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

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q


     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended March 31, 1999

                                      OR

     [_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from _______________ to _______________.

                       Commission File Number:  0-29490


                           HAWKER PACIFIC AEROSPACE
            (Exact name of registrant as specified in its charter)

                California                                95-3528840
      (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)                 Identification No.)



11240 Sherman Way, Sun Valley, California                   91352
 (Address of principal executive offices)                 (Zip Code)


                                (818) 765-6201
             (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 of the registrant's common stock outstanding on May
14, 1999, was 5,822,222 shares.

================================================================================
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

                        PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                   CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                  ASSETS                              1999           1998
                                                   -----------   ------------
<S>                                                <C>           <C>
Current assets
 Cash                                              $ 1,536,000    $   560,000
 Trade accounts receivable, net                     12,386,000     12,303,000
 Other receivables                                     218,000        114,000
 Inventories                                        28,170,000     21,645,000
 Prepaid expenses                                      720,000        617,000
                                                   -----------    -----------
   Total current assets                             43,030,000     35,239,000
 
Equipment and leasehold improvements, net            8,988,000      9,298,000
Exchange assets, net                                39,406,000     37,877,000
Deferred taxes                                       1,874,000      1,916,000
Deferred financing costs                               883,000        798,000
Other assets                                         2,381,000      2,109,000
                                                   -----------    -----------
   Total assets                                    $96,562,000    $87,237,000
                                                   ===========    ===========
 
 LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
 Accounts payable                                  $17,089,000    $12,171,000
 Accrued liabilities                                 3,820,000      3,698,000
 Line of credit                                     43,185,000     37,185,000
 Current portion of notes payable                   10,777,000     11,280,000
                                                   -----------    -----------
   Total current liabilities                        74,871,000     64,334,000
                                                   -----------    -----------
 
Long-term debt                                       2,500,000      2,500,000
 
Shareholders' equity                                19,190,000     20,403,000
                                                   -----------    -----------
   Total liabilities and shareholders' equity      $96,562,000    $87,237,000
                                                   ===========    ===========
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                      -2-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

                CONDENSED  CONSOLIDATED  STATEMENTS  OF  INCOME
                                  (unaudited)
<TABLE>
<CAPTION>
 
                                                    Three months ended
                                                          March 31
                                                          --------
 
                                                    1999           1998
                                                 -----------    -----------
<S>                                              <C>            <C> 
Revenue                                          $16,195,000    $13,667,000
Cost of revenue                                   12,796,000     10,470,000
                                                 -----------    -----------
Gross margin                                       3,399,000      3,197,000
 
Selling, general and administrative expense        2,193,000      1,862,000
                                                 -----------    -----------
Income from operations                             1,206,000      1,335,000
 
Interest expense                                   1,147,000        648,000
Interest income                                       (5,000)
                                                 -----------
Income before income taxes                            64,000        687,000
 
Provision for income taxes                            24,000        259,000
                                                 -----------    -----------
Net income                                       $    40,000    $   428,000
                                                 ===========    ===========

Earnings per common share - basic                $       .01    $       .09
Earnings per common share - diluted              $       .01    $       .08


Number of shares - basic                           5,822,222      5,013,333
Number of shares - diluted                         5,829,728      5,091,457
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                      -3-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

             CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                            Three months ended
                                                                                 March 31
                                                                                 --------
                                                                           1999             1998
                                                                         --------         --------
<S>                                                                      <C>              <C>
Operating Activities
Net income                                                                $    40,000      $    428,000
Adjustments to reconcile net income to net cash used in                                                
  operating activities:                                                                                
  Deferred income taxes                                                        42,000           140,000
  Depreciation                                                                408,000           280,000
  Amortization                                                                633,000           220,000
  Other noncash items                                                             -              14,000
  Changes in operating assets and liabilities:                                                         
    Accounts receivable and other receivables                                (202,000)       (3,660,000)
    Inventory                                                              (7,043,000)       (1,410,000)
    Other Assets                                                             (293,000)              -
    Prepaid expenses                                                         (111,000)         (216,000)
    Accounts payable                                                        4,528,000        (2,679,000)
    Deferred revenue                                                        1,077,000         1,014,000
    Accrued liabilities                                                    (1,131,000)        1,632,000
                                                                          -----------      ------------
  Cash used in operating activities                                        (2,052,000)       (4,237,000)
                                                                                                       
Investing Activities                                                       
Purchase of equipment, leasehold improvements and landing gear             (2,384,000)       (1,334,000)
Purchase of equipment and rotables from British Airways                           -         (17,524,000)
Purchase of inventory from British Airways                                        -          (1,947,000)
                                                                          -----------      ------------
  Cash used in investing activities                                        (2,384,000)      (20,805,000)
                                                                                                       
Financing Activities                                                                                   
Borrowings under bank note                                                        -          24,500,000
Principal payments on bank notes                                             (503,000)      (14,150,000)
Borrowings on line of credit                                                6,582,000         5,050,000
Payments on line of credit                                                   (582,000)       (8,529,000)
Proceeds from equity offering                                                     -          18,834,000
Deferred offering costs                                                      (130,000)              -
Deferred acquisition and loan fee expenses                                     45,000          (271,000)
                                                                          -----------      ------------
  Cash provided by financing activities                                     5,412,000        25,434,000
                                                                          -----------      ------------
                                                                                                       
Increase in cash                                                              976,000           392,000
Cash, beginning of period                                                     560,000           160,000
                                                                          -----------      ------------
Cash, end of period                                                       $ 1,536,000      $    552,000
                                                                          ===========      ============
                                                                                                       
Supplemental disclosure of cash flow information                                                       
 Cash paid during the period for:                                                                      
   Interest                                                               $ 1,143,000      $    609,000
   Income taxes                                                                 3,000             6,000 
 
</TABLE>
     See accompanying Notes to Condensed Consolidated Financial Statements

                                      -4-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

        CONDENSED  CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
                                  (unaudited)
<TABLE>
<CAPTION>
 
 
                                                                             Other
                                    Common Stock            Retained     Comprehensive
                             --------------------------
                             # of Shares      Amount        Earnings         Income          Total
                             -----------   ------------   ------------   --------------   ------------
<S>                          <C>           <C>            <C>            <C>              <C>
Balances at
  December 31, 1998            5,822,222    $21,108,000    ($ 941,000)     $   236,000     $20,403,000
 
Net income                                                     40,000                           40,000
 
Foreign currency
 translation adjustment                                                     (1,253,000)     (1,253,000)
                                                                                         -------------
 
Comprehensive income                                                                        (1,213,000)
                               ---------    -----------   -----------      -----------   -------------
Balances at
  March 31, 1999               5,822,222    $21,108,000   $  (901,000)     $(1,017,000)    $19,190,000
                               =========    ===========   ===========      ===========    ============
</TABLE>

     See accompanying Notes to Consolidated Condensed Financial Statements

                                      -5-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

           NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
                                  (unaudited)

1.   BASIS OF PRESENTATION

Interim Condensed Financial Statements

During interim periods, Hawker Pacific Aerospace (the "Company") follows the
accounting policies set forth in its Annual Report to Shareholders and applies
appropriate interim financial reporting standards, as indicated below.  Users of
financial information produced for interim periods are encouraged to refer to
the notes contained in the Annual Report to Shareholders when reviewing interim
financial results.

Interim financial reporting standards require management to make estimates that
are based on assumptions regarding the outcome of future events and
circumstances not known at the present time, including the use of estimated
effective tax rates.  Inevitably, some assumptions may not materialize and
unanticipated events and circumstances may occur which vary from those estimates
and such variations may significantly affect the Company's future results.

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with the
Securities and Exchange Commission's requirements of Form 10-Q and contain all
adjustments of a normal and recurring nature which are necessary to present
fairly the financial position of the Company as of March 31, 1999, and December
31, 1998, and the results of its operations and cash flows for the three month
periods ended March 31, 1999 and 1998.

Contingencies

The Company is party to various legal and environmental proceedings incidental
to its business.  Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against the Company.  Based on
facts now known to the Company, management believes all such matters are
adequately provided for, covered by insurance or, if not so covered or provided
for, are without merit, or involve such amounts that would not materially
adversely affect the consolidated results of operations and cash flows or
financial position of the Company.

Earnings per Share

Basic earnings per share are based upon the weighted average number of common
shares outstanding. The weighted average common shares used in calculating basic
earnings per share were 5,822,222 and 5,013,333 for the three months ended March
31, 1999 and 1998, respectively.  Diluted earnings per share is based on the
number of shares used in the basic earnings per share calculation plus the
dilutive effects of stock options under the treasury stock method.  The weighted
average of common and common equivalent shares used in calculating diluted
earnings per share were 5,829,728 and 5,091,457, for the three months ended
March 31, 1999 and 1998, respectively.

Stock Splits

The information set forth herein reflects a 579.48618 for one stock split
effected in November 1997 and a one for .9907406 reverse stock split effected in
January 1998.  All references in the accompanying financial statements and notes
to the number of shares of common stock and per common share amounts have been
retroactively adjusted to reflect the stock splits.
 
Inventories

Inventories are comprised of the following:
<TABLE>
<CAPTION>
                                                    March 31,   December 31,
                                                      1999          1998
                                                    ---------   ------------
<S>                                              <C>            <C>
 Purchased parts and assemblies                   $21,202,000   $19,251,000
 Work in process                                    6,968,000     2,394,000
                                                  -----------   -----------
 
                                                  $28,170,000   $21,645,000
                                                  ===========   ===========
</TABLE>

                                      -6-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

           NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
                                  (continued)

Forward Looking Statements

Statements included in this filing which are not historical in nature are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.  Forward looking statements regarding the
Company's future performance and financial results are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those set forth for a variety of reasons.  Factors that may impact such forward
looking statements include, among others, changes in the condition of the
industry, changes in general economic conditions and the success of the
Company's strategic operating plans.

2.   INITIAL PUBLIC OFFERING

On February 3, 1998, the Company completed an initial public offering of
2,766,667 shares of the Company's common stock. The Company received net
proceeds of approximately $18.1 million, net of expenses of approximately $2.7
million. The Company used approximately $9.2 million of the net proceeds to fund
a portion of the purchase price for certain assets of British Airways as
discussed in Note 3, and approximately $7.6 million to repay a portion of the
revolving and term debt previously outstanding under the Company's credit
facility.  The balance of the net proceeds has been used for working capital
purposes.

3.   ACQUISITIONS

On February 4, 1998, the Company completed the acquisition of certain assets of
the British Airways landing gear repair and overhaul operation for a purchase
price of approximately $19.5 million. This acquisition resulted in the formation
of a wholly owned subsidiary in the United Kingdom, Hawker Pacific Aerospace
Ltd., which has been operational since that date.

4.   LINE OF CREDIT AND NOTES PAYABLE

On December 22, 1998, the Company secured a $66.3 million senior credit facility
from Heller Financial, Inc., and NMB-Heller Limited (collectively, "Heller").
The Loan and Security Agreement (the "Heller Agreement") provides a $55 million
revolving line of credit, a Term Loan A in the amount of $4.3 million, and a
Term Loan B in the amount of $7.0 million.  The revolver and both term loans
expire in five years. At March 31, 1999, the weighted average interest rate for
all three loans was 7.1%.

On February 19, 1999, Heller established a $5 million reserve on the line of
credit because the Company was in default on certain financial covenants. On
March 10, 1999, the Company entered into a Forbearance Agreement with Heller
which waived certain violations of financial covenants in the Heller Agreement.
In consideration therefor, the Company agreed to: (i) accept certain stricter
financial controls; (ii) provide a consolidated business plan, and an
operational improvements plan for the UK subsidiary; (iii) pay a $75,000 fee and
(iv) hire a third party consultant to evaluate improvement plans underway in the
UK subsidiary.

This agreement was subsequently extended in a Second Forbearance Agreement with
an effective date of April 13, 1999.  In exchange for Heller's continued
agreement to forbear, the Company agreed to: (i) continue the tighter financial
controls and retain a consultant as required in the Forbearance Agreement; (ii)
accept a 1.5% interest rate increase on the revolving line; (iii) forego the
ability to elect the LIBOR interest rate option; (iv) forego the benefit of
future interest rate reductions if financial conditions improve; and (v) provide
supplemental financial statements for 1998 conforming to certain financial
criteria.

Unique Investment Corporation, an entity controlled by shareholders of the
Company, has a $5 million subordinated debt agreement with the Company. At the
closing of the Heller Agreement, $2.5 million of principal related to this debt
was repaid to Unique.

As additional consideration for the Second Forbearance Agreement, Unique (or a
shareholder of Unique) has agreed to provide Heller a $2.5 million guarantee and
stand-by letter of credit securing the Company's obligations to Heller related
to Term Loan B.  Upon delivery of this guarantee and letter of credit, the $5.0
million reserve against the line of credit shall be released, and the Company
will pay, to the extent available on the line of credit, up to $4.15 million to
reduce the outstanding principal balance on Term Loan B to $2.5 million. At such
time as the balance on Term Loan B is reduced to $2.5 million, all remaining
principal payments shall be deferred until the expiration of Term Loan B on
December 31, 2003.

                                      -7-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

           NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
                                  (continued)

The Second Forbearance Agreement expired on April 30, 1999, and the Company is
presently in the final stages of its discussions with Heller to restructure the
facility.  Management believes the restructure will be accomplished before the
end of May 1999.

As the Company has been in default of certain provisions of its loan agreement,
Term Loans A and B were reclassified, in their entirety, as current obligations.
The Company expects, however, that the Heller facility will be restructured, the
five year amortization of Term Loan A will continue, and principal payments for
Term Loan B will be deferred. In such event, of the $10.8 million balance on
these two notes presently classified as a current liability, only $0.5 million
of principal repayments will be required during the remainder of 1999.

Availability for the $55 million revolving line of credit may be limited by
borrowing base criteria related to levels of accounts receivable, inventory and
exchange assets.  At April 30, 1999, the Company's borrowing base was $48.9
million, of which $44.4 million had been advanced, leaving remaining
availability of $4.5 million.

5.   SEGMENT  INFORMATION

On December 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information".  The new rules establish revised standards for public companies
relating to the reporting of financial and descriptive information about
business segments and enterprise-wide operations.  The Company operates in one
segment.  The following table sets forth certain geographic information related
to the Company's operations.
<TABLE>
<CAPTION>
 
                                              United States                United Kingdom               Consolidated
As of March 31                            1999           1998            1999          1998          1999           1998
--------------                         -----------   -------------   ------------   -----------   -----------   ------------
<S>                                    <C>           <C>             <C>            <C>           <C>           <C>
Total assets                           $52,733,000     $43,496,000   $43,829,000    $23,142,000   $96,562,000    $66,638,000
Total long-lived assets (net of
   depreciation and amortization)       18,953,000      16,655,000    29,442,000     18,579,000    48,395,000     35,234,000
 
For the quarter ended March 31
------------------------------
Revenue by location of operations       10,595,000      11,620,000     5,600,000      2,047,000    16,195,000     13,667,000
Income before income tax expense           847,000         376,000      (783,000)       311,000        64,000        687,000
</TABLE>

The Company generated revenue from customers located outside of the United
States of $7,726,000 and $5,395,000 for the quarters ended March 31, 1999 and
1998, respectively.

                                      -8-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This Quarterly Report contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, such as statements of the Company's plans, objectives, expectations and
intentions, that involve risks and uncertainties that could cause actual results
to differ materially from those discussed in such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this Quarterly Report and in the Company's
various filings with the Securities and Exchange Commission, including without
limitation the Company's Annual Report on Form 10-K for the year ended December
31, 1998.

The following discussion and analysis should be read in conjunction with the
Company's financial statements and related notes thereto included herein, and
with the information set forth under Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.

Material Changes in Financial Condition

The following analysis compares material changes in the Company's financial
position from December 31, 1998, to March 31, 1999.

Inventories increased from $21.6 million to $28.2 million during the first
quarter of 1999. This increase resulted primarily from a higher level of work in
process at the end of the quarter. Inventory also increased as a result of
additional provisioning to meet the Company's increased customer support
requirements.

Accounts payable increased from $12.2 million to $17.1 million primarily because
of: (i) the purchase of a landing gear shipset; (ii) expenditures for leasehold
improvements; and (iii) increased purchasing of equipment and inventory to meet
additional customer support requirements.

The Company drew $6.0 million net on its revolving line of credit during the
first quarter. These funds were used principally to support purchases for
inventory, equipment, leasehold improvements and the landing gear shipset. At
April 30, 1999, the Company has $4.5 million remaining available on its line of
credit.

Since December 31, 1998, the Company has been in default of certain financial
covenants related to its senior credit facility. The Company and Heller are in
the final stages of discussions concerning restructuring this facility, and
management believes such restructure will be accomplished before the end of May
1999.

Material Changes in Results of Operations

The following analysis compares the Company's results of operations for the
quarter ended March 31, 1999, with the quarter ended March 31, 1998. The
comparisons below will not be meaningful unless consideration is given to the
fact that the Company's United Kingdom subsidiary began operations on February
4, 1998. Operations in this subsidiary began slowly, and there was a
considerable amount of startup expense. As the Company recorded results of
operations from this subsidiary for only a portion of the prior comparable
period, both revenue and expense items for the first quarter of 1999 were
correspondingly higher.

Revenue in the first quarter increased by 18% to $16.2 million, as compared with
$13.7 million in the prior comparable period. While revenue from the Company's
other operations increased slightly during the quarter, most of the revenue gain
was a result of the Company's acquisition of the UK subsidiary.

Cost of revenue in the first quarter increased by 22% from $10.5 million to
$12.8 million. This increase resulted directly from the addition of the UK
subsidiary. During its first quarter of operation in 1998, the UK subsidiary
incurred proportionally higher cost of revenue expenses as compared with the
Company's long-established facility in Sun Valley. As a result, consolidated
gross margin in the first quarter decreased by two percentage points as compared
with the first quarter of 1998.

                                      -9-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (continued)

Selling, general and administrative expense increased by 18% in the first
quarter as a result of additional expenses in the UK subsidiary.  As a percent
of revenue, selling, general and administrative expense for the quarter remained
constant as compared with the first quarter of last year.

Interest expense increased by $0.5 million in the first quarter as a result of
increased borrowings on the Company's line of credit. Interest expense is
expected to continue to increase as further advances are drawn on the line of
credit to fund capital expenditure requirements during the remainder of 1999.

As a result of the changes above, net income for the quarter decreased from
$0.4 million to just above break-even. Results of operations have been adversely
affected in general since the first quarter of last year as the UK subsidiary
has been establishing and restructuring operations, and dealing with a very high
degree of personnel turnover. The impact of these transition issues has been
gradually decreasing, and the subsidiary has been making considerable progress
in improving performance metrics.

During the second quarter of 1999, the UK subsidiary will be relocating to a new
140,000 square foot facility. The new facility will increase capacity and
improve work flow, and will enable the subsidiary to provide additional services
to its customers. Relocation costs and leasehold improvements for the new
facility have been and will continue to be material during the second quarter.
In addition, operating capacity will be reduced for a significant portion of the
quarter. For these reasons, the Company anticipates that the second quarter
results for the UK subsidiary will be adversely affected.

The Company believes that the UK subsidiary is still moving through a period of
transition, and the Company does not believe that the first quarter results are
representative of the results of operations which may be expected when the
subsidiary is fully integrated, and has fully resolved remaining transition
issues.  The Company expects that the UK subsidiary will continue to record
operational improvements, and that the remaining transition issues will be
substantially resolved by the third quarter of this year after the relocation
has been completed.

Year 2000 Issue

The Company is currently working to resolve the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems. The year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculation or system failures.

Based on a review of its product lines, the Company has determined that its
products and services do not require remediation to be Year 2000 compliant.
Accordingly, the Company does not believe that the Year 2000 issue presents a
material exposure as it relates to the Company's products and services.

The Company is currently in the process of gathering information and evaluating
the Year 2000 compliance status of its significant suppliers and subcontractors.
To date the Company is not aware of any problems with its suppliers or
subcontractors that would affect the Company's operations. This assessment is
scheduled to be completed by June 15, 1999.

The Company has completed approximately 50% of the software reprogramming and
replacement required, and expects to complete the remaining remedial work
required no later than June 15, 1999. All communication systems within the
Company will be Year 2000 compliant by the end of the second quarter. The
Company is currently developing a contingency plan to handle any unanticipated
year 2000 problems.  The Company's contingency plan is scheduled to be completed
by July 1999.

As of March 31, 1999, the total costs incurred to address the Company's year
2000 issues approximate $125,000. The Company estimates that another $70,000 of
costs may be required to complete remediation efforts on the year 2000 issue.
Given the nature of the Company's repair and overhaul operations, management
does not believe such impact, if any, will be material. The Company believes it
has an effective program in place to resolve this issue prior to the end of the
third quarter.

                                      -10-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (continued)

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk refers to the potential effects of unfavorable changes in certain
prices and rates on the Company's financial results and condition, primarily
foreign currency exchange rates and interest rates on borrowings. The Company
does not utilize derivative instruments in managing its exposure to such
changes.

Foreign Currency Risk.  The Company has operations in the United Kingdom and the
Netherlands. The currencies of these two countries have been relatively stable
as compared with the U.S. dollar.  The Company manages foreign currency risk, in
part, by generally requiring that customers pay for the services of the
Company's foreign operating units in the currency of the country where the
operating unit is located. The Company also does not routinely exchange material
sums of money between the operating units. The Company has not to date seen the
need for currency hedging transactions in the ordinary course of business.

Interest Rate Risk.  The Company's senior credit facility is comprised of two
notes payable and a revolving line of credit, each of which currently carries an
interest rate which varies in accordance with a Base Rate equal to the higher of
the Federal Reserve prime rate, or the Federal Funds Effective Rate. The Company
is presently subject to potentially material fluctuations in its debt service as
the Base Rate changes. However, the Company is currently finalizing a
restructure of the Heller facility, and management expects that the interest
rate for the line of credit will be converted to a fixed rate. Accordingly, the
Company does not believe that interest rate fluctuations will have a material
impact on its financial condition or results of operations.

In February 1998, to reduce the impact of changes in interest rates on the
Company's debt facility, the Company entered into an interest rate swap
agreement. The swap agreement changed interest rate exposure to a fixed amount
on a portion of the debt.


                          PART II  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

(c)  On March 25, 1999, the Company declared a dividend distribution of one
Preferred Share Purchase Right on each outstanding share of its common stock.
The Rights will be attached to the Company's common stock and will trade
separately and be exercisable only in the event that a person or group acquires
or announces the intent to acquire 20% or more of the Company's common stock.
Each Right will entitle shareholders to buy one one-hundredth of a share at an
exercise price of $15.  The rights will expire on March 25, 2009.

If the Company is acquired in a merger or other business combination transaction
after a person has acquired 20% or more of the Company's outstanding common
stock, each Right will entitle its holder to purchase, at the Right's then
current exercise price, a number of the acquiring company's common shares having
a market value of twice such price.  In addition, if a person or group acquires
20% or more of the Company's outstanding common stock, each Right will entitle
its holder (other than such person or members of such group) to purchase, at the
Right's then-current exercise price, the number of its common shares having a
market value of twice such price.

Following an acquisition by a person or group of beneficial ownership of 20% or
more of the Company's common stock and before an acquisition of 50% or more of
the common stock, the Company's Board of Directors may exchange the Rights
(other than Rights owned by such person or group), in whole or in part, at an
exchange ratio of one-hundredth of a share of new series of junior participating
preferred stock per Right. Before a person or group acquires beneficial
ownership of 20% or more of the Company's common stock, the Rights are
redeemable for $.0001 per Right at the option of the Board of Directors.

                                      -11-
<PAGE>
 
                           HAWKER PACIFIC AEROSPACE

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

4.2  Rights Agreement, dated as of March 10, 1999, between the Company and U.S.
Stock Transfer Corporation (previously filed, as Form 8-A12G, with the
Securities and Exchange Commission on March 23, 1999).
4.3  Amendment to Rights Agreement, dated as of March 10, 1999, between the
Company and U.S. Stock Transfer Corporation (previously filed, as Form 8-A12G/A,
with the Securities and Exchange Commission on April 7, 1999).

27   Financial Data Schedule
 
(b)  Form 8-K

No reports were filed on Form 8-K during the quarter ended March 31, 1999.


                                  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.

                                  HAWKER PACIFIC AEROSPACE


Date:  May 14, 1999               By    /s/  Daniel J. Lubeck
                                    --------------------------------------------
                                    Daniel J. Lubeck
                                    Chairman of the Board

Date:  May 14, 1999               By    /s/  David L. Lokken
                                    --------------------------------------------
                                    David L. Lokken
                                    President and Chief Executive Officer

Date:  May 14, 1999               By    /s/  Philip M. Panzera
                                    --------------------------------------------
                                    Philip M. Panzera
                                    Vice President and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

                                      -12-