)
     Weighted Average Shares                      3,185,169
     Basic Net Loss Per Share                         (2.36)
                                                -----------
     Dilutive securities:
       *Options                                           -
       *Warrants                                          -
    Diluted Weighted Average Shares               3,185,169
    Diluted Net Loss Per Share                        (2.36)
                                                 ----------

     *Potentially dilutive securities outstanding for 1997 were
excluded from EPS because they were antidilutive. Potentially
dilutive securities at June 30, 1997, were 263,485 warrants and
39,254 options.  (See Note 6)

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

     Revolving credit facility        $13,515,712   $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     1,388,411     1,379,986
                                      -----------   -----------
     Total debt                       $21,105,325   $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 new $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 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.

     The above loans are collateralized by substantially all of
the assets of the Company and have various loan covenants.  At
June 30, 1998, the Company may be deemed to have been in
violation of certain financial ratio tests required by its loan
agreements.  No debt service obligations are at issue, and no
default notice has been received.  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 the U.S. Government's audits,
reviews, and investigations 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) seeking proposals for all work related to its
KC-135 aircraft.  The Company's Pemco Aeroplex subsidiary
currently performs the airframe maintenance portion of the KC-135
workload, which is included in the RFP.  Although the Company
intends to aggressively pursue this workload, there can be no
assurance that it will be successful.

     Litigation - A purported class action was brought against
the Company and its Pemco Aeroplex subsidiary 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 complaint alleges
fraud, breach of contract, and civil conspiracy and seeks  both
compensatory and  punitive damages.   The Company believes the
plaintiffs' claims have no factual basis and will vigorously
defend the case.

     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.  Certain of the suits also allege
fraud, misrepresentation and violations of the Racketeer
Influenced and Corrupt Organizations Act.

     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.  The case involved an employee who
alleged a supervisor had made sexual advances against her.  Pemco
was sued for the actions of its employee undertaken in the course
of employment.  However, the jury found in favor of the
supervisor and against Pemco.  Various post-trial motions
resulted in the trial court reducing the verdict to $1 million in
compensatory damages.  Pemco and the plaintiff have appealed this
decision.  The Company believes it will successfully reverse the
decision upon appeal as the supervisor was not found liable.
However, an accrual was established in the fourth quarter of 1997
for the compensatory damage award pending outcome of the appeal.

     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.  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 has recorded an accrual in the fourth quarter of
1997 for the above penalties and certain other related charges.

6.   STOCKHOLDERS' EQUITY

     At June 30, 1998 the Company had 300,000,000 authorized
shares of $.0001 par value common stock, with 3,775,401 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. The
Company has guaranteed certain obligations of PWAS.  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 six months
ended June 30, 1997 are as follows:

                                     1997

          Net Sales              $5,645,000
          Expenses                7,046,000
          Net Loss               (1,401,000)

     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 $5,000,000 and
resulted in a gain of $3.2 million, after adjustments.

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

                                     1997

          Net Sales               $772,000
          Operating Income           8,000

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 June 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 second quarter of 1998, the Company continued its
return to profitability.  The Company reported operating income
of $3.8 million for the three months ended June 30, 1998 and a
combined operating income of $5.8 million for the first six
months of 1998.  Total income before taxes for the first and
second quarters of 1998 was $4.6 million and $2.8 million,
respectively, for a combined total income before taxes of $7.4
million.  This includes additional profits of $2.9 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 June 30, 1998
versus three months ended June 30, 1997

Revenues for the second quarter of 1998 improved from the second
quarter of 1997, increasing approximately 10% from $35.7 million
in 1997 to $39.2 million in 1998.  Both government and commercial
sales increased during the second quarter of 1998.  Government
sales increased approximately 16% from $18.2 million in 1997 to
$21.1 million in 1998, and commercial sales increased 3% from
$17.5 million in 1997 to $18.1 million in 1998.  The Company's
mix of business between government and commercial customers moved
from 49% commercial and 51% government in 1997 to 46% commercial
and 54% government in 1998.

Government sales in the second quarter of 1998 increased
approximately $1.5 million due to increased sales volume under
government contracts at the Dothan and Birmingham facilities.
Commercial sales increased approximately $3.3 million in the
second quarter of 1998 due to increased sales volume under
commercial contracts at the Dothan facility.

The ratio of cost of sales ($30.7 million in 1998; $34.4 million
in 1997) to net sales ($39.2 million in 1998; $35.7 million in
1997) decreased from 96% in the second quarter of 1997 to 78% in
1998.  The decrease in the cost of sales was the result of
restructuring efforts undertaken during 1997 and 1998, and strike-
related costs recognized in the first six months of 1997.

Selling, general and administrative expenses decreased from $5.4
million in the second quarter of 1997 to $4.9 million in 1998,
and decreased as a percentage of sales from 15% in 1997 to 13% in
1998.  These decreases resulted primarily due to the Company's
reduction of overhead expenses and corporate management changes.

Interest expense was $0.6 million in first quarter 1998 versus
$0.3 million in 1997.

Six months ended June 30, 1998
Versus six months ended June 30, 1997

Revenues in the first six months of 1998 increased from $70.7
million in 1997 to $73.7 million in 1998.  Government sales
increased 6% from $38.4 million in 1997 to $40.7 million in 1998.
Commercial sales remained fairly constant, increasing 2% from
$32.3 in 1997 to $33.0 million in 1998.  The Company's mix of
business between government and commercial customers remained
consistent at 46% commercial and 54% government in 1997 and 45%
commercial and 55% 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 ($58.5 million in 1998; $66.2 million
in 1997) to net sales ($73.7 million in 1998; $70.7 million in
1997) decreased from 94% in 1997 to 79% in 1998.  The decrease in
the cost of sales was the result of restructuring efforts
undertaken during 1997 and 1998 and strike related costs
recognized in the first six months of 1997.

Selling, general and administrative expense (SG&A) decreased from
$10.4 million in the first six months of 1997 to $9.5 million in
1998, and decreased as a percentage of sales from 15% 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 was $1.3 million in the first six months of 1998
versus $0.7 million in 1997 due to increased borrowing under the
Revolving Credit agreement.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash resources continued to be strained in 1998
primarily due to delays and reductions in progress payments for
amounts billed to the U.S. Government, increased workloads under
government 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 six months
ended June 30, 1998 and 1997.

Accounts payable and accrued expenses decreased from $31.7
million to $30.4 million in the first six months of 1998.  The
decrease primarily reflects the sale of the Hayes Targets
division's net assets in the first quarter of 1998.  Accrued
interest payments at June 30, 1998 were $0.3 million representing
a $0.6 million decrease from that due at June 30, 1997.  This
decrease was primarily due to a reduction in the amounts due
under the Senior Subordinated Loan and repayment in full of the
Term Loan, which was partially offset by borrowings under the
Revolving Credit facility.

Accounts receivable increased $4.0 million in the first six
months of 1998, after adjustments for the sale of Hayes Targets
assets, due to increased amounts that the Company is allowed to
bill under new cost/benefit sharing provisions on the KC-135
contract that became effective October 1, 1997 and increased
billings under the Company's commercial contracts at the Dothan
facility.

Net inventories increased slightly by $0.5 million in the first
six months of 1998 primarily due to a reduction in progress
payments.  (See Note 2 to Financial Statements).

During the first six months of 1998, the Company's operating
activities used $1.1 million in cash.  In addition, investing
activities provided net cash of $4.8 million and $3.7 million was
used for financing activities.  In the first six months of 1997,
$0.6 million of cash was used for operating activities, $0.2
million was used for investing activities, and $0.3 million was
applied to financing activities under various capital leases.

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 June 30, 1998 and 1997:

                                   1998              1997
                                   ----              ----

     U.S. Government             $137,067          $121,895
     Commercial                    20,346            14,404
                                 --------          --------
                                 $157,413          $136,299

The above numbers for 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 June 30, 1998, 87% of the Company's backlog
related to work for the U.S. Government versus 89% for the period
ended June 30, 1997. The Company's Government backlog increased
$21 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                    $181 million      $211 million

The $181 million of estimated backlog is associated with option
periods and new government contracts.

CONTINGENCIES

See Note 5 to the Consolidated Financial Statements.

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 Copenhagen facility, and the Company's
intent to take certain action 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

          In General Electric Capital Corporation et al. v.
GATX/Airlog Company, et al., the plaintiffs, who own four 747
aircraft converted under a Supplementary Type Certificate for 747
cargo conversion, owned by GATX and others, sued a number of
defendants seeking damages.  As a result of an Airworthiness
Directive issued by the FAA in January 1996, aircraft which had
been so converted were restricted to carrying reduced amounts of
cargo.  The Company's Pemco Aeroplex subsidiary has been named as
a defendant in the case because of engineering work performed in
the late 1980's by its predecessor, Hayes International.  The
complaint, which was filed in U.S. District Court for the
Northern District of California and served on June 23, 1998,
alleges fraud, conspiracy, negligent misrepresentation, and
violations of the Racketeer Influenced and Corrupt Organizations
Act against Pemco.  Pemco intends to vigorously defend this
claim.

          The Company has been notified of a claim by the
Bankruptcy Estate of Sterling Airways A/S (the "Sterling Estate")
for the payment of parts and materials supplied to the Company's
Danish subsidiary Pemco World Air Services A/S, which was placed
in bankruptcy in November 1997.  The Company guaranteed certain
obligations to the Sterling Estate.  The claim, for approximately
$1.4 million, is under investigation.  The Company has previously
accrued a reserve of $1.3 million for claims arising out of the
Copenhagen operation.

          On July 31, 1998, the Alabama Supreme Court denied the
motion of the Company's Pemco Aeroplex subsidiary for the
issuance of a stay of execution pending appeal of the judgment
entered in Stevenson v. Pemco Aeroplex, Inc.

          In response to an inspection conducted by the
Environmental Protection Agency in June 1997, the Company has
entered into informal discussions regarding the alleged
violations under the Toxic Substances Control Act (TSCA).  No
release to the environment has been alleged and all issues raised
during the inspection have been fully addressed.  In August,
1998, EPA indicated that it may seek penalties for the alleged
violations, although an amount has not been specified.

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

          On April 15, 1998, the Company held a special meeting
of shareholders at which the shareholders approved a 1-for-4
reverse stock split of the Company's stock, effective as of the
meeting date.

          The number of votes* cast for, against and abstentions
of the reverse stock split proposal were as follows:

               For            Against     Abstain

            13,799,612        310,186      10,650

          Because the approval of a reverse stock split is
routine under applicable stock exchange rules, all proxy shares
held in the names of brokers as nominees which were not voted at
the meeting by the beneficial holders thereof were voted by the
brokers at their discretion.

          The Company's annual meeting of shareholders was held
on May 9, 1998.  At the meeting, Matthew L. Gold, Donald C.
Hannah, Admiral George E.R. Kinnear II and General Thomas C.
Richards  were elected as directors.  Also ratified at the
meeting was the selection of Arthur Andersen LLP as the
independent public accountants for the Company for the calendar
year ending December 31, 1998.

          The number of votes* cast for or withheld for each
director nominee was as follows:

               Nominee                    For          Withheld

          Matthew L. Gold               14,059,758     307,500
          Donald C. Hannah              14,087,658     279,600
          Adm. George E.R. Kinnear II   14,088,258     279,000
          Gen. Thomas C. Richards       14,088,258     279,000

          The number of votes* cast for, against and abstentions
for ratification of the selection of Arthur Andersen LLP as the
Company's independent auditors for the calendar year ending
December 31, 1998 was as follows:

                 For             Against        Abstain

             14,313,758           26,600         26,900

          Because the election of directors and ratification of
auditors were considered routine under applicable stock exchange
rules, all proxy shares held in the names of brokers as nominees
which were not voted at the meeting by the beneficial holders
thereof were voted by the brokers at their discretion.

          *Number of votes cast are stated pre-reverse stock
split.

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:       8/14/98                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)

                          EXHIBIT INDEX


No.  Description                   Method of Filing

27   Financial Data Schedule       Filed herewith electronically