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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, 2002                                           
|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
incorporation or organization) |  | (I.R.S. Employer
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
August 9, 2002, was one share.



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TABLE OF CONTENTS



|                               |                                                                                               |                                                                    |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                             
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME                       
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                   
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS              
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION   
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                    
|EXHIBIT 99.1                  



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##### Table of Contents



Hawker Pacific Aerospace




PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




CONDENSED CONSOLIDATED BALANCE
SHEETS

(IN THOUSANDS EXCEPT FOR SHARE
AMOUNTS)


|                                            |                                                                                                                                  |             |                             |         |           |        |              |         |   |        |  
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ----------- | --------------------------- | ------- | --------- | ------ | ------------ | ------- | - | ------ | -
|                                            |                                                                                                                                  |             |                             |         | March 31, |        | December 31,
|                                            |                                                                                                                                  | 2002        |                             | 2001   
|                                            |                                                                                                                                  |             |                             |        
|                                            |                                                                                                                                  | (unaudited) |                             |        
|ASSETS                                      |                                                                                                                                  |             |                             |         |           |        |              |        
|Current assets                              |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            | Cash                                                                                                                             |             | $                           | 1,411   |           |        | $            | 1,558   |  
|                                            | Accounts receivable, less allowance for doubtful accounts of
$230 and $520 at March 31, 2002 and December 31, 2001,
respectively |             |                             | 12,132  |           |        |              | 14,927  |  
|                                            | Inventories                                                                                                                      |             |                             | 30,057  |           |        |              | 31,390  |  
|                                            | Prepaid expenses                                                                                                                 |             |                             | 1,481   |           |        |              | 1,088   |  
|                                            | Deferred
income taxes                                                                                                            |             |                             | 3,822   |           |        |              | 3,810   |  
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            |                                                                                                                                  |             | Total current assets        |         |           | 48,903 |              |         |   | 52,773 |  
|Equipment and leasehold improvements, net   |                                                                                                                                  |             | 12,313                      |         |           |        | 12,591       |        
|Exchange assets, net                        |                                                                                                                                  |             | 30,238                      |         |           |        | 31,193       |        
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            |                                                                                                                                  |             | Total fixed assets          |         |           | 42,551 |              |         |   | 43,784 |  
|Other assets                                |                                                                                                                                  |             | 1,897                       |         |           |        | 2,026        |        
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            |                                                                                                                                  |             | Total assets                |         | $         | 93,351 |              |         | $ | 98,583 |  
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|LIABILITIES AND SHAREHOLDERS DEFICIT       |                                                                                                                                  |             |                             |         |           |        |              |        
|Current liabilities                         |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            | Line of credit  related party                                                                                                   |             | $                           | 7,134   |           |        | $            | 7,207   |  
|                                            | Accounts payable                                                                                                                 |             |                             | 10,833  |           |        |              | 10,125  |  
|                                            | Deferred revenue                                                                                                                 |             |                             | 5,634   |           |        |              | 7,423   |  
|                                            | Accrued payroll and employee benefits                                                                                            |             |                             | 1,968   |           |        |              | 2,298   |  
|                                            | Accrued expenses and other liabilities                                                                                           |             |                             | 4,225   |           |        |              | 5,800   |  
|                                            | Current portion of note payable to related party                                                                                 |             |                             | 2,009   |           |        |              | 1,509   |  
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            |                                                                                                                                  |             | Total current liabilities   |         |           | 31,803 |              |         |   | 34,362 |  
|Long-term debt                              |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            | Bank note                                                                                                                        |             |                             | 62,998  |           |        |              | 63,856  |  
|Deferred
income taxes                       |                                                                                                                                  |             | 4,700                       |         |           |        | 4,625        |        
|Commitments and contingencies               |                                                                                                                                  |             |                             |         |           |        |              |        
|Shareholders deficit                       |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            | Common stock: 20,000,000 shares authorized;
10,196,257 issued and outstanding at
March 31, 2002, and December 31, 2001           |             |                             | 35,977  |           |        |              | 35,977  |  
|                                            | Accumulated deficit                                                                                                              |             |                             | (36,622 | )         |        |              | (34,830 | )
|                                            | Accumulated other comprehensive loss                                                                                             |             |                             | (5,505  | )         |        |              | (5,407  | )
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|                                            |                                                                                                                                  |             | Total shareholders deficit |         |           | (6,150 | )            |         |   | (4,260 | )
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        
|Total liabilities and shareholders deficit |                                                                                                                                  | $           | 93,351                      |         |           | $      | 98,583       |        
|                                            |                                                                                                                                  |             |                             |         |           |        |              |        

See accompanying Notes to Condensed Consolidated Financial Statements

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Hawker Pacific Aerospace

CONDENSED CONSOLIDATED STATEMENTS OF
INCOME

(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE
AMOUNTS)


(unaudited)


|                                            |  |                    |            |      |  |   |           |  
|------------------------------------------- |  | ------------------ | ---------- | ---- |  | - | --------- | -
|                                            |  | Three months ended
|                                            |  | March 31          
|                                            |  |                   
|                                            |  | 2002               |            | 2001
|                                            |  |                    |            |      |  |   |           |  
|Revenue                                     |  | $                  | 20,687     |      |  | $ | 18,920    |  
|Cost of revenue                             |  |                    | 18,514     |      |  |   | 14,911    |  
|                                            |  |                    |            |      |  |   |           |  
|Gross margin                                |  |                    | 2,173      |      |  |   | 4,009     |  
|Selling, general and administrative expense |  |                    | 2,680      |      |  |   | 3,074     |  
|                                            |  |                    |            |      |  |   |           |  
|Income (loss) from operations               |  |                    | (507       | )    |  |   | 935       |  
|Interest expense, net                       |  |                    | (1,024     | )    |  |   | (2,010    | )
|Miscellaneous expense                       |  |                    | (261       | )    |  |   |          |  
|                                            |  |                    |            |      |  |   |           |  
|Loss before income taxes                    |  |                    | (1,792     | )    |  |   | (1,075    | )
|Income tax benefit                          |  |                    |           |      |  |   |          |  
|                                            |  |                    |            |      |  |   |           |  
|Net loss                                    |  | $                  | (1,792     | )    |  | $ | (1,075    | )
|                                            |  |                    |            |      |  |   |           |  
|Loss per common share: basic and diluted    |  | $                  | (0.18      | )    |  | $ | (0.14     | )
|                                            |  |                    |            |      |  |   |           |  
|Number of shares: basic and diluted         |  |                    | 10,196,257 |      |  |   | 7,580,772 |  
|                                            |  |                    |            |      |  |   |           |  

See accompanying Notes to Condensed Consolidated Financial Statements

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Hawker Pacific Aerospace

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)

(IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)


(unaudited)


|                              |  |  |              |  |             |   |               |   |       |   |          |   |        |   |         |   |  |  |         |   |  |  |  |  | 
|----------------------------- |  |  | ------------ |  | ----------- | - | ------------- | - | ----- | - | -------- | - | ------ | - | ------- | - |  |  | ------- | - |  |  |  |  | 
|                              |  |  | Common Stock |  |             |   |               |   | Other |   |          |   |        |   |         |   | 
|                              |  |  |              |  | Accumulated |   | Comprehensive |   |       |   |          |   |        |   |        
|                              |  |  | # of Shares  |  | Amount      |   | Deficit       |   | Loss  |   | Total    |   |        |   |        
|                              |  |  |              |  |             |   |               |   |       |   |          |   |        |   |        
|Balances at
December 31, 2001 |  |  | 10,196,257   |  |             | $ | 35,977        |   |       |   | $(34,830 | ) |        |   | $(5,407 | ) |  |  | $(4,260 | ) |  |  |  | 
|Net loss                      |  |  |              |  |             |   | (1,792        | ) |       |   |          |   | (1,792 | ) |         |   |  | 
|Foreign currency
translation  |  |  |              |  |             |   |               |   | (98   | ) |          |   | (98    | ) |         |   |  | 
|                              |  |  |              |  |             |   |               |   |       |   |          |   |        |   |         |   |  |  |         |   |  |  |  | 
|Comprehensive loss            |  |  |              |  |             |   |               |   |       |   | (1,890   | ) |        |   |         |  
|                              |  |  |              |  |             |   |               |   |       |   |          |   |        |   |         |   |  |  |         |   |  | 
|Balances atMarch 31, 2002     |  |  | 10,196,257   |  |             | $ | 35,977        |   |       |   | $(36,622 | ) |        |   | $(5,505 | ) |  |  | $(6,150 | ) |  |  |  | 
|                              |  |  |              |  |             |   |               |   |       |   |          |   |        |   |         |   |  |  |         |   |  |  |  | 

See accompanying Notes to Condensed Consolidated Financial Statements

4



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Hawker Pacific Aerospace

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)


(unaudited)


|                                                                            |  |                                                                       |          |   |        |                    |         |      |        |       |  | 
|--------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | -------- | - | ------ | ------------------ | ------- | ---- | ------ | ----- |  | 
|                                                                            |  |                                                                       |          |   |        | Three months ended
|                                                                            |  |                                                                       |          |   |        | March 31          
|                                                                            |  |                                                                       |          |   |        |                   
|                                                                            |  |                                                                       |          |   |        | 2002               |         | 2001
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|Operating Activities                                                        |  |                                                                       |          |   |        |                    |         |     
|Net loss                                                                    |  |                                                                       | $(1,792  | ) |        |                    | $(1,075 | )   
|Adjustments to reconcile net loss to net cash
used in operating activities: |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Deferred income taxes                                                 |          |   | (12    | )                  |         |      |       |      
|                                                                            |  | Depreciation and amortization                                         |          |   | 1,072  |                    |         |      | 1,128  |      
|                                                                            |  | Amortization of loan discounts and costs                              |          |   | 33     |                    |         |      | 245    |      
|                                                                            |  | Bad debt expense                                                      |          |   | 15     |                    |         |      | 15     |      
|Changes in operating assets and liabilities:                                |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Accounts receivable and other receivables                             |          |   | 2,696  |                    |         |      | (397   | )    
|                                                                            |  | Inventory                                                             |          |   | 1,165  |                    |         |      | (4,328 | )    
|                                                                            |  | Prepaid expenses and other current assets                             |          |   | (332   | )                  |         |      | (350   | )    
|                                                                            |  | Accounts payable                                                      |          |   | 764    |                    |         |      | 937    |      
|                                                                            |  | Deferred revenue                                                      |          |   | (1,713 | )                  |         |      | 2,376  |      
|                                                                            |  | Accrued liabilities                                                   |          |   | (2,237 | )                  |         |      | (248   | )    
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|Cash used in operating activities                                           |  |                                                                       | (341     | ) |        |                    | (1,697  | )   
|Investing Activities                                                        |  |                                                                       |          |   |        |                    |         |     
|Purchases of equipment, leasehold improvements and landing gear             |  |                                                                       | (280     | ) |        |                    | (150    | )   
|Deposits for construction in progress                                       |  |                                                                       |         |   |        |                    | (80     | )   
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Cash used in investing activities                                     |          |   | (280   | )                  |         |      | (230   | )    
|Financing Activities                                                        |  |                                                                       |          |   |        |                    |         |     
|Principal payments on bank notes                                            |  |                                                                       | (4       | ) |        |                    |        |     
|Borrowings on line of credit, net                                           |  |                                                                       | 478      |   |        |                    |        |     
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Cash
provided from financing activities                               |          |   | 474    |                    |         |      |       |      
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|Decrease in cash                                                            |  |                                                                       | (147     | ) |        |                    | (1,927  | )   
|Cash, beginning of period                                                   |  |                                                                       | 1,558    |   |        |                    | 3,349   |     
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|Cash, end of period                                                         |  | $                                                                     | 1,411    |   |        |                    | 1,422   |     
|                                                                            |  |                                                                       |          |   |        |                    |         |     
|Supplemental disclosure of cash flow information                            |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Cash paid during the period for:                                      |          |   |        |                    |         |      |        |      
|                                                                            |  |                                                                       | Interest |   | $      | 518                |         |      | $      | 1,484 | 
|Non-cash items                                                              |  |                                                                       |          |   |        |                    |         |     
|                                                                            |  | Conversion of principal due on the LHT
note payable into common stock |          | $ |       |                    |         | $    | 6,749  |      
|                                                                            |  | Conversion of interest due on the LHT
note payable into common stock  |          | $ |       |                    |         | $    | 503    |      

See accompanying Notes to Condensed Consolidated
Financial Statements

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Hawker Pacific Aerospace

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


(IN THOUSANDS EXCEPT FOR SHARE
AND PER SHARE AMOUNTS)


(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 on Form 10-K 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 on Form 10-K for fiscal year 2001
when reviewing interim financial results.

The preparation of interim financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Significant estimates and assumptions include the accounts
receivable allowance for doubtful accounts, a provision for potentially excess
or slow-moving inventory, warranty accruals, deferred tax asset valuation
allowances, and a provision for anticipated losses on future work covered by
contracts performed at the Companys UK operation (Hawker UK). Actual results may differ
from those estimates.

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 and contain all
adjustments of a normal and recurring nature that are necessary to present
fairly the financial position of the Company as of March 31, 2002 and December
31, 2001, and the results of its operations and cash flows for the
three-month
periods ended March 31, 2002 and 2001, respectively.

Contingencies

The Company is from time to time involved in various lawsuits, claims and
inquiries, which the Company believes are routine to the nature of its
business. The Company is not, however, currently involved in any litigation,
or subject to any claim that has not been provided for, or that would have a
material adverse effect on the financial position, results of operation or cash
flow of the Company.

There are various environmental remediation actions that have involved the area
surrounding the Companys Sun Valley facility. The Company has the right to be
indemnified by its former parent company, BTR plc, for certain asserted claims
against the Company.

On October 1, 2001, First Union Securities Inc. was awarded $989 in an
arbitrated claim against the Company. First Union provided investment banking
services to the Company, and the claim sought payment of their fee for those
services. Pursuant to an indemnification agreement, the Company ceded control
of the First Union claim to a group of individual shareholders associated with
Unique Investment Corporation (the Unique Sellers), and the Unique Sellers
agreed to indemnify the Company for any costs related to the claim in excess
of $250. The Company paid First Union the $989 award in October 2001
and has since incurred additional expenses related to this matter. As of
October 22, 2001, the Unique Sellers had not honored their indemnification
agreement, and the Company filed an arbitration claim to enforce the terms of
the agreement, which include recovery of the award, expenses in excess of
$250, and certain other expenses. As of December 31, 2001, the Company
recorded an account receivable in the amount of $1,000 related to this
matter. On June 21, 2002, the Company entered into a settlement agreement with
the Unique Sellers under which the Unique Sellers agreed to pay the
Company a total of $1,000 plus interest of 10% per annum commencing
on or about September 19, 2002, in installments of $250 each in
June, August, October and December 2002.

On April 3, 2002 in conjunction with the tender offer commenced by Lufthansa
Technik AG (LHT), two complaints were filed in the Superior Court of the
State of California, Los Angeles County, North Central District, against the
Company and its directors. The complaints alleged, inter alia, breaches of
fiduciary duty to Company shareholders in connection with the LHT tender
offer. In June 2002, the plaintiffs voluntarily dismissed the
complaints. On July 15, 2002, the Company was officially notified of
the courts dismissal of one of the complaints, with the other dismissal pending.

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Hawker Pacific Aerospace

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


(IN THOUSANDS EXCEPT FOR SHARE
AND PER SHARE AMOUNTS)


(unaudited)


Loss per Share

Basic and diluted loss per common share is computed based upon the weighted
average number of common shares outstanding for the period. The number of
shares used in the calculation of basic and diluted loss per share for the
three months ended March 31, 2002 and 2001 was 10,196,257 and 7,580,772,
respectively.

The effect of dilutive securities was not included in the computation of
diluted loss per share for the three months ended March 31, 2002
and 2001 because the
effect would have been antidilutive. Options to purchase 690,122 shares of
common stock and 814,004 shares of common stock at exercise prices between
$6.88 and $9.88 were outstanding during 2002 and 2001, respectively, and were
excluded from the computation of diluted loss per share as the exercise price
was greater than the average market price of the common shares. Accordingly,
basic loss per share is the same as diluted loss per share for all periods
presented.

2. INVENTORIES

Inventories are comprised of the following:

|                               |  |           |        |              |  |   |        | 
|------------------------------ |  | --------- | ------ | ------------ |  | - | ------ | 
|                               |  | March 31, |        | December 31,
|                               |  | 2002      |        | 2001        
|                               |  |           |        |             
|Purchased parts and assemblies |  | $         | 22,230 |              |  | $ | 22,672 | 
|Work in process                |  |           | 7,827  |              |  |   | 8,718  | 
|                               |  |           |        |              |  |   |        | 
|                               |  | $         | 30,057 |              |  | $ | 31,390 | 
|                               |  |           |        |              |  |   |        | 

3. RELATED PARTY TRANSACTIONS

On April 5, 2002, LHT and LHT Acquisition Corporation, a wholly owned
subsidiary of LHT, completed a successful tender offer of the
outstanding common shares of the Company not previously owned by LHT.
As a result of the tender offer, LHT and LHT Acquisition Corporation
collectively owned approximately 96.5% of the outstanding common shares
of the Company. On April 12, 2002, LHT contributed all of its common
shares of the Company to LHT Acquisition Corporation. On April 15,
2002, LHT Acquisition Corporation merged with and into the Company.
Pursuant to the merger, all outstanding shares of common stock of the
Company not tendered in the tender offer and not held by LHT or LHT
Acquisition Corporation were converted into the right to receive $3.25
per share in cash. Upon the merger becoming effective, the one (1) outstanding
share of common stock of LHT Acquisition Corporation owned by LHT was converted into
one (1) outstanding share of common stock of the Company. LHT holds
the one outstanding share of common stock of the Company. No other
shares of common stock are outstanding.

On June 8, 2001, LHT, provided a
revolving line of credit to Hawker UK. The facility, which may be drawn
up to an aggregate amount of 5,200 British pounds sterling ($7,963 at
August 9, 2002) and must be repaid within 364 days. On October 10, 2001
LHT agreed to extend the term of the revolving line of credit for
another 365 days if Hawker UK does not have sufficient funds at its
disposal to pay the loan balance in full or in part, as of the repayment
date. Amounts advanced under the facility bear interest, payable
monthly, at a daily average rate based on the London Sterling Overnight
Index Average (SONIA), plus 270 basis points (approximately 6%
as of March 31, 2002). Proceeds from the facility are being used for
capital investment and additional working capital at Hawker UK. As of
August 9, 2002, the credit line is fully utilized.

During the first quarter of 2002, the Company received $1,100 from LHT
for overhaul services rendered, and purchased $1,145 of spare parts from
LHT.



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Hawker Pacific Aerospace

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


(IN THOUSANDS EXCEPT FOR SHARE
AND PER SHARE AMOUNTS)


(unaudited)


4. PROVISION FOR ANTICIPATED LOSSES ON CONTRACTS

The Company records a current charge to cost of revenue whenever it is
anticipated that the total estimated costs will exceed the total estimated
revenue over the life of a contract. The amount of the provision is the excess
of cost over revenue for every overhaul event for which the Company
anticipates a loss during the contract term. As each overhaul event is
completed in the future, the specific portion of the provision previously
accrued for that overhaul is utilized.

This provision has been recorded for certain contracts performed at Hawker UK,
and includes anticipated losses on overhaul events based on managements
estimates. During the three months ended March 31, 2002, $1,100 was utilized
from the provision, and no additions were made to the provision.

5. SEGMENT INFORMATION

Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information, sets forth 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.

|                                                          |  |               |        |                |  |              |        |      |  |      |        |      |  |   |        |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | ------------- | ------ | -------------- |  | ------------ | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                          |  | United States |        | United Kingdom |  | Consolidated
|                                                          |  |               |        |                |  |             
|As of March 31                                            |  | 2002          |        | 2001           |  | 2002         |        | 2001 |  | 2002 |        | 2001
|                                                          |  |               |        |                |  |              |        |      |  |      |        |     
|Total assets                                              |  | $             | 52,316 |                |  | $            | 50,456 |      |  | $    | 41,035 |      |  | $ | 47,227 |   |  | $ | 93,351 |   |  | $ | 97,683 |  
|Total fixed assets (net of
depreciation and amortization) |  |               | 16,139 |                |  |              | 17,141 |      |  |      | 26,412 |      |  |   | 28,399 |   |  |   | 42,551 |   |  |   | 45,540 |  
|                                                         
|For the quarter ended March 31                            |  |               |        |                |  |              |        |      |  |      |        |      |  |   |        |   |  |   |        |   |  |   |        |  
|Revenue by location of operations                         |  |               | 12,716 |                |  |              | 14,189 |      |  |      | 7,971  |      |  |   | 4,731  |   |  |   | 20,687 |   |  |   | 18,920 |  
|Income (loss) before income taxes                         |  |               | (570   | )              |  |              | 210    |      |  |      | (1,222 | )    |  |   | (1,285 | ) |  |   | (1,792 | ) |  |   | (1,075 | )

The Company generated revenue from customers located outside of the United
States of $9,991 and $7,106 for the quarters ended March 31, 2002 and 2001,
respectively.

6. SUBSEQUENT EVENTS

On April 5, 2002, LHT and LHT Acquisition Corporation, a wholly owned
subsidiary of LHT, completed a successful tender offer of the outstanding
common shares of the Company not previously owned by LHT. As a result of
the tender offer LHT and LHT Acquisition Corporation collectively owned
approximately 96.5% of the outstanding common shares of the Company. On April
12, 2002, LHT contributed all its common shares of the Company to LHT
Acquisition Corporation. On April 15, 2002, LHT Acquisition Corporation
merged with and into the Company. Pursuant to the merger, all outstanding
shares of common stock of the Company not tendered in the tender offer and not
held by LHT or LHT Acquisition Corporation were converted into the right to
receive $3.25 per share in cash. Upon the merger becoming effective, the one (1)
outstanding share of common stock of LHT Acquisition Corporation
owned by LHT was converted
into one (1) outstanding share of common stock of the Company. LHT holds
the one outstanding share of common stock of the Company. No other shares of
common stock are outstanding.

On April 3, 2002, in conjunction with the tender offer commenced by LHT,
two complaints were filed in the Superior Court of the State of California,
Los Angeles County, North Central District, against the Company and its
directors. The complaints alleged, inter alia, breaches of fiduciary duty to
Company shareholders in connection with the LHT tender
offer. In June 2002, the plaintiffs voluntarily
dismissed the complaints. On July 15, 2002, the Company was
officially notified of the court's dismissal of one of the complaints, with the other dismissal pending.

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Hawker Pacific Aerospace




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

Results of Operations

The following analysis compares the Companys results of operations for the
quarter ended March 31, 2002, with the quarter ended
March 31, 2001:

Revenue for the quarter increased by 9.3% to $20.7 million from $18.9 million
for the comparable period in 2001. This increase occurred primarily in landing
gear sales at Hawker UK. Total UK revenue increased $3.2 million versus the
prior year quarter while total Sun Valley revenue decreased $1.5 million.

Cost of revenue increased by 24.2% to $18.5 million from $14.9 million in the
first quarter of 2001. Sun Valley cost of revenue increased by 5.0%,
or $0.5
million, from the prior comparable quarter, and UK cost of revenue increased by
64.5%, or $3.1 million on increased revenue of $3.2 million. The first quarter
of 2002 included higher overhead costs due to reduced manhours and
higher overhead rates incurred.

Gross margin for the first quarter decreased from $4.0 million in 2001 or 45.8%
to $2.2 million in 2002 due to the increased cost of revenue in both
facilities.

Selling, general and administrative expense for the first quarter decreased by
$0.4 million or 12.8% from $3.1 million in 2001 to $2.7 million in 2002
primarily due to cost containment initiatives implemented by the Company.

Interest expense for the quarter decreased by $1.0 million or 49.0% from $2.0
million in 2001 to $1.0 million in 2002. The reduction was primarily due to
the fact that first quarter 2001 included $0.5 of interest and amortization of
discount related to the Companys loan from LHT, which was converted to equity
on March 16, 2001, and lower interest rates.

As a result of the increased cost of revenue and margin, partially offset by
the decreases in selling, general and administrative expense and interest, the
Company recorded a net loss for the quarter of $1.8 million, or $0.18 as
compared with a net loss of $1.1 million or $0.14 per share in the first
quarter of 2001.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the U.S., which require the
Company to make estimates and assumptions (see Note 1 to the consolidated
financial

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Hawker Pacific Aerospace



statements). The Company believes that of its significant
accounting policies, the following may involve a higher degree of
judgment and complexity.

Revenue Recognition.The Company generates revenue primarily from repair
and overhaul services. In some cases, overhaul revenue includes exchange
fees that compensate the Company for the carrying cost of its exchange
assets. The Company also generates revenue from the sale and distribution
of spare parts, and the manufacturing of certain aircraft components. The
revenue derived from spare parts sales and manufacturing are each
individually less than 10% of total revenue.

Revenue for repair and overhaul services involving an exchange is
recognized when the job is complete. Exchange fees are recognized upon
the shipment of the Companys exchange asset to the customer. Revenue for
repair and overhaul services not involving an exchange is recognized when
the completed item is shipped to the customer.

The Company is allowed under certain of its contracts to invoice
customers prior to the completion of the overhaul. Such invoices are
credited to deferred revenue until the overhaul is complete. Revenue from
spare parts sales and manufacturing is recognized at the time of
shipment.

Provision for Anticipated Losses on Contracts.The Company records a
current charge to cost of revenue when it is anticipated that the total
estimated costs will exceed the total estimated revenue over the life of
the contract. The amount of the provision is the excess of cost over
revenue for every overhaul event anticipated during the contract term.

Inventories.Inventories are stated at the lower of cost or market.
Purchased parts and assemblies are valued based on their weighted average
cost. Work-in-process inventory includes purchased parts, direct labor
and factory overhead. Provisions for potentially obsolete or slow-moving
inventory are made based on managements analysis of inventory levels,
turnover and future usage forecasts.

Exchange Assets.Landing gear and other exchange assets are accounted for
as fixed assets at cost and are depreciated over their estimated useful
lives to their respective salvage values. These exchange assets
principally include various large commercial jet landing gear shipsets,
and flap tracks and carriages. Exchange assets are held for the purpose
of exchanging the asset with a customer to allow the customers aircraft
to return to service in the shortest possible time. Certain of the
Companys contracts could not have been obtained without sufficient
exchange assets to meet the customers requirements.

After the landing gear shipset is exchanged and the customer is
billed for the established cost of the overhaul, the landing gear shipset
from the customer is overhauled and returned to the Companys exchange
asset pool. The estimated useful lives of these exchange assets range
from 10 to 15 years depending on the age of the aircraft type, and the
Companys estimate of how many years of overhaul demand remain.
Depreciation expense is recorded as a cost of revenue using the
straight-line depreciation method.

The Company reviews the carrying value of an exchange asset for
impairment whenever events and circumstances indicate that the carrying
value of such asset may not be recoverable from the estimated future cash
flows expected from its use and eventual disposition. If the undiscounted
expected future cash flows are less than the carrying value, an
impairment loss is recognized equal to the amount by which the carrying
value exceeds the fair value of the asset.

Deferred Income Taxes.Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The Company
has established a valuation allowance for its deferred tax
asset, which was previously recorded for the tax benefit related to
future utilization of the Companys net operating loss carryforward.

Related Party Information

In July 2001, the Company entered into a Cooperation Agreement and
General Supporting Contract with LHT. The Cooperation Agreement
establishes areas of cooperation between the Company and LHT related to
aircraft component and landing gear services jointly provided by both
companies to their combined customer base. The General Supporting
Contract describes the procedures, terms and conditions under which the
Company and LHT shall together perform the services contemplated under
the Cooperation Agreement. The Cooperation Agreement does not specify the
amount of work that will be done at the Companys London facility or the
amounts to be charged.

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Hawker Pacific Aerospace

Liquidity and Capital Resources

The following analysis compares material changes in the Companys financial
position from December 31, 2001, to March 31, 2002:

Inventories decreased by $1.3 million during the first quarter of 2002,
primarily as a result of higher revenue during the quarter. The increase in
revenue generated an decrease in deferred revenue of $1.8 million. As a result
of the net loss for the period, the Companys operating activities used cash of
$0.3 million during the first quarter of 2002.

The Company expects that its cash liquidity will remain tight but manageable
over the next few quarters. In order to maintain liquidity, the Company has
made full use of the LHT credit line. As a wholly-owned subsidiary of
LHT, the Company also expects to have access to liquidity from LHT,
subject to certain limits LHT is expected to impose. The Company may also consider asset sales if
necessary. The Company believes that these limits will be at
such a level that together with
potential asset sales, the Company will have sufficient funds to meet its
cash requirements for the next twelve months.

Forward-Looking Statements

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. The forward-looking statements contained in this section and
elsewhere in this document involve risks and uncertainties that may affect the
Companys operations, markets, services, prices and other factors, as more
fully discussed elsewhere and in other Company filings with the U.S.
Securities and Exchange Commission. These risks and uncertainties include, but
are not limited to, economic, legal, governmental, environmental and
technological factors, the impact of the September 11th terrorist attacks on
the airline industry, the economy and insurance rates, the potential for
additional adverse impact from terrorist attacks and/or war, as well as
competitive pricing and market conditions, customer concentration, foreign
currency risk, and the Companys continuing ability to acquire adequate and
reasonably priced inventory, meet increasing requirements for capital, and
successfully develop its UK subsidiary into a profitable operation. There can
be no assurance that future developments affecting the Company will be those
anticipated by management. Because of the factors listed above, as well as
other factors beyond the control of the Company, actual results may differ
from those in the forward-looking statements. The Company disclaims any intent
or obligation to update or revise any forward-looking information, whether as
a result of new information, future developments, or otherwise.




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 UK and the
Netherlands, and also conducts business with customers in many other countries
worldwide. These activities may generate gains and losses as a result of
currency fluctuations, and may require translation adjustments to the value of
certain assets in the Companys foreign operations. Foreign currency exchange
rates could also cause the Companys services to become relatively more
expensive in particular countries, leading to a reduction in revenue in that
country.

The Company reduces foreign currency risk 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.

If the US dollar continues to strengthen against the British pound, sales from
the Companys UK subsidiary will provide less consolidated revenue. A strong
dollar also increases material costs for the Companys UK operation, which
purchases a significant portion of its materials from US suppliers. In
addition, the value of the Companys intercompany receivables from the UK
operation will become less valuable.

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Interest Rate Risk. The Companys debt facilities carry interest rates that
vary in accordance with the US and UK LIBOR. The Company is subject to
potentially material fluctuations in its debt service as the LIBOR changes. The
extent of this risk is not quantifiable or predictable however, a
hypothetical 1%
change in the interest rate would result in a $0.2 million
change in interest expense.

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Hawker Pacific Aerospace




PART II  OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

99.1    Section 906
Certification

(b)  Form 8-K

No reports were filed on Form 8-K during the quarter ended March 31, 2002.




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: August 13, 2002 |  | By                       |  | /s/ James R. Bennett
James R. Bennett
Chief Financial Officer
(Principal Financial and Accounting Officer)

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