SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-K

             FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS
               13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

[X]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act  of  1934  for  the  fiscal  year  ended  MAY  31,  2000
                                              --------------

[  ]     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 0-18352
                                                -------

                    INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

              Delaware                                 59-2223025
             ---------                                 ----------
  (State or Other Jurisdiction of   (I.R.S. Employer Identification No.)
  Incorporation or Organization)

  1954 Airport Road, Suite 200,
           Atlanta, Georgia                               30341
  ----------------------------------------             ----------
 (Address of Principal Executive Offices)              (Zip Code)


                                  (770) 455-7575
               --------------------------------------------------
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

       Title of class                  Name of each exchange on which registered
       Common Stock, $.001 par value        American Stock Exchange
      -----------------------------    -----------------------------------------

        Securities registered pursuant to Section 12(g) of the Act:  None

     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  [  ]

     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendment  to  this  Form  10-K.  [X]

     At  August  10,  2000,  the  aggregate market value of common stock held by
non-affiliates  of  the  Registrant  was  approximately  $4,036,701.

     The  number  of  shares  of the Registrant's Common Stock outstanding as of
August  10,  2000  was  2,190,198.

                      DOCUMENTS INCORPORATED BY REFERENCE:

     Portions  of  the  Proxy  Statement  for  the  2000  Annual  Meeting of the
Company's  Stockholders  are  incorporated  by  reference  in  Parts III and IV.


<PAGE>
                    INTERNATIONAL AIRLINE SUPPORT GROUP INC.
                           ANNUAL REPORT ON FORM 10-K
                     FOR THE FISCAL YEAR ENDED MAY 31, 2000



                                TABLE OF CONTENTS
                                -----------------
                                                                            PAGE
                                                                            ----
PART  I

     Item  1.     Business                                                     1
     Item  2.     Properties                                                  13
     Item  3.     Legal  Proceedings                                          14
     Item  4.     Submission  of  Matters  to  a Vote of Security Holders     14

PART  II

     Item  5.     Market  for  the  Registrant's  Common  Stock
                  and  Related Stockholder  Matters                           15

     Item  6.     Selected  Financial  Data                                   16
     Item  7.     Management's  Discussion  and  Analysis  of Financial
                  Condition and Results  of Operations                        17
     Item  7A.    Quantitative  and  Qualitative  Disclosures about
                  Market Risk                                                 20
     Item  8.     Financial  Statements  and  Supplementary  Data             20
     Item  9.     Changes in and Disagreements with Accountants on
                  Accounting and Financial  Disclosure                        20

PART  III

     Item  10.     Directors  and  Executive  Officers  of the Registrant     21
     Item  11.     Executive  Compensation                                    21
     Item  12.     Security Ownership of Certain Beneficial Owners and
                   Management                                                 21
     Item  13.     Certain  Relationships  and  Related  Transactions         21

PART  IV

     Item  14.     Exhibits,  Financial  Statement Schedules and Reports
                   on Form 8-K                                                22

SIGNATURES


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                                        4

                                     PART I

ITEM  1.     BUSINESS.
-------      --------

     THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
WITHIN  THE  MEANING  OF  SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED  (THE  "EXCHANGE ACT"), INCLUDING THE PLANS AND OBJECTIVES OF MANAGEMENT
FOR  THE  BUSINESS,  OPERATIONS  AND  FINANCIAL PERFORMANCE OF THE COMPANY.  THE
FORWARD-LOOKING  STATEMENTS AND ASSOCIATED RISKS SET FORTH IN THIS ANNUAL REPORT
MAY  INCLUDE  OR  RELATE  TO,  AMONG  OTHER THINGS, (I) INCREASING THE COMPANY'S
MARKET  SHARE  OF  PARTS FOR CERTAIN COMMERCIAL JET AND COMMUTER AIRCRAFT, WHILE
MAINTAINING  ITS POSITION AS A LEADING REDISTRIBUTOR OF PARTS FOR MD-80 AND DC-9
AIRCRAFT,  (II)  POTENTIAL  ACQUISITIONS  OF  ADDITIONAL INVENTORIES OF AIRCRAFT
SPARE PARTS AND THE ACQUISITION OF OTHER COMPANIES, ASSETS OR PRODUCT LINES THAT
WOULD COMPLEMENT OR EXPAND THE COMPANY'S EXISTING AIRCRAFT SPARE PARTS BUSINESS,
(III)  DEMAND  AMONG THE COMPANY'S PRINCIPAL CUSTOMERS, INCLUDING CARGO CARRIERS
AND REGIONAL COMMERCIAL AIRLINES, FOR THE COMPANY'S INVENTORY OF PARTS, (IV) THE
DEMAND  FOR  DC-9  AIRCRAFT,  WHICH  WILL DETERMINE THE SUCCESS OF THE COMPANY'S
JOINT  VENTURE'S  EFFORTS TO REMARKET ITS AIRCRAFT; (V) THE SIZE AND GROWTH RATE
OF  THE  AIRCRAFT  PARTS  REDISTRIBUTION  INDUSTRY  AND  THE AIRCRAFT AND ENGINE
LEASING  INDUSTRY, (VI) INCREASES OR CHANGES IN GOVERNMENT REGULATIONS REGARDING
THE  AVIATION  INDUSTRY,  (VII)  COMPETITION  FROM  OTHER  AIRCRAFT  PARTS
REDISTRIBUTORS, (VIII) PROPOSED EXPANSION OF THE COMPANY'S PRODUCT LINE AND (IX)
OPERATION  OF  A  PART  135  AIR  CARRIER.  SEE  "CAUTIONARY STATEMENTS" HEREIN.

     THE  FORWARD-LOOKING  STATEMENTS  INCLUDED  HEREIN  ARE  BASED UPON CURRENT
EXPECTATIONS  THAT  INVOLVE  A  NUMBER  OF  RISKS  AND  UNCERTAINTIES.  THESE
FORWARD-LOOKING  STATEMENTS  ARE  BASED  UPON  ASSUMPTIONS THAT THE COMPANY WILL
CONTINUE TO MANAGE ITS INVENTORY EFFECTIVELY, THAT COMPETITIVE CONDITIONS WITHIN
THE  AIRCRAFT  PARTS  REDISTRIBUTION  INDUSTRY  WILL  NOT  CHANGE  MATERIALLY OR
ADVERSELY,  THAT  DEMAND  FOR  AIRCRAFT SPARE PARTS WILL REMAIN STRONG, THAT THE
COMPANY  WILL  BE  ABLE  TO ENTER INTO NEW LEASES OF AIRCRAFT AS EXISTING LEASES
EXPIRE,  THAT  THE COMPANY'S JOINT VENTURE WILL BE ABLE TO REMARKET ITS AIRCRAFT
AS  THEY COME OFF LEASE ON FINANCIAL TERMS THAT WILL PERMIT THE JOINT VENTURE TO
SERVICE  ITS  INDEBTEDNESS,  THAT  THE COMPANY WILL BE ABLE TO PURCHASE AIRCRAFT
THAT  ARE  SUBJECT  TO  LEASES,  THAT  THE  COMPANY  WILL BE ABLE TO OPERATE ITS
RECENTLY  ACQUIRED  AIR  CARGO  SUBSIDIARY  PROFITABLY AND THAT THERE WILL BE NO
MATERIAL  ADVERSE  CHANGE  IN  THE  COMPANY'S  BUSINESS, FINANCIAL CONDITION AND
RESULTS  OF OPERATIONS.  ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE JUDGMENTS
WITH  RESPECT  TO,  AMONG  OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET
CONDITIONS  AND  FUTURE  BUSINESS  DECISIONS,  ALL  OF  WHICH  ARE  DIFFICULT OR
IMPOSSIBLE TO PREDICT ACCURATELY AND MOST OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY.  ALTHOUGH  THE  COMPANY  BELIEVES  THAT  THE ASSUMPTIONS UNDERLYING THE
FORWARD-LOOKING  STATEMENTS  ARE  REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE
INACCURATE  AND,  THEREFORE,  THERE  CAN  BE  NO  ASSURANCE  THAT  THE  RESULTS
CONTEMPLATED IN SUCH FORWARD-LOOKING INFORMATION WILL BE REALIZED.  IN ADDITION,
AS  DISCLOSED  ABOVE,  THE BUSINESS AND OPERATIONS OF THE COMPANY ARE SUBJECT TO
SUBSTANTIAL RISKS THAT INCREASE THE UNCERTAINTY INHERENT IN SUCH FORWARD-LOOKING
STATEMENTS.  ANY  OF THE OTHER FACTORS DISCLOSED ABOVE COULD CAUSE THE COMPANY'S
REVENUES  OR  NET  EARNINGS,  OR  GROWTH  IN REVENUES OR NET EARNINGS, TO DIFFER
MATERIALLY FROM PRIOR RESULTS.  FURTHERMORE, A CHANGE IN THE MARKET FOR AIRCRAFT
AND  ENGINE  PARTS  COULD RESULT IN THE COMPANY'S INVENTORY BEING OVERVALUED AND
COULD  REQUIRE  THE  COMPANY  TO WRITE DOWN ITS INVENTORY VALUATIONS IN ORDER TO
BRING  THEM  IN  LINE WITH THE REVISED FAIR MARKET VALUE.  THERE IS NO ASSURANCE
THAT  A  WRITE-DOWN WOULD NOT ADVERSELY AFFECT THE COMPANY'S BUSINESS, OPERATING
RESULTS OR FINANCIAL CONDITION.  GROWTH IN ABSOLUTE AMOUNTS OF COST OF SALES AND
GENERAL  AND  ADMINISTRATIVE  EXPENSES OR THE OCCURRENCE OF EXTRAORDINARY EVENTS
COULD  CAUSE  ACTUAL RESULTS TO VARY MATERIALLY FROM THE RESULTS CONTEMPLATED IN
THE  FORWARD-LOOKING  STATEMENTS.  BUDGETING  AND OTHER MANAGEMENT DECISIONS ARE
SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC
REVISIONS  BASED  ON  ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS, THE IMPACT OF
WHICH MAY CAUSE THE COMPANY TO ALTER ITS MARKETING, CAPITAL EXPENDITURE OR OTHER
BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S RESULTS OF OPERATIONS.  IN LIGHT
OF  THE  SIGNIFICANT  UNCERTAINTIES  INHERENT IN THE FORWARD-LOOKING INFORMATION
INCLUDED  HEREIN,  THE INCLUSION OF SUCH INFORMATION SHOULD NOT BE REGARDED AS A
REPRESENTATION  BY  THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS
OF  THE  COMPANY  WILL  BE  ACHIEVED.

GENERAL

     The  Company is a leading redistributor of aftermarket aircraft spare parts
used  primarily  for  McDonnell  Douglas  MD-80  and  DC-9 aircraft and commuter
turboprop  aircraft.  According  to  the  World Jet Inventory Year-End 1999 (the
"World  Jet  Inventory"),  MD-80  and  DC-9 aircraft accounted for approximately
13.2%  of the commercial jet aircraft in service worldwide at December 31, 1999.
According  to  a  November  1999  report  published  by Speednews, Inc., Embraer
EMB-120  aircraft  accounted  for approximately 13% of the turboprop aircraft in
service  at  the  top  worldwide  regional  airline  fleets.

     Management  believes  that  the  Company  has  one  of  the  most extensive
inventories  of  aftermarket  MD-80,  DC-9 and Embraer EMB-120 Brasilia parts in
the  industry.  In  addition,  the  Company  provides  aircraft  spare parts for
Boeing,  Lockheed,  Airbus  and  other  McDonnell Douglas and commuter turboprop
aircraft.  The  aircraft  spare  parts  distributed  by  the  Company, including
avionics,  rotable  and expendable airframe and engine parts, are sold to a wide
variety  of  domestic and international air cargo carriers, major commercial and
regional  passenger  airlines,  maintenance  and  repair  facilities  and  other
redistributors.  The  wide  variety  of  aircraft spare parts distributed by the
Company  are  acquired  through  purchase  or  consignment  of  surplus  or bulk
inventories  from  airlines, purchases from other redistributors and disassembly
of  aircraft.

     In  addition  to  being  a  provider  of  aircraft spare parts, the Company
leverages  its  industry  expertise  to  purchase,  sell  and lease aircraft and
engines.  The  Company  has  periodically acquired, leased and sold a variety of
narrow-body  commercial  jet  aircraft, such as Boeing 727 and 737 and McDonnell
Douglas  MD-80  and  DC-9  aircraft,  and  commuter  turboprop aircraft, such as
Embraer  EMB-120  aircraft.  The  Company  currently  owns  six  Embraer EMB-120
aircraft,  three  of  which  are  leased,  and  two  Pratt & Whitney JT8D series
engines,  both  of  which  are  leased.  The  Company derives revenue from lease
payments  and  seeks  to  sell  spare  parts  to  the lessee both for the leased
aircraft and other aircraft in the lessee's fleet.  Upon return of the aircraft,
the  Company  either  re-leases, sells or disassembles the aircraft for parts in
order  to  achieve  the  highest utilization of the asset.  The Company believes
that  its  aircraft  trading  activities  and  its parts redistribution business
complement  one  another.  Therefore,  the  Company  is  increasing its focus on
aircraft  trading  and  leasing  activities.

     The  Company  also  owns  a  50% interest in a joint venture that leases 20
DC-9-41H aircraft.  Nineteen of the aircraft are leased to Scandinavian Airlines
System  ("SAS");  one  is  leased  to  a U.S.-based charter operator.  The joint
venture  expects  to  derive  revenue  from  lease payments with respect to such
aircraft  and  from the re-lease or sale of them following the expiration of the
leases with SAS.  The Company believes that its investment in this joint venture
complements  its  parts redistribution and aircraft sales and leasing businesses
by  providing  a  high  quality  source of aircraft for further releasing, sales
and/or  parting  out.

     The Company's other business activities include the operation of a regional
airline  and  providing  advisory  services  to  air carriers on parts-inventory
disposition.  The  Company's  air  cargo  operations  and  advisory  services
complement  its  parts  sales  and  aircraft  trading  and leasing activities by
enhancing  the  Company's reputation as an industry expert in commercial jet and
turboprop  parts  and  operations.

The  Company's  strategy  is  to  capitalize  upon  its  position  as  a leading
redistributor  of  MD-80,  DC-9  and commuter turboprop aircraft spare parts and
broaden  its product lines to include other high-use aircraft as the world fleet
grows.  Key  elements  of  the  Company's  strategy  include:

-     Expand  Aircraft  and  Engine  Trading  and  Leasing
-     Broaden  Product  Line
-     Increase  Sales  to  Cargo  Carriers,  Regional  Commercial  Airlines  and
      Commuter  Airlines
-     Utilize  Consignment  Agreements  to  Acquire  Inventory
-     Seek  Additional  Bulk  Purchase  Opportunities
-     Maintain  Market  Share  of  Parts  for  MD-80  and  DC-9  Aircraft
-     Continued  Commitment  to  Quality  and  Technological  Innovation
-     Expand  Air  Carrier  Operations
-     Pursue  Strategic  Acquisitions




COMPANY  HISTORY

     The  Company  was founded in 1982 in Miami, Florida.  Initially the Company
focused  on  parting  out DC-8 aircraft and reselling the resulting spare parts.
Based  upon  the  Company's  success  in  parting out DC-8 aircraft, in 1991 the
Company  began purchasing and parting out DC-9 and MD-80 aircraft.  Beginning in
1992,  the  Company began purchasing and parting out Boeing 727 aircraft.  Since
its  founding,  the  Company has acquired over 50 aircraft for parting out.  The
Company  has also engaged in aircraft and engine trading throughout its history.
During  fiscal  1999 and the first half of fiscal 2000, the Company expanded its
core  aftermarket  parts business by acquiring significant parts inventories for
McDonnell  Douglas  DC-10, Boeing 747 and Embraer EMB-120 aircraft.  The Company
also  expanded  its  aircraft  trading  activities  during fiscal 1999 and 2000,
completing  the  purchase of eight and the sale of two EMB-120 aircraft.  During
fiscal  2000, the Company established a presence in Europe, establishing a sales
office  in  France  and  a  distribution  center  in  the  Netherlands.

INDUSTRY  OVERVIEW

     The  Company  believes  that the annual worldwide market for aircraft spare
parts  is  approximately  $11  billion,  of  which  approximately  $1.3  billion
represents  sales  of  aircraft  spare  parts to the redistribution market.  The
Company  believes  that  this  market will continue to grow due to the following
factors:

     Increase  in the Number of Older Commercial Aircraft.  Increased demand for
air  travel  and the need for aircraft operators to reduce operating and capital
costs  have prompted many airlines to extend the useful life of older equipment.
According  to  the World Jet Inventory, at December 31, 1999, the average age of
the  worldwide  jet  fleet  was  13.1  years.  The  installation of FAA-approved
hush-kits  and extended life maintenance programs have also increased the useful
life  of  many older aircraft.  As a result, most aircraft types have had longer
service lives than originally certified.  In addition, many foreign and domestic
aircraft  operators  and  cargo carriers are increasing their fleets through the
acquisition of less expensive used aircraft.  As older aircraft are transitioned
from  major domestic passenger airlines to lower cost international and regional
domestic  passenger  airlines  and  cargo  carriers,  used aircraft have enjoyed
longer  service  lives  than  originally  anticipated.  Older aircraft typically
require  more  maintenance  and  replacement  parts  than  new  aircraft.

Reduction  in  Number  of  Approved  Suppliers.  Cost  considerations cause many
aircraft  operators  to  reduce the size of their spare parts inventories, while
efficiency  and  quality  concerns  may  cause  aircraft  operators  to maintain
relationships  with  a  more  limited  number  of  approved  suppliers.  Quality
concerns  are  causing  aircraft  operators  to  demand  that their suppliers be
quality  certified  by  organizations  such as the Airline Suppliers Association
("ASA")  or  the  International  Standards Organization ("ISO") and at least one
major  commercial  airline  has begun to demand that its suppliers carry product
liability  insurance.  In  addition,  as  aircraft  operators adopt just-in-time
inventory  procurement  processes,  inventory storage is increasingly handled by
suppliers  such  as  the  Company.  The  Company believes that these trends will
continue in the future and will benefit well-positioned aircraft parts suppliers
such  as  the  Company.

     Increased Inventory Consignment.  Certain of the Company's customers adjust
inventory  levels  on  a  periodic  basis  by disposing of excess aircraft spare
parts.  Traditionally, larger airlines have used internal sales agents to manage
such dispositions.  The Company believes that major airlines and other owners of
aircraft  spare  parts,  in order to concentrate on their core businesses and to
more  effectively  monetize their excess parts and inventories, are increasingly
entering  into  long-term  consignment  agreements  with  redistributors.  By
consigning  inventories  through  a redistributor such as the Company, customers
are  able  to offer their aircraft spare parts to a larger number of prospective
inventory  buyers, allowing the customer to maximize the value of its inventory.
Consignment  also  enables  a  consignee to offer for sale significant parts and
inventory  at  minimal  capital  cost.

     Modernization  of  Commuter  Fleets.  Many  of the larger regional commuter
airlines  are  modernizing their fleets by retiring their turboprop aircraft and
acquiring  short-range commuter jet aircraft.  As a result, the retired commuter
turboprop  aircraft  and  related  spare  parts  inventories  are  available for
purchase  at  favorable  prices.  The  Company  believes  that  smaller regional
commuter  airlines  will  upgrade  their fleets by replacing the small turboprop
aircraft  they  currently operate with larger, more efficient turboprop aircraft
being  retired  by  the  larger  regional  commuter  airlines.  Accordingly, the
Company  believes  that small regional commuter airlines are potential customers
for  the  aircraft  and related spare parts being retired by the larger regional
commuter  airlines.  The  Company  also  believes  that  there  is a significant
opportunity  for  the  redeployment  of  certain types of the commuter turboprop
aircraft  as  cargo  aircraft.

COMPANY  STRATEGY

     The  Company's  strategy  is  to  capitalize upon its position as a leading
redistributor  of MD-80, DC-9 and commuter turboprop aircraft spare parts and to
broaden  its product lines to include other high-use aircraft as the world fleet
grows.  Key  elements  of  the  Company's  strategy  include:

     Expand  Aircraft and Engine Trading and Leasing.  The Company believes that
due  to  the  increasing costs of commercial aircraft, the anticipated growth of
the  worldwide  aircraft  fleet,  and  the  emergence  of new regional airlines,
aircraft  operators will increasingly turn to operating leases as an alternative
method  to  finance  their aircraft and engine needs.  The Company believes that
leasing  used commercial aircraft and engines should grow due to the emphasis on
airline  cost  reduction,  the  desire of airlines for fleet flexibility and the
growth  in  air travel.  In addition, several smaller and regional airlines have
recently  chosen  to  lease  inventories  of  aircraft  spare  parts in order to
preserve  capital  while  maintaining  adequate  spare  parts  support.

     The  Company  has  periodically  acquired,  leased  and  sold  a variety of
aircraft and engines.  The Company derives revenue from lease payments and seeks
to  sell spare parts to the lessee both for the leased aircraft as well as other
aircraft in the lessee's fleet.  Upon return of the aircraft, the Company either
re-leases,  sells or disassembles the aircraft for parts in order to achieve the
highest utilization of the asset.  In the case of aircraft that are disassembled
for  parts,  the  lease  revenues reduce the Company's cost of the aircraft and,
therefore,  the  parts  acquired  from disassembly of the aircraft.  The Company
purchases  aircraft  and  engines  for  resale  when it believes the aircraft or
engines  can  be purchased at an attractive price and resold within a relatively
brief  period  of  time.  The  Company has determined that its spare parts sales
opportunities  are  enhanced  by providing existing and new customers with whole
aircraft  and  engines  through  sale  and  lease  transactions.  Therefore, the
Company  believes  that  its  aircraft  trading  activities  and  its  parts
redistribution  business  complement one another.  The Company has increased its
aircraft  trading  and  leasing  activities  and  intends  to  do  so  further.

     Broaden  Product  Line.  The Company has recently expanded its product line
to  include  aftermarket  parts  for  Airbus  A-300, McDonnell Douglas DC-10 and
Boeing  747  aircraft  and  certain commuter aircraft including Embraer, Shorts,
Saab,  de  Havilland,  British  Aerospace  and  ATR  aircraft.  In addition, the
Company  intends  to  expand further its product line to include parts for other
aircraft  that  are likely to be converted to freighters, such as Boeing 767 and
757  aircraft.  As  fleets  of  these  aircraft  age  and  as air cargo carriers
transition  larger  portions  of their fleets to wide-body aircraft, the Company
will  seek  to  capitalize  on the demand for parts resulting from the aging and
continued  use  of  these aircraft models.  Several air cargo carriers currently
utilize  DC-10, 767, 747 and A-300 series aircraft, and the Company believes use
of  these  models  will  continue  to  increase.  The  Company  believes  that a
significant  number  of  these  aircraft types have been or will be converted to
cargo  use  and  that  its  relationship  with  cargo  carriers  will provide an
advantage  in supplying parts for these aircraft to such customers.  The Company
also  believes  that  there is a significant opportunity for the redeployment of
the  Embraer  EMB-120  and  ATR aircraft as cargo aircraft, as commuter carriers
convert  their  fleets  to small jet aircraft.  The Company has acquired service
bulletin  kits  that will permit the conversion of 20 EMB-120 aircraft to either
full cargo or quick-change configurations.  The Company has converted one of the
six  EMB-120  aircraft  that  it  owns to full cargo configuration.  The Company
intends  to  convert  its  remaining EMB-120 aircraft if customer demand for the
EMB-120  cargo  variant  justifies  the  conversion  cost.

     Increase Sales to Cargo Carriers, Regional Commercial Airlines and Commuter
Airlines.  Cargo  carriers,  regional  commercial airlines and commuter airlines
are  among  the  Company's  principal  customers.  Cargo  carriers are important
customers  because  the  fleets  of  such  operators  typically consist of older
aircraft  of  the type for which the Company maintains an extensive inventory of
parts.  Additionally,  such  customers  typically  do  not  maintain  extensive
inventories  of  spare  parts.  Regional  commercial  airlines  are  important
customers  because  such  airlines favor narrow-body aircraft, such as MD-80 and
DC-9  aircraft,  for  which the Company is a primary source of spare parts.  The
smaller  commuter  airlines are important customers because their fleets consist
primarily  of  the  turboprop  aircraft  being  retired  by  the larger commuter
airlines.  The  Company has acquired an extensive inventory of aftermarket parts
for  several popular commuter turboprop aircraft types.  The Company will direct
its  marketing activities to broadening its customer base of cargo, regional and
commuter  airlines  in  order  to  increase  market  share and leverage its core
competencies.

     Utilize  Consignment Agreements to Acquire Inventory.  In recent years, the
Company  acquired  most  of  its  aircraft  parts  inventory by purchasing large
numbers  of  parts  in  bulk  from aircraft operators.  The Company has recently
begun  to  acquire  inventory  by  means  of strategic consignment arrangements.
Pursuant  to a consignment arrangement, an aircraft operator permits the Company
to  market  and  sell  an  inventory  of aircraft parts.  The Company receives a
percentage  of  the  sales  price of a consigned part.  Consignment arrangements
allow  the  Company  to  obtain  parts  inventory  on  a favorable basis without
committing  its capital to purchasing inventory.  The Company's margins on sales
of  consigned parts are, however, typically lower than margins realized on sales
of  parts  acquired  by  other  methods.  During calendar year 1999, the Company
completed  three  significant  consignment agreements. The Company believes that
its  market  presence, experience in evaluating parts inventories, sophisticated
management  information  systems and capital strength will enable the Company to
enter  into  additional  consignment  arrangements.

     Seek  Additional Bulk Purchase Opportunities.  The Company will continue to
seek  opportunities  to  purchase  large  spare  parts inventories in bulk.  The
Company  cannot  predict  when  such  opportunities  will  arise.  Bulk purchase
opportunities arise when airlines, in order to reduce capital requirements, sell
large amounts of inventory in a single transaction, when inventories of aircraft
spare  parts  are  sold  in  conjunction  with  corporate  restructurings  or
reorganizations  or  when  an  aircraft  operator  realigns  its aircraft fleet,
reducing  the  number of or exiting a particular aircraft model.  Bulk inventory
purchases  allow the Company to obtain large inventories of aircraft spare parts
at  a  lower  cost  than  can  ordinarily  be obtained by purchasing parts on an
individual basis.  Therefore, the Company realizes higher gross margins on sales
of parts acquired by bulk purchases, as opposed to other methods.  However, bulk
inventory  purchases require a commitment of the Company's capital.  The Company
believes  that  it  has  the  ability, due to its market presence, experience in
evaluating  parts  inventories, sophisticated management information systems and
capital  strength,  to  complete large bulk purchase opportunities to the extent
such  purchases  are  considered  favorable.

     Maintain  Market  Share  of  Parts  for  MD-80 and DC-9 Aircraft.  Recently
several  of  the Company's competitors have increased their inventories of parts
for  MD-80  and DC-9 aircraft.  The Company intends to maintain its market share
of parts for such aircraft despite such competition.  According to the World Jet
Inventory, MD-80 and DC-9 aircraft together accounted for approximately 13.2% of
the commercial jet aircraft in service worldwide at December 31, 1999.  Although
the  DC-9  is  no  longer  in  production,  many  of  the  DC-9's  parts  are
interchangeable  with  the  MD-80,  which,  although no longer in production, is
still in widespread use.  The Company believes that its experience and knowledge
of  the  DC-9  gives  it a competitive advantage in selling parts into the MD-80
marketplace.  The  Company  intends to capitalize on the limited availability of
new  parts  for  such  aircraft  models by acquiring (i) pools of inventory from
airlines  that  cease  to  operate  such aircraft or that desire to reduce their
levels  of  parts  inventory and (ii) aircraft for disassembly when economically
justified.  The  Company believes that its knowledge of the fleets of MD-80s and
DC-9s  currently  in  operation  and  its  worldwide  contacts in the commercial
aviation  industry  will permit it to acquire other inventory pools and aircraft
for  disassembly  on  favorable  terms  in  the  future.

     Continued  Commitment to Quality and Technological Innovation.  The Company
emphasizes  adherence  to  high  quality  standards  during  each  stage  of its
operations (product acquisition, documentation, inventory control and delivery).
In  August  1997,  the  ASA,  an  FAA-recognized  independent  quality assurance
organization,  accredited  the Company as an aftermarket supplier.  In addition,
the  Company  believes  it  was  one  of the first aftermarket redistributors to
bar-code its inventory and it has created and sponsors an industry-wide Internet
parts  locator  service  for  its  customers,  which  heightens awareness of the
Company,  enhances  its  position  in the industry and increases sales of parts.

     Expand Air Carrier Operations.  The global express-transportation market is
estimated  at  more  than $12 billion and growing at more than 25% annually.  To
date  this  market  has  been  served  by  large,  well  capitalized,
airfreight/logistics companies that have tended to focus on large, international
and  national,  freight movements and have the financial wherewithal to meet the
market's  and  their  customer's  growing  requirements.  The  regional  freight
market, however, is highly fragmented; a large number of small, undercapitalized
companies serve distinct market niches typically utilizing small converted older
generation  general  aviation  aircraft.  The  Company  believes  that  these
companies,  many  of  which are family-owned and/or capital constrained, will be
unable to meet the market's and their customer's growing requirements, providing
a  significant  opportunity  for  a well capitalized company with new generation
commercial  aircraft.  In  order  to  capitalize on this opportunity, during the
fourth  quarter  of  fiscal  2000, the Company acquired a small regional airline
that  currently operates three piston light twin and two light turboprop Part 23
aircraft under an Air Carrier Certificate under Part 135 of the FAA regulations.
The  Company intends to expand the acquired airline's fleet with the addition of
cargo  and  quick-change  variants of the EMB-120.  Although the Company expects
the  acquisition  to  be accretive, earnings could be negatively impacted due to
the resulting investment in the airline and the intended expansion.  The Company
is  evaluating  the  possibility  of  raising  capital by issuing debt or equity
securities  of  the  subsidiary to finance the acquisition, continued operations
and  expansion  of  this  subsidiary.

     Pursue Strategic Acquisitions.  The Company competes in a fragmented market
in  which  numerous  small  companies serve distinct market niches.  The Company
believes  that  small  aftermarket  parts  redistributors,  many  of  which  are
family-owned  or  capital  constrained,  are  unable  to  provide  the extensive
inventory  and  quality  control  measures  necessary  to comply with applicable
regulatory and customer requirements, and will provide acquisition opportunities
for  the  Company.  Similarly,  the  Company  believes  that many small aircraft
leasing  companies are potential acquisition targets.  Acquisitions are expected
to  increase  the  Company's  customer  base,  expand its product line both with
respect  to  aircraft  in  which  the Company currently specializes and into new
aircraft  types, to strengthen its relationships with existing customers through
availability  of  additional  inventory  and  permit  the  Company to expand its
aircraft  trading  opportunities.

AIRCRAFT  SPARE  PARTS

     Aircraft  spare  parts  can  be  categorized by their ongoing ability to be
repaired  and  returned  to service.  The general categories are as follows: (i)
rotable;  (ii)  repairable  and  (iii) expendable.  A rotable is a part which is
removed  periodically  as dictated by an operator's maintenance program or on an
as-needed  basis  and  is  typically  repaired  or  overhauled  and  re-used  an
indefinite  number  of  times.  An  important subset of rotables is life limited
parts.  A life limited rotable has a designated number of allowable flight hours
and/or  cycles  (one take-off and landing generally constitutes one cycle) after
which it is rendered unusable.  A repairable is similar to a rotable except that
it  can  only be repaired a limited number of times before it must be discarded.
An  expendable is generally a part which is used and not thereafter repaired for
further  use.

     Aircraft  spare parts' conditions are classified within the industry as (i)
factory  new,  (ii)  new  surplus, (iii) overhauled, (iv) serviceable and (v) as
removed.  A factory new or new surplus part is one that has never been installed
or used.  Factory new parts are purchased from manufacturers or their authorized
distributors.  New  surplus  parts  are purchased from excess stock of airlines,
repair  facilities  or  other  redistributors.  An  overhauled  part  has  been
completely  disassembled,  inspected,  repaired,  reassembled  and  tested  by a
licensed  repair  facility.  An aircraft spare part is classified serviceable if
it is repaired by a licensed repair facility rather than completely disassembled
as  in  an overhaul.  A part may also be classified serviceable if it is removed
by  the  operator  from  an aircraft or engine while operating under an approved
maintenance  program  and  is  functional and meets any manufacturer or time and
cycle  restrictions  applicable  to the part.  With appropriate documentation, a
factory  new,  new surplus, overhauled or serviceable part designation indicates
that  the part can be immediately utilized on an aircraft.  A part in as removed
condition requires functional testing, repair or overhaul by a licensed facility
prior  to  being  returned  to service in an aircraft.  The aircraft spare parts
sold by the Company include avionics, rotable and expendable airframe and engine
parts  for  commercial  aircraft.  Currently,  the  Company  specializes  in
replacement parts for MD-80, DC-9 and commuter turboprop aircraft and management
believes  that  the  Company  has  one  of  the  most  extensive  inventories of
aftermarket  MD-80,  DC-9  and  EMB-120  parts  in the industry.  Currently, the
Company  has  approximately 85,000 inventory line items, many of which represent
multiple  unit  quantities  and  relate to the MD-80, DC-9 and EMB-120 aircraft.
Many  of  these  parts, such as avionics and engine parts, can also be used by a
wide  variety  of  aircraft  other  than  MD-80,  DC-9 and EMB-120 aircraft.  In
addition  to  the  Company's  inventory  of  MD-80,  DC-9 and EMB-120 parts, the
Company's  inventory  also  includes  spare  parts  for  Boeing 727, 737 and 747
aircraft,  Lockheed  L-1011 aircraft, McDonnell Douglas DC-8 and DC-10 aircraft,
and  Airbus,  Shorts, Saab, de Havilland, British Aerospace and ATR aircraft and
for  the  Pratt  &  Whitney  JT8D  engine  series.



OPERATIONS  OF  THE  COMPANY

     The Company's core business is buying and selling aircraft spare parts.  In
addition,  the  Company engages in the sale and leasing of aircraft and engines,
provides  advisory  services  to  air  carriers  and  through  a  wholly-owned
subsidiary,  operates  a  regional air cargo airline.  The Company believes that
aircraft  and  engine  trading,  as well as air carrier operations, may become a
more  significant  part  of  the  Company's  business in the future.  Management
believes  these  activities  provide  significant  opportunities  for expansion.

     Inventory  Acquisition.  The  Company  acquires parts inventory by means of
strategic  consignment  arrangements,  by  purchasing  individual  parts  from
airlines,  repair  facilities  or  other  redistributors,  by  purchasing excess
inventory  from  aircraft  operators  or by purchasing aircraft for disassembly.
The  Company may also fill a customer order for a part not held in the Company's
inventory  by locating the part for the customer from another vendor, purchasing
the  part  and  then  reselling  the  part to the customer.  The Company obtains
inventory  on consignment from or purchases inventory in bulk from airlines that
are  eliminating  certain  portions  of  their  spare parts inventory due to the
retirement  of  an  aircraft  type  from  their  fleets,  implementing inventory
reduction  programs  to  reduce costs, downsizing their operations or ceasing to
conduct  business.

     Aircraft and Engine Sales and Leasing.  The Company has determined that its
spare  parts  sales  opportunities  are  enhanced  by providing existing and new
customers  with  whole aircraft and engines through sale and lease transactions.
Such  transactions allow the Company to expand its customer base for spare parts
and, through leasing, to reduce the cost basis in its aircraft and engines.  The
Company derives revenue from lease payments and seeks to sell spare parts to the
lessee  both  for  the leased aircraft as well as other aircraft in the lessee's
fleet.  Upon  return  of  the  aircraft,  the Company either re-leases, sells or
disassembles  the aircraft for parts in order to achieve the highest utilization
of  the  asset.

     The Company currently owns six Embraer EMB-120 aircraft, three of which are
leased,  and two JT8D engines, both of which are leased.  The Company's aircraft
leases  are  operating leases rather than finance leases and expire between July
2003  and  August  2003.  The  Company's  engine  leases  are "evergreen" leases
which,  although  they  have no termination date, are cancelable by either party
upon  specified  notice, typically 30 to 90 days.  Under an operating lease, the
Company retains title to the aircraft or engine, thereby retaining the potential
benefits  and assuming the risk of the residual value of the aircraft or engine.
Operating  leases  allow  aircraft  operators  greater  fleet  and  financial
flexibility  due  to  their  shorter-term  nature,  the relatively small initial
capital outlay necessary to obtain use of the aircraft or engine and off-balance
sheet  accounting  treatment.  The Company currently focuses on leasing commuter
turboprop  aircraft,  particularly the EMB-120.  The Company believes that there
is  an increasing demand by customers for operating leases, which are being used
as  an  alternative  to  traditional  financing  arrangements.

     During  the second quarter of fiscal 1999, the Company entered into a joint
venture (the "Air 41 Joint Venture") for the acquisition of 20 DC-9-41H aircraft
from  SAS.  The  aircraft  were leased back to SAS and the leases had an average
term  of  39  months.  The  Company's  original  investment  in the Air 41 Joint
Venture  was approximately $1.4 million.  The aircraft were financed through the
joint  venture,  utilizing non-recourse debt to the partners.  The Company's Air
41  Joint  Venture  partner  is  AirCorp,  Inc.,  a privately held company.  The
Company is exploring opportunities for the aircraft after the end of the term of
the  leases  with  SAS.  In this regard, the Air 41 Joint Venture has engaged an
aircraft portfolio management firm to remarket the aircraft.  Such opportunities
include  releasing  the  aircraft  to  SAS,  leasing the aircraft to one or more
different lessee(s), selling the aircraft, parting out the aircraft, or directly
placing  the  aircraft  into  either  passenger  or  cargo  service.  One of the
aircraft  was  sold following the expiration of its lease to SAS.  At this time,
the  Company  has no firm commitment for the remaining 19 aircraft after the SAS
leases  expire.

     Air  Carrier  Operations.  During  the  fourth  quarter of fiscal 2000, the
Company  acquired  a small regional airline that currently operates three piston
light  twin  and  two  light  turboprop  Part  23  aircraft under an Air Carrier
Certificate  under  Part  135  of the FAA regulations.  Besides providing ad hoc
charter  operations  to customers such as the Department of Defense, the airline
is  currently  under contract to provide cargo services to certain clients, such
as United Parcel Service and Corporate Express.  The Company paid $125,000, plus
certain  contingent  consideration,  including assuming the debt relating to the
aircraft,  for the airline.  The airline has become a wholly-owned subsidiary of
the  Company  operating  as North-South Airways ("NSA").  The Company intends to
expand  NSA's  fleet with the addition of cargo and quick-change variants of the
EMB-120.


SALES  AND  MARKETING;  CUSTOMERS

     The  Company  has  developed  a  sales  and  marketing infrastructure which
includes  well-trained and knowledgeable sales personnel, computerized inventory
management,  listing  of parts in electronic industry data bank catalogues and a
home page on the Internet.  Crucial to the successful marketing of the Company's
inventory  is  the  Company's  ability to make timely delivery of spare parts in
reliable  condition.  The Company believes aircraft operators are more sensitive
to  reliability  and  timeliness  than  price.

     During  fiscal 2000 the Company established a presence in Europe by opening
a  sales office in Nantes, France, and a distribution center at Schipohl Airport
in  the  Netherlands.  The distribution center is managed for the Company by KLM
Aerospace  Logistics  Group,  which provides all shipping and logistics services
necessary  for  the  delivery  of  parts  to  the  Company's European customers.

     In  addition  to  directly marketing its inventory, the Company has created
and  sponsors an industry-wide internet parts locator service, which is found at
http:\\www.ipls.com.  The Company's internet service is a free service available
to  any  potential customer and lists all of the inventory available for sale by
the  Company.  In  order  to  increase  its  value  to  potential customers, the
Company's  Internet  service  also  lists  the  inventory of over 100 additional
aftermarket  parts redistributors, representing more than 1.2 million individual
parts.  Similarly,  the  Company  lists  its  inventory  in  the  Air  Transport
Association's  computerized  databank  ("AIRS")  and  with the Inventory Locator
Service  ("ILS")  proprietary  computerized  databank.  Buyers of aircraft spare
parts  can  access  any of the databases described above, as well as other parts
databases,  to  determine  the  companies  which  have  the  desired  inventory
available.  Neither  the  Company's service, AIRS nor ILS list price information
relating  to  particular  parts.

     Market  forces  establish  the  price  for  aftermarket aircraft parts.  No
pricing  service  or  price catalogue exists for aftermarket parts.  Aftermarket
aircraft  parts  prices  are determined by referencing new parts catalogues with
consideration  given  to existing supply and demand conditions.  Often, aircraft
operators  will  opt for quality aftermarket parts even when new parts are still
in  production.  Aftermarket  aircraft  parts  meet the same FAA standard as new
parts,  cost  less than the same new parts and are often more readily available.

     The  Company's  customers  include  a  wide  variety  of  domestic  and
international  air  cargo  carriers,  major  commercial,  regional  and commuter
passenger  airlines, maintenance and repair facilities and other redistributors.
Management  believes  that  its  customer  relationships  are  important  to the
Company's  operational  success.  The  Company  maintains  an  adequate level of
inventory  in  order  to  service  its customers in a timely manner.  Management
believes  that  availability  and timely delivery of quality spare parts are the
primary  factors  considered  by  customers  when  making a spare parts purchase
decision.  Cargo  carriers,  regional  commercial airlines and commuter airlines
are  among  the  Company's  principal  customers.  Cargo  carriers are important
customers  because  the  fleets  of  such  operators  typically consist of older
aircraft  of  the type for which the Company maintains an extensive inventory of
parts and because such customers typically do not maintain extensive inventories
of  spare  parts.  Regional  commercial airlines are important customers because
such  airlines  favor narrow-body aircraft, such as MD-80 and DC-9 aircraft, for
which  the  Company  is  a  primary source of spare parts.  The smaller commuter
airlines  are  important customers because their fleets consist primarily of the
turboprop  aircraft  being retired by the larger commuter airlines.  The Company
has  acquired  an  extensive  inventory of aftermarket parts for several popular
commuter  turboprop  aircraft  types

     In  fiscal  2000,  one  customer,  Spirit  Airlines,  Inc.,  accounted  for
approximately  11%  of the Company's parts sales.  Excluding aircraft and engine
sales,  in  fiscal  2000,  no  other  customer accounted for more than 5% of the
Company's  total  revenues.  Each  aircraft  or  engine  sale  is unique and the
Company does not rely on previous customers for repeat business.  Currently, the
Company  believes  that  it  has  no  customer,  the  loss of which would have a
material  adverse  effect  on  the  Company's  business, financial condition and
results  of  operations.  In  a  given  period,  a  substantial  portion  of the
Company's  revenues  may  be attributable to the sale of one or more aircraft or
engines.  Such sales are unpredictable transactions dependent, in part, upon the
Company's  ability  to purchase an aircraft or engine at an attractive price and
resell  it within a relatively brief period of time.  The revenues from the sale
of  an  aircraft or engine, the timing of inventory sales or a lease transaction
during a given period may result in a customer being considered a major customer
of  the  Company  for  that  period.

QUALITY  ASSURANCE

     The  Company  adheres to stringent quality control standards and procedures
in  the  purchase  and sale of its products.  In August 1997, the ASA accredited
the  Company's  quality  assurance  system  after the completion of an extensive
facilities  audit  and  numerous  meetings with the Company's management.  Parts
procured  from an accredited supplier convey assurance to the purchaser that the
quality  is  as  stated  and  the  appropriate  documentation  is on file at the
supplier's  place  of  business.  Furthermore,  accreditation provides assurance
that  the  supplier  has implemented an appropriate quality assurance system and
has  demonstrated the ability to maintain that system.  In addition, many of the
Company's  customers  periodically  audit  the  Company's  operations  to ensure
compliance  with  such  customer's  quality  standards.

     Because  aircraft  operators  require  a readily available and identifiable
source of inventory meeting regulatory requirements, the Company has implemented
a  total  quality  assurance program.  This program consists of numerous quality
procedures,  including  the  following:

-     Inspection  procedures mandating that procured aircraft, engines and parts
be  traceable  to  a  source  approved  by  the  Company;

-     Training  and  supervision  of  personnel  to properly carry out the total
quality  assurance  program;

-     On-going  quality  review board meetings conducted by senior management to
oversee  the  total  quality  assurance  program

GOVERNMENT  REGULATION

     The  aviation  industry is highly regulated in the United States by the FAA
and  in  other  countries by similar regulatory agencies.  These regulations are
designed  to  ensure  that  all  aircraft,  engines  and aircraft components are
continuously  maintained in proper condition for the safe operation of aircraft.
Before  spare  parts  are  installed  on  an  aircraft,  they  must meet certain
standards as to their condition and have appropriate documentation.  Parts owned
or  acquired  by  the  Company  may  not meet currently applicable standards, or
standards  may  change  in  the  future,  causing parts already contained in the
Company's  inventory  to  be  scrapped or modified.  While most of the Company's
non-airline  operations  are  not  currently  regulated directly by the FAA, the
independent  facilities  that repair and overhaul the Company's products and the
aircraft operators that ultimately utilize the Company's products are subject to
extensive  regulation.  Accordingly,  the  Company  must consider the regulatory
requirements  of  its  customers  and  provide  them with parts that comply with
airworthiness  standards  established  by  the  FAA,  together  with  required
documentation  which  enables  these  customers  to comply with other applicable
regulatory  requirements.  The inspection, maintenance and repair procedures for
the various types of aircraft, engines and aircraft components are prescribed by
regulatory  authorities  and  can  be  performed  only  by  FAA-licensed  repair
facilities  utilizing certified technicians.  Compliance with applicable FAA and
OEM  standards are required prior to installation of a part on an aircraft.  The
Company  only  utilizes  FAA-licensed  repair  facilities  to repair and certify
aircraft,  engines  and  aircraft  components.

     In  September  1996,  the  FAA  issued  an advisory circular to support the
implementation  of  a  voluntary  accreditation program for civil aircraft parts
suppliers.  This  accreditation program establishes quality standards applicable
to  aftermarket  suppliers,  such  as  the  Company, and designates FAA approved
organizations  such  as  the ASA to perform quality assurance audits for initial
accreditation  of  aftermarket suppliers.  Quality assurance audits are required
on  an  on-going  basis  to  maintain  accreditation.  In  addition, many of the
Company's  customers  periodically  audit  the  Company's  operations  to ensure
compliance  with  such  customer's quality standards.  The Company believes that
ongoing  quality  assurance audits and strict adherence to its quality assurance
system  is  essential to meeting the needs of its existing and future customers.
In  August  1997,  the  Company  received  accreditation  from  the  ASA.

     Because  the  Company's  sales consist largely of parts for older aircraft,
regulations  promulgated by the FAA governing noise emission standards for older
aircraft  and  the  FAA's  Aging  Aircraft  Program  Plan  (the  "Aging Aircraft
Program")  may  increase the cost of operating such aircraft and have a material
impact  on  the  market for the Company's products.  All stage two aircraft must
install  hush-kits pursuant to such noise emission standards or be phased out of
operation in the United States by December 31, 1999 and in the European Union by
April  1,  2002.  The  Aging  Aircraft  Program  requires  aircraft operators to
perform structural modifications and inspections to address airframe fatigue and
to  implement  corrosion  prevention  and  control  programs, which increase the
operating and maintenance costs of older aircraft.  Furthermore, the EPA and the
various  agencies  of  the  European  Union have sought the adoption of stricter
standards  limiting  the  emission  of nitrous oxide from aircraft engines.  The
Company  believes  that  notwithstanding  the substantial costs imposed by noise
emission  standards  and the Aging Aircraft Program on older aircraft, estimated
by  the Company to average less than $4 million per aircraft on aircraft such as
the DC-9, certain aircraft operators will continue to utilize older aircraft due
to  the  substantially  greater  cost  of  acquiring  new  replacement aircraft.

     The  inability of the Company to supply its customers with spare parts on a
timely  basis,  or  any  occurrence  of  the  Company  providing  products which
subsequently  fail,  may  adversely  affect the Company's relationships with its
customers  and  have  a  material  adverse  effect  on  its  business, financial
condition  and results of operations.  The core operations of the Company may in
the  future  be  subject  to  FAA or other regulatory requirements.  The Company
closely  monitors  the FAA and industry trade groups in an attempt to understand
how  possible future regulations might impact the Company.  There can also be no
assurance  that new and more stringent government regulations, if enacted, would
not  have  a  direct  or  indirect  adverse  effect  on  the  Company.

     An  important  factor  in  the  aircraft  spare parts redistribution market
relates  to  the  documentation and traceability of an aircraft spare part.  The
Company  requires  all  of  its  suppliers  to provide adequate documentation as
dictated  by  the  Company's  customers.  The  Company  utilizes electronic data
scanning  and  storage  techniques  to  maintain  complete  copies  of  all
documentation.  Documentation  required  includes,  where  applicable,  (i)  a
maintenance  release  from a certified FAA repair facility signed and dated by a
licensed  airframe  and/or power plant mechanic or other certified inspector who
repaired  the  aircraft  spare part and an inspection to certify that the proper
methods,  materials  and  workmanship  were  used,  (ii)  a  "tear-down"  report
detailing  the  discrepancies  and corrective actions taken during the last shop
repair,  and  (iii)  an  invoice  or  purchase  order  for  an  approved source.

     NSA  has  been  subject  to  FAA  regulation  since the commencement of its
business  activities.  Under  the  Federal Aviation Act of 1958, as amended, the
FAA  is concerned with safety and the regulation of flight operations generally,
including  equipment  used,  ground  facilities, maintenance, communications and
other  matters.  The  FAA can suspend or revoke the authority of air carriers or
their  licensed  personnel  for  failure  to comply with its regulations and can
ground  aircraft  if  questions  arise  concerning airworthiness.  NSA holds all
operating,  airworthiness and other FAA certificates that are currently required
for the conduct of its business, although these certificates may be suspended or
revoked  for  cause.

PRODUCT  LIABILITY

     The  commercial  aviation  industry  periodically  experiences catastrophic
losses.  As  a  redistributor,  the  Company  may  be  named as a defendant in a
lawsuit as a result of such catastrophic loss if a part sold by the Company were
installed  in  an  incident-related  aircraft.  In  this  regard,  the  Company
maintains  product  liability  insurance  in  an  amount the Company believes is
sufficient.  While  the  Company  believes  that  it  has liability insurance to
protect  it  from  such claims, and while no lawsuit has ever been filed against
the  Company  based  upon  a product liability theory, no assurance can be given
that claims will not arise in the future or that such insurance coverage will be
adequate.  However,  an  uninsured  or  partially  insured claim, or a claim for
which  third-party  indemnification  is  not  available,  could  have a material
adverse  effect  on  the  Company's business, financial condition and results of
operations.  Additionally, there can be no assurance that insurance coverage can
be  maintained  in  the  future  at  an acceptable cost.  Any such liability not
covered  by  insurance  could  have  a  material adverse effect on the financial
condition  of  the  Company.

     NSA has secured public liability and property damage insurance in excess of
minimum amounts required by the United States Department of Transportation.  The
Company  has also obtained all-risk hull insurance on Company-owned aircraft and
maintains  cargo  liability  insurance.



COMPETITION

     The  aircraft spare parts redistribution market is highly competitive.  The
market  consists  of  a  limited  number of well-capitalized companies selling a
broad  range  of products and numerous small competitors serving distinct market
niches.  Certain  of  these  competitors  have  substantially greater financial,
marketing  and  other  resources  than  the  Company.  The Company believes that
current  industry  trends  will benefit larger, well-capitalized companies.  The
Company  believes  that range and depth of inventories, quality and traceability
of  products, service and price are the key competitive factors in the industry.
The  principal  companies  with  which the Company competes are AAR Corp., AGES,
Aviation  Sales  Company, Kellstrom Industries Inc., The Memphis Group, Inc. and
AVTEAM,  all  of  which are significantly larger than the Company.  Customers in
need  of  aircraft parts have access, through on-line inventory catalogues, to a
broad  array  of  suppliers,  including  aircraft  manufacturers,  airlines  and
aircraft services companies, which may have the effect of increasing competition
for,  and  lowering  prices  on,  parts  sales.

     NSA  operates in highly competitive markets and competes with approximately
50  other  contract cargo carriers in the United States.  Accurate industry data
is  not  available  to  indicate  NSA's  position  within  its  marketplace, but
management  believes that NSA is currently one of the smaller contract carriers.
NSA's  competitors,  however,  typically  utilize  older  generation  and  less
efficient aircraft, and are not as well capitalized than the Company.  Given the
growth  in  the  regional  freight  and  passenger  charter  markets expected by
management,  access  to capital will be critical to successfully compete in this
industry.

EMPLOYEES

     As  of  May  31,  2000, the Company had 38 employees.  The Company is not a
party  to  any  collective  bargaining  agreement.  The  Company  believes  its
relations  with  its  employees  are  good.

CAUTIONARY  STATEMENTS

     This Annual Report on Form 10-K contains certain forward-looking statements
within  the  meaning  of the Exchange Act, including the plans and objectives of
management  for  the  business,  operations  and  financial  performance  of the
Company.  The  forward-looking statements and associated risks set forth in this
Annual  Report  may  include  or  relate to, among other things, the factors set
forth  below,  together  with other information set forth in this Annual Report.

     Risks  Associated  with Leases.  The Company currently leases three Embraer
EMB-120  aircraft and two Pratt & Whitney JT8D series engines.  The Company also
owns  a  50%  interest in a joint venture that leases 20 DC-9-41H aircraft.  The
success  of  an  operating  lease  depends  in part upon having the aircraft and
engines returned to the Company in marketable condition as required by the lease
of  such aircraft and engines.  In addition, the financial return to the Company
from a leased aircraft or engine depends in part on the re-lease of aircraft and
engines  on  favorable terms on a timely basis, the ability to sell the aircraft
or  engines at favorable prices or realize sufficient value from the disassembly
for  parts  of  the  aircraft or engines at the end of the lease term.  Numerous
factors, many of which are beyond the control of the Company, may have an impact
on the Company's ability to re-lease or sell aircraft, engines and parts.  These
factors  include  general  market  conditions,  regulatory changes (particularly
those  imposing  environmental,  maintenance  and  other  requirements  on  the
operation  of  aircraft  and engines), changes in the supply or cost of aircraft
and  engines  and  technological  development.  Consequently,  there  can  be no
assurance  that  the  Company's estimated residual value for aircraft or engines
will  be  realized.  If  the Company is unable to re-lease, sell its aircraft or
engines  on favorable terms or realize sufficient value from the disassembly for
parts  of  the  aircraft  or  engines  on  a timely basis upon expiration of the
related  lease,  its business, financial condition and results of operations may
be  adversely  affected.  In the event that a lessee defaults in the performance
of  its  obligations,  the Company may be unable to enforce its remedies under a
lease.  The  Company's  inability  to  collect  lease  payments  when  due or to
repossess  aircraft  or engines in the event of a default by a lessee could have
an  adverse effect on the Company's business, financial condition and results of
operations.  If  the  Company  were  to  acquire an aircraft or engines and such
acquisitions  were  not  financed  by additional borrowing, it could result in a
reduction  of  the  Company's  liquidity.

     Risks Regarding the Company's Inventory.  The Company acquires inventory by
purchasing  individual  parts  from  airlines,  repair  facilities  or  other
redistributors,  by  purchasing  excess inventory from aircraft operators, or by
purchasing  aircraft  for disassembly.  The Company also obtains parts inventory
on consignment from airlines.  The Company's business is substantially dependent
on  its  ability  to  acquire  inventory by one of these methods because its net
sales  are  directly  influenced  by  the  level  and  composition  of inventory
available for sale.  Because the size and composition of the Company's inventory
is  critical  to  its  results  of  operations and because there is no organized
market  to  procure  surplus  inventory, the Company's operations are materially
dependent  on  the  success  of  management  in identifying potential sources of
inventory  and  obtaining  a consignment of the inventory on acceptable terms or
purchasing  it  at  acceptable prices.  There can be no assurance that inventory
will  be  available on acceptable terms or at the times required by the Company.
In addition, once acquired, the market value of the Company's inventory could be
adversely  affected  by factors beyond the Company's control, such as the sudden
availability  of  additional  inventory,  a  sudden  decline  in  demand for the
Company's  parts  due  to a decline in use of certain aircraft types, regulatory
changes  mandating  uneconomic improvements to items in inventory, or a decision
by  an  OEM to begin manufacturing new parts that would compete with aftermarket
parts.  Any  of  such  factors  could  result  in  the Company's inventory being
overvalued  and could require the Company to write down its inventory valuations
in  order to bring them in line with the revised fair market value.  The failure
to  identify  and acquire inventory in a timely fashion on acceptable terms or a
decline  in  the  value of the Company's inventory would have a material adverse
effect on the Company's business, financial condition and results of operations.

     Concentration  on  MD-80  and  DC-9 Aircraft.  The Company's net  sales are
concentrated  in  the aftermarket for MD-80 and DC-9 aircraft, which aircraft at
December  31,  1998  accounted  for  approximately  13.2%  of the commercial jet
aircraft in service worldwide according to the World Jet Inventory.  Neither the
DC-9  nor the MD-80 is still in production.  Any decline in the use of MD-80 and
DC-9  aircraft  by  aircraft  operators, the unscheduled removal from service of
large  numbers  of  MD-80 and DC-9 aircraft or the grounding of such aircraft by
governmental  authorities for any reason could have a material adverse effect on
the  Company's  business,  financial  condition  and  results of operations.  In
addition,  all  DC-9  aircraft  operated in the United States and European Union
will need to be hush-kitted, relocated to other areas or removed from service by
2000  or  2002,  respectively.  In  the  event  these  aircraft are removed from
service,  demand  for  the  Company's MD-80 and DC-9 parts could decline and the
supply  of  spare parts may increase, which would have a material adverse effect
on  the  Company's  business,  financial  condition  and  results of operations.

     Broadening  of Product Line.  The Company has recently expanded its product
line  to  include  aftermarket  parts for Airbus A-300, McDonnell Douglas DC-10,
Boeing  747  aircraft and certain commuter turboprop aircraft including Embraer,
Shorts,  Saab,  de  Havilland, British Aerospace and ATR aircraft.  In addition,
the  Company  intends  to  broaden further its product line to include parts for
other aircraft that are likely to be converted to freighters, such as Boeing 767
and  757  aircraft.  The  Company  has  limited  experience  with respect to the
purchase  and  sale  of  spare parts for these aircraft models.  There can be no
assurance  that  the Company will have the same level of success in managing its
parts  inventories  for  such  aircraft that it has had with parts for MD-80 and
DC-9  aircraft.  The failure to successfully broaden its product line could have
a  material  adverse  effect  on  the  Company's ability to implement its growth
strategy.

     Effects  of  the  Economy  on the Operations of the Company.  The Company's
customers  include  a  wide  variety  of  domestic  and  international air cargo
carriers,  major  commercial,  regional  and  commuter  passenger  airlines,
maintenance  and  repair  facilities and other redistributors.  As a result, the
Company's  business  can  be  impacted  by  the economic factors that affect the
airline  and  air  cargo  industries.  When  such  factors  adversely affect the
airline  and  air  cargo industries, they tend to cause downward pressure on the
pricing  for  aircraft  spare parts and increase the credit risk associated with
doing business with airlines and air cargo carriers.  Additionally, factors such
as  the price of fuel affect the aircraft spare parts market for older aircraft,
since  older  aircraft  become less competitive with newer model aircraft as the
price  of  fuel  increases.  There  can  be no assurance that economic and other
factors  which might affect the airline and air cargo industries will not have a
material  adverse  effect  on  the  Company's  business, financial condition and
results  of  operations.

     Risks  Associated  with  Acquisitions.  One of the Company's strategies for
growth  is  to pursue acquisitions of aftermarket redistributors, small aircraft
leasing  companies  and  regional  air  carriers.  Currently, the Company has no
acquisition  agreements, understandings or commitments for any acquisitions and,
in  order to consummate an acquisition, the Company would be required to receive
the consent of the lender under its Credit Agreement.  There can be no assurance
that  any  such  acquisitions  will be completed on reasonable terms, if at all.
Certain of the Company's competitors may also seek to acquire the same companies
which  the  Company  seeks  to acquire.  This may increase the price and related
costs at which the Company could otherwise have acquired such companies, perhaps
materially.  The  Company's  inability  to  complete  acquisitions on reasonable
terms  could  limit  the  Company's  ability  to  grow  its  business.

     The  Company  may  expend  significant  funds  to  pursue  and  consummate
acquisitions.  Such use of funds would reduce the Company's working capital.  In
addition,  the  Company  may  fund  acquisitions  in whole or in part by issuing
equity securities, and any such issuances, individually or in the aggregate, may
be dilutive to holders of the Common Stock.  Acquisitions also may result in the
Company  incurring  additional debt and amortizing costs related to goodwill and
other intangible assets, either of which could have a material adverse effect on
the  Company's  business,  financial  condition  and  results  of  operations.

     The  Company  may  experience  difficulties in assimilating the operations,
services  and  personnel  of  acquired companies and may be unable to sustain or
improve the historical revenue and earnings levels of acquired companies, any of
which  may  materially  adversely  affect  the  Company's  business,  financial
condition  and  results  of  operations.  In  addition, to the extent it becomes
necessary  for  the Company to fund the working capital requirements of acquired
companies,  the  Company's  working capital available for its currently existing
operations  would  decrease.  Acquisitions involve a number of additional risks,
including  the  diversion  of  management's  attention  from  ongoing  business
operations and the potential loss of key employees of acquired companies.  There
can  be no assurance that the Company can successfully implement its acquisition
strategy.  The  failure  to  consummate  acquisitions on reasonable terms or the
inability to successfully integrate and manage acquired operations and personnel
could  have  a  material  adverse  impact  on  the Company's business, financial
condition  and  results  of  operations.

     Risks  Associated  with  Air Carrier Operations.  The Company's air carrier
subsidiary  operates  in  an  industry  that typically experiences lower average
margins  than  the Company's other operations.  The Company's ability to operate
its  air  carrier subsidiary profitably depends on its ability to control costs,
many  of  which  are  beyond  the Company's control.  Examples of costs that the
Company is unable to control are fuel costs, which are affected by political and
economic  conditions  throughout  the  world,  and  the  costs  of  regulatory
compliance.  The  Company  believes  that  its  existing financial resources are
sufficient to permit it to implement its business plan for NSA.  However, if the
Company  requires additional capital resources to fund the operations of NSA, it
may  be  unable to obtain them on favorable terms, if at all.  The Company's air
carrier  operations  may also result in demands on the Company's management time
and  liquidity that may preclude the Company from pursuing more profitable parts
sales  opportunities.

     Reliance  on  Executive  Officers.  The continued success of the Company is
dependent  to  a  significant degree upon the services of its executive officers
and  upon  the  Company's  ability  to  attract  and  retain qualified personnel
experienced in the various phases of the Company's business.  The ability of the
Company  to  operate  successfully  could  be  jeopardized if one or more of its
executive  officers were unavailable and capable successors were not found.  The
Company  does  not  maintain key man insurance on any of its executive officers.
The  Company has employment agreements with Alexius A. Dyer III, its Chairman of
the  Board,  President  and Chief Executive Officer, and George Murnane III, its
Executive Vice President and Chief Operating Officer.  The employment agreements
between  the Company and Messrs. Dyer and Murnane are individually terminable by
each  executive  officer  upon  a  change  of  control  of  the  Company.

ITEM  2.     PROPERTIES.
-------      ----------

     The  Company's executive offices and operations are located at 1954 Airport
Road,  Suite  200,  Atlanta,  Georgia  30341,  consisting of approximately 3,600
square  feet  of leased space pursuant to a lease expiring in January 2003.  The
Company  leases approximately 29,500 square feet of warehouse facilities in Fort
Lauderdale,  Florida  pursuant to a lease expiring in June 2002.  All facilities
are  rented  at  competitive  rates for their location and utility.  The Company
believes  that  its  facilities  are  adequate for its needs for the foreseeable
future.


ITEM  3.     LEGAL  PROCEEDINGS.
-------      ------------------

     The  Company  is  not  now  a defendant in any material litigation or other
legal  proceeding.  The  Company  may become a defendant in legal proceedings in
the  ordinary  course  of  business.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.
-------      -----------------------------------------------------------

     None.

<PAGE>
                                     PART II

ITEM  5.     MARKET  FOR  THE  REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
-------      -------------------------------------------------------------------
MATTERS.
-------

     The  Company's  Common Stock, which has been publicly traded since April 2,
1990,  is  listed  and  traded  on  the American Stock Exchange under the symbol
"YLF."  The  following  table  sets forth the high and low closing prices of the
Common  Stock  as  reported  on  the American Stock Exchange for each quarter in
fiscal  2000  and  1999.

2000  Fiscal  Year             High             Low
------------------             ----             ---
First  Quarter                 $  4.625        $  4.25
Second  Quarter                   4.4375          3.75
Third  Quarter                    3.75            3.125
Fourth  Quarter                   4.5             2.625

1999  Fiscal  Year             High             Low
------------------             ----             ---
First  Quarter                 $  8.5          $  5.875
Second  Quarter                   7.125           3.75
Third  Quarter                    5.5             3.25
Fourth  Quarter                   4.625           3.75

     At  August  10,  2000,  there  were  105 holders of record of the Company's
Common  Stock.

     The  Company  has  never paid dividends on the Common Stock.  The Company's
secured  credit  facility  prohibits  the  Company  from paying dividends on the
Common  Stock  as  long as indebtedness issued pursuant to such facility remains
outstanding.  It  unlikely  that  the  Company  will pay dividends on the Common
Stock  in  the  foreseeable  future.



<PAGE>
------
ITEM  6.     SELECTED  FINANCIAL  DATA.
-------      -------------------------

     The selected consolidated financial data presented below for, and as of the
end  of,  each  of  the fiscal years in the five-year period ended May 31, 2000,
have  been derived from the Company's audited consolidated financial statements.
The consolidated financial statements of the Company as of May 31, 1999 and 2000
and  for  the  three-year period ended May 31, 2000 and the accountant's reports
thereon  are  included  in  Item  8  of  this  Form  10-K.

<TABLE>
<CAPTION>
                                                                                YEAR ENDED MAY 31,
                                                          1996      1997        1998           1999          2000
                                                       ---------   --------   --------      --------      ----------
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATING  DATA:
----------------
<S>                                                  <C>          <C>         <C>             <C>            <C>
Net  sales                                             $21,410     $20,123     $25,648     $   24,344     $   23,480
Lease  and  service  revenue                             1,795       1,109       2,315          3,328          2,724
                                                        ------     ------       ------         ------         ------
Total  revenue                                          23,205      21,232      27,963         27,672         26,204
Total  operating expenses                               18,528      17,423      23,186         24,406         24,247
Equity  in  earnings  of  joint  venture                  --         --          --             1,026          1,757
                                                        ------     ------       ------         ------         ------
Income  from  continuing  operations                     4,677       3,809       4,777          4,292          3,714
Interest  expense,  net                                  2,377       1,550       1,934          1,302          1,657
                                                        ------     ------       ------         ------         ------
Earnings  before  income  taxes
 and  extraordinary  item                                2,300       2,259       2,843          2,990          2,057
Provision  (benefit)  for  income  taxes                    14        --        (2,820)         1,036            800

Earnings  before  extraordinary  item                    2,286       2,259       5,663          1,954          1,257

Extraordinary  loss  on  extinguishment  of  debt          --         (531)       --             --             --
                                                        ------     ------       ------         ------         ------
Net  earnings                                         $  2,286    $  1,728    $  5,663    $     1,954     $    1,257
                                                      ========    ========    ========    ===========     ==========
PER  SHARE  DATA:
-----------------

Earnings  per  common  share  -  basic
  before effect of extraordinary item                 $  15.27   $    1.37    $   2.29    $       .77     $      .57
Extraordinary  item                                        --        (0.32)       --              --             --
                                                        ------     ------       ------         ------         ------
Net  earnings                                         $  15.27   $    1.05    $   2.29    $       .77     $      .57
                                                      ========    ========    ========    ===========     ==========

Weighted  average  shares  outstanding  used
   in  basic  calculation                              149,696   1,646,629   2,471,025      2,550,940      2,189,539


Earnings  per  common  share - diluted before
  effect of extraordinary item                        $  12.69       $1.25       $2.03     $      .72     $      .55
Extraordinary  item                                       --         (0.29)       --              --             --
                                                        ------     ------       ------         ------         ------
Net  earnings                                         $  12.69     $  0.96       $2.03     $      .72     $      .55
                                                      ========    ========    ========    ===========     ==========
Weighted  average  shares  outstanding  used
 in diluted calculation                                242,288   1,806,938   2,793,414      2,720,513      2,268,472

</TABLE>

<PAGE>


<TABLE>
<CAPTION>
                                                                             AT  MAY  31,
                                                   -----------------------------------------------------------------
                                                       1996           1997            1998         1999        2000
                                                   -----------        -----     -----------   ----------    --------
                                                                          (IN  THOUSANDS)
BALANCE  SHEET  DATA:
---------------------
<S>                                                <C>           <C>             <C>            <C>       <C>
Working  capital  (deficit)                         $(10,841)    $  9,141          $10,228       $11,524    $13,444
Total  assets                                         16,132       21,287           23,636        23,976     35,183
Total  debt                                           18,144       13,749            9,648         9,594     20,094
Stockholders'  equity  (deficit)                      (7,416)       4,660           10,808        11,263     12,468
</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
------   -----------------------------------------------------------------------
OF  OPERATIONS.
--------------

OVERVIEW

     The  Company  is primarily engaged in the sale of aircraft, aircraft parts,
leasing  of  aircraft  and  engines and related services.  In addition, with the
acquisition  of NSA, the Company is engaged in the operation of a small regional
airline.  The Company's total revenue includes net parts sales revenue and lease
and  service revenue.   Net sales revenue includes revenue from individual parts
sales and revenue from aircraft and engine sales.  Aircraft and engine sales are
unpredictable  transactions,  dependent,  in part, upon the Company's ability to
purchase an aircraft or engine and resell it within a relatively brief period of
time.  In  a given period, a substantial portion of the Company's revenue may be
attributable  to  the  sale  of  aircraft  or  engines.  Cost  of sales consists
primarily  of  inventory,  aircraft  and engine costs and shipping charges.  The
cost  of  the  inventory  is  determined  on a specific identification basis and
inventory  is  stated  at  the lower of cost or market.  The Company's operating
results  are affected by many factors, including the timing of orders from large
customers,  the  timing of aircraft and engine sales, the timing of expenditures
to purchase parts inventory, aircraft and engines and the mix of parts contained
in  the  Company's  inventory.  The  Company  does not obtain long-term purchase
orders  or  commitments  from  its  customers.

     Revenue  from  the sale of parts is recognized when products are shipped to
the  customer.  Revenue  from  aircraft  and engine sales is recognized when the
Company has received consideration for the sale price, the risk of ownership has
passed  to  the  buyer,  and  collectibility  is  reasonably assured.  Lease and
service  revenue  are  recognized  on an accrual basis, unless collectibility is
uncertain.

RESULTS  OF  OPERATIONS

FISCAL  2000  COMPARED  WITH  FISCAL  1999

     Net  sales  decreased  by  3.6%  from $24.3 million in fiscal 1999 to $23.5
million  in fiscal 2000.  This decrease was primarily due to a decrease in parts
sales,  which  was partially offset by an increase in aircraft and engine sales.
During  fiscal  2000,  the Company sold nine engines as compared to fiscal 1999,
during  which  the  Company  sold  three  engines.  Lease  and  service  revenue
decreased 18.1% from $3.2 million in fiscal 1999 to $2.7 million in fiscal 2000,
due  primarily to fewer assets being on lease during fiscal 2000.  Due primarily
to  the  decrease in parts sales and lease and service revenue, partially offset
by  the  increase  in  aircraft  and engine sales, total revenue for fiscal 2000
decreased  5.3%  to  $26.2  million  from  $27.7  million  for  fiscal  1999.

     Cost  of  sales  decreased  4.7% from $18.2 million in fiscal 1999 to $17.4
million  in  fiscal  2000.  Cost  of  sales  as  a  percentage  of total revenue
increased  from  65.8%  in  fiscal  1999  to  66.2%  in fiscal 2000.  The slight
increase  in  the  cost of sales as a percentage of total revenue in fiscal 2000
compared  to  fiscal  1999 was due primarily to an increase in the cost of parts
sold.  As  the  Company  enters  into more consignment agreements and sells more
parts  on consignment, the Company anticipates that it will incur higher cost of
sales  as  a  percentage  of  revenues.  These  higher  cost  of sales should be
partially  offset  by  lower  inventory  costs,  including  interest.

     Selling,  general  and  administrative  expenses  increased 14.7% from $5.1
million in fiscal 1999 to $5.8 million in fiscal 2000.  This increase was due to
higher  expenses  related to legal and professional fees; travel, entertainment,
and  marketing  expenses;  health care costs; and outside commissions as outside
agents  were  involved in the sale of an aircraft and several engines, partially
offset  by  lower  compensation  expenses.  Another  factor  in  the increase in
selling,  general  and  administrative  expenses  was a $173,000 increase in the
Company's provision for doubtful accounts in fiscal 2000 as the Company recorded
no  provision  for  doubtful  accounts  in  fiscal  1999.

     Depreciation was $1,147,000 in fiscal 1999 compared to $1,092,000 in fiscal
2000.  The  net  decrease  from  fiscal 1999 to fiscal 2000 was due primarily to
fewer  assets  being  on  lease  during  fiscal  2000.

     Equity  in Net Earnings of Unconsolidated Joint Venture for fiscal 1999 was
$1,026,000  compared  to  $1,757,000  during  fiscal  2000.  This  increase  was
primarily  due  to  a full year of earnings in fiscal 2000 versus nine months of
earnings  in fiscal 1999, a decrease in the interest expense of the Air 41 Joint
Venture  as  the  debt  associated  with  the acquisition is reduced, and higher
revenue  from  the  re-lease  of  one  of  the  aircraft.

     Interest  expense  increased  29.9%  from  $1,315,000  in  fiscal  1999  to
$1,708,000  in  fiscal  2000.  The  increase in interest expense resulted from a
higher  outstanding average balance as the Company, among other things, financed
the  purchase of aircraft held for lease.  Furthermore, interest rates increased
during  the  period.  Interest  and  other  income  for  fiscal 2000 was $51,000
compared  to  other  income  of  $13,000  in  fiscal  1999.

     The  Company's  income  tax expense in fiscal 2000 was $800,000 compared to
$1,036,000  in  fiscal  1999.  Income  taxes have been provided at the Company's
estimated  effective  tax  rate of approximately 39% for fiscal 2000 compared to
35%  for  fiscal  1999.

     Net  earnings  for  fiscal 2000 were $1,257,000, or $0.57 per share - basic
and  $0.55  per  share  -  diluted,  compared to net earnings for fiscal 1999 of
$1,954,000,  or  $0.77  per  share  -  basic  and  $0.72  per  share  - diluted.

     In  the third quarter of fiscal 1999, the Company began acquiring shares of
its  common  stock  in  connection  with a stock repurchase program announced in
December  1998.  During  fiscal  1999, the Company repurchased 467,325 shares of
its  common stock at an average price of $4.16.  During fiscal 2000, the Company
repurchased  4,200  shares  of  its  common  stock at an average price of $4.39.


FISCAL  1999  COMPARED  WITH  FISCAL  1998

     Net  sales  decreased  by  5.1%  from $25.6 million in fiscal 1998 to $24.3
million  in  fiscal  1999.  This  decrease  was  primarily  due to a decrease in
aircraft  and  engine  sales, which was partially offset by an increase in parts
sales.  During  fiscal  1999,  the  Company acquired two aircraft and sold three
aircraft,  as  compared  to  fiscal  1998, during which the Company acquired two
aircraft  and  sold  four  aircraft.  During fiscal 1999, the Company sold three
engines as compared to fiscal 1998, during which the Company sold seven engines.
Lease  and  service  revenue  increased to $3.2 million in fiscal 1999 from $2.3
million  in fiscal 1998, due primarily to the Company's acquisition and lease of
three  spare  engines  during  the  first quarter of fiscal 1999.  These engines
remain  on  lease.  Due  primarily to the decrease in aircraft and engine sales,
partially  offset  by the increase in parts sales and lease and service revenue,
total revenue for fiscal 1999 decreased 1.0% to $27.7 million from $28.0 million
for  fiscal  1998.

     Cost  of  sales  increased  8.4% from $16.8 million in fiscal 1998 to $18.2
million  in  fiscal  1999.  Cost  of  sales  as  a  percentage  of total revenue
increased  from  60.0%  in fiscal 1998 to 65.8% in fiscal 1999.  The increase in
the  cost  of  sales  as  a  percentage of total revenue was due primarily to an
increase  in  the  cost  of aircraft and engine sales as a percent of revenue in
fiscal  1999  compared to fiscal 1998, as well as an increase in the cost of the
parts sold.  As the Company enters into more consignment agreements, the Company
anticipates that it will incur higher cost of sales.  These higher cost of sales
should  be  partially  offset  by  lower  inventory  costs,  including interest.

     Selling,  general  and  administrative  expenses  decreased  5.3% from $5.3
million  in  fiscal  1998 to $5.1 million in fiscal 1999.  This decrease was due
primarily  to  lower expenses related to compensation, travel and entertainment,
investor  relations,  and  the  Company's  provision  for  doubtful  accounts.



     Depreciation was $1,147,000 in fiscal 1999 compared to $1,060,000 in fiscal
1998.  The  net increase from fiscal 1998 to fiscal 1999 was due primarily to an
increase  in  depreciation of engines held for lease, resulting from the engines
acquired  in  the  first  quarter  of  fiscal  1999.

     Equity  in Net Earnings of Unconsolidated Joint Venture for fiscal 1999 was
$1,026,000  compared to $0 during fiscal 1998.  This increase was due to the Air
41  Joint  Venture,  which  was  entered  into  during  September  1998.

     Interest  expense  decreased  20.2%  from  $1,648,000  in  fiscal  1998  to
$1,315,000  in  fiscal  1999.  The reduction in interest expense resulted from a
lower  outstanding  average  balance  and  a  reduction  in  the  interest  rate
applicable  to  the outstanding balance.  Interest and other expenses for fiscal
1998 were $286,000 compared to other income of $13,000 in fiscal 1999.  Included
in  the  interest  and  other  expense  for  fiscal 1998 is $400,000 in expenses
relating  to  a  withdrawn  secondary  offering.

     The  Company's  income  tax  benefit  for  fiscal  1998  was  $2.8 million,
primarily  due  to  a  reduction  in the valuation allowance applied against its
deferred  tax  assets  and  the utilization of net operating loss carryforwards.
The  Company's  income  tax expense in fiscal 1999 was $1,036,000.  Income taxes
have  been  provided  at  the  Company's  estimated  effective  tax  rate  of
approximately  35%  for  fiscal 1999.  In the prior year, the Company recognized
deferred  tax  benefits as the realization of such benefits was determined to be
more  likely  than  not  because of the Company's consistent profitability.  The
realization  of  the  tax  benefits  was accomplished through a reduction in the
valuation  allowance  that had been previously established against the Company's
deferred  tax  assets.

     Earnings  before  income  taxes increased from $2,843,000 in fiscal 1998 to
$2,990,000 in fiscal 1999.  Earnings for fiscal 1999 were benefited by equity in
net  earnings  of  unconsolidated  joint  venture,  the Air 41 Joint Venture, of
$1,026,000.  Net  earnings for fiscal 1998 were $5,663,000, or $2.29 per share -
basic and $2.03 per share - diluted, compared to net earnings for fiscal 1999 of
$1,954,000,  or $0.77 per share - basic and $0.72 per share - diluted.  On a pro
forma basis, adjusted as if the Company had been a full taxpayer in fiscal 1998,
earnings  per  share  -  diluted  for  fiscal  1998  would  have  been  $0.67.

     In  the  third  quarter  of 1999, the Company began acquiring shares of its
common stock in connection with a stock repurchase program announced in December
1998.  During  fiscal 1999, the Company repurchased 467,325 shares of its common
stock  at  an  average  price  of  $4.16.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Credit  Agreement originally entered into by the Company in October of
1996  provided  for  a  $3  million term loan and up to an $11 million revolving
credit.  The  Credit  Agreement has been amended to create several new term loan
facilities  and  to  increase  the revolving credit to $14 million (collectively
referred to as the "Credit Facility").  The revolving credit facility matures in
October  2001  and  the term loans mature on various dates through October 2001.
The interest rate that the Company is assessed is subject to fluctuation and may
change based upon certain financial covenants.  As of May 31, 2000, the interest
rate  under  the Credit Facility was the lender's base rate (9.50%) minus 0.25%.
The Credit Facility is secured by substantially all of the assets of the Company
and  availability of amounts for borrowing is subject to certain limitations and
restrictions.  Such  limitations and restrictions are discussed in the Company's
Proxy  Statement/Prospectus filed with the Securities and Exchange Commission on
August  29,  1996.

     Net  cash  provided  by (used in) operating activities for the fiscal years
ended  May  31,  1999  and  2000  amounted  to  $1.3  million  and  ($971,000),
respectively.  For  fiscal  1999,  the  primary  use  of  cash  from  operating
activities was an increase in accounts receivable offset partially by a decrease
in  inventory.  For  fiscal  2000,  the  primary  use  of  cash  from  operating
activities,  was  an  increase  in  inventories due to the purchase of aircraft,
partially  offset  by  a  reduction  in  the  parts  inventory.

     Net  cash  provided  by  (used in) investing activities for fiscal 1999 and
2000  amounted to $834,000 and ($8,695,000), respectively.  For fiscal 1999, the
Company  received  proceeds  from the sale of aircraft and engines that had been
held for lease of $5,875,000.  The primary use of funds for investing activities
was  the  Company's  investment  in  the  Air 41 Joint Venture of $1,587,000 and
capital  expenditures  for aircraft and engines of $3,786,000.  For fiscal 2000,
the  primary  use  of  funds  was  the  purchase  of  aircraft  held  for lease.

     Net  cash  provided  by  (used in) financing activities for fiscal 1999 and
2000  amounted  to  ($1,713,000) and $9,484,000, respectively.  For fiscal 1999,
net  of  borrowings, the Company prepaid $54,000 under the Credit Facility.  The
primary  use  of cash in financing activities was the purchase of treasury stock
for  $1,947,000.  The  Company  received  $288,000  in  proceeds from employees'
exercise  of  stock  options.  For  fiscal  2000,  net  of payments, the Company
borrowed  an  additional  $9.5  million  under  the  Credit  Facility.

     At  May  31,  2000, the Company was permitted to borrow up to an additional
$1.7  million  pursuant  to  the Credit Facility.  The Company believes that its
working  capital  and  amounts  available  under  the  Credit  Facility  will be
sufficient  to  meet the requirements of the Company for the foreseeable future.

FLUCTUATIONS  IN  OPERATING  RESULTS

     The  Company's  operating results, both on an annual and a quarterly basis,
are  affected  by  many  factors,  including  the  timing  of  large orders from
customers,  the  timing of expenditures to purchase inventory in anticipation of
future  sales,  the  Company's  ability  to  obtain  inventory on consignment on
acceptable  terms,  the  mix  of available aircraft spare parts contained at any
time  in  the  Company's  inventory,  the  timing of aircraft or engine sales or
leases,  unanticipated  aircraft  or  engine  lease terminations, default by any
lessees  and many other factors largely outside the Company's control. Since the
Company  typically does not obtain long-term purchase orders or commitments from
its  customers,  it  must  anticipate the future volume of orders based upon the
historic  purchasing patterns of its customers and discussions with customers as
to their future requirements. Cancellations, reductions or delays in orders by a
customer  or  group  of  customers  could  have a material adverse effect on the
Company's  business, financial condition and results of operations. In addition,
due  to  the  value of a single aircraft or engine sale relative to the value of
parts  typically  sold  by  the Company, any concentration of aircraft or engine
sales  in  a particular quarter may obscure existing or developing trends in the
Company's  business,  financial  condition  and  results  of  operations.

RECENT  ACCOUNTING  PRONOUNCEMENT

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  (FAS)  No.  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  FAS  No.  133,  as  amended by FAS 138,
establishes  standards  for accounting and reporting for derivative instruments,
and  conforms  the  requirements  for  treatment  of  different types of hedging
activities.  This  statement  is  effective for all fiscal years beginning after
June  15,  2000.  Management does not expect this standard to have a significant
impact  on  the  Company's  operations.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
--------   ----------------------------------------------------------------

     The  Company's  major  market  risk exposure is to changing interest rates.
The Company's policy is to manage interest rate risk through the use of floating
rate  debt  instruments.  The Company has loans under a Credit Facility totaling
approximately  $20.1  million  at May 31, 2000.  The interest rate on the Credit
Facility, which fluctuates based on certain financial ratios of the Company, was
the  lender's  prime  rate  less  .25%  at  May  31, 2000 (9.25%).  An immediate
increase  of  10% in interest rates would increase the Company's annual interest
expense  by  approximately  $186,000.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA
-------      -----------------------------------------------

     Information  with  respect  to  this  Item  is  contained  in the Company's
consolidated financial statements and financial statement schedules indicated in
the  Index  on  Page  F-1 of this Annual Report on Form 10-K and is incorporated
herein  by  reference.

ITEM  9.     CHANGES  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
-------      -------------------------------------------------------------------
FINANCIAL  DISCLOSURE.
------ --------------

None.

<PAGE>
                                    PART III


ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.
--------   --------------------------------------------------------

     The  information  contained  under the heading "Information as to Directors
and Executive Officers" in the Company's definitive proxy statement for its 2000
Annual  Meeting  of stockholders (the "2000 Proxy Statement") is incorporated by
reference  herein.

ITEM  11.  EXECUTIVE  COMPENSATION.
--------   -----------------------

     The information contained under the heading "Executive Compensation" in the
2000  Proxy  Statement  is  incorporated  herein  by  reference.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT.
--------   --------------------------------------------------------------------

     The  information  contained  under  the  headings  "Directors and Executive
Officers"  and  "Principal  Stockholders"  in  the  2000  Proxy  Statement  is
incorporated  herein  by  reference.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.
--------   --------------------------------------------------

     The  information  contained  under  the  heading  "Executive
Compensation--Certain  Transactions" in the 2000 Proxy Statement is incorporated
by  reference.


<PAGE>
                                     PART IV

ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES AND REPORTS ON FORM 8-KITEM
--------   ---------------------------------------------------------------------
14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON  FORM  8-K.
--   -----------------------------------------------------------------------


(a)  Financial  Statements     Page  or  Method  of  Filing

     (1)  Index  to  Consolidated  Financial  Statements                     F-1

     (2)  Report  of  Grant  Thornton  LLP                                   F-2

(3)  Consolidated  Financial  Statements  and  Notes  to  Consolidated Financial
Statements  of  the Company, including Consolidated Balance Sheets as of May 31,
2000 and 1999 and related Consolidated Statements of Earnings, Consolidated Cash
Flows  and  Consolidated Stockholders' Equity (Deficit) for each of the years in
the  three-year  period  ended  May  31,  2000                               F-3


(b)  Financial  Statements  Schedules     Page  or  Method  of  Filing

(1)           Schedule  II.  Valuation  and  Qualifying  Accounts            S-1


Schedules  not  listed  above  and  columns  within  certain Schedules have been
omitted  because  of  the absence of conditions under which they are required or
because  the  required  material  information  is  included  in the Consolidated
Financial  Statements or Notes to the Consolidated Financial Statements included
herein.

     (c)     Exhibits
             --------
<TABLE>
<CAPTION>

 Exhibit
 NUMBER  DESCRIPTION                PAGE NUMBER OR METHOD OF FILING
<S>      <C>                        <C>

 2.4     Credit                    Incorporated by reference to Exhibit 2.4 to
         Agreement                 Amendment   No.  2  to  the  Company's  Registration
         between BNY               Statement on Form S-4 filed on August 29, 1996 (File
         Financial                 No. 333-08065).
         Corporation
         and       the
         Registrant
         (the  "Credit
         Agreement").

 2.5     First
         Amendment,                Incorporated by Reference.
         Waiver and Agreement,
         dated as of March 24,
         1997, between BNY Financial
         Corporation and the
         Registrant and related
         to the Credit Agreement.

 2.6     Second                    Incorporated by Reference.
         Amendment and Agreement,
         dated as of September  9,
         1997, between BNY Financial
         Corporation and the Registrant
         and related to the Credit
         Agreement.

<PAGE>

 2.7     Third
         Amendment and              Incorporated by Reference.
         Agreement, dated as of
         October 15, 1997, between
         BNY Financial Corporation
         and the Registrant
         and related to the Credit
         Agreement.

 2.8     Fourth
         Amendment and              Incorporated by Reference.
         Agreement, dated as of
         February 2, 1998, between
         BNY Financial Corporation
         and the Registrant and
         related to the Credit
         Agreement.

 2.9     Fifth
         Amendment,                  Incorporated by Reference.
         dated as of July 16, 1998,
         between BNY Financial
         Corporation and the
         Registrant and related
         to the Credit Agreement.

 2.10    Sixth
         Amendment,                  Incorporated by Reference
         dated  as  of May 30, 1998,
         between   BNY Financial
         Corporation and the
         Registrant and related
         to the Credit Agreement.

 2.11    Seventh
         Amendment,                  Incorporated by Reference.
         dated  as of October   28,
         1998, between BNY Financial
         Corporation and the Registrant
         and   related to the Credit
         Agreement.



 3.1     Amended   and                Incorporated  by  reference  to  Exhibit  3.1 to the
         Restated                     Company's  Annual Report on Form 10-K for the fiscal
         Certificate                  year ended May 31, 1996 (the "1996 Form 10-K").
         of
         Incorporation
         of        the
         Registrant.

 3.2     Restated  and                Incorporated by reference to Exhibit 3.2 to the 1996
         Amended                      Form 10-K.
         Bylaws of the
         Registrant.

 4.1     Specimen                     Incorporated by reference to Exhibit 4.1 to the 1996
         Common  Stock                Form 10-K.
         Certificate.

 10.1.1  Employment                   Incorporated  by  reference to Exhibit 10.1.1 to the
         Agreement,                   1996 Form 10-K
         dated  as  of
         December   1,
         1995, between
         the
         Registrant
         and   Alexius
         A. Dyer  III,
         as amended on
         October    3,
         1996.

 10.1.2  Employment                  Incorporated  by  reference to Exhibit 10.1.2 to the
         Agreement                   Company's  Quarterly  Report  for  the quarter ended
         dated  as  of               February 28, 1997.
         October    3,
         1996, between
         the
         Registrant
         and    George
         Murnane III.

 10.2.1  1996    Long-               Incorporated by reference to Appendix B to the Proxy
         Term                        Statement/Prospectus   included   in  the  Company's
         Incentive and               Registration    Statement    on   Form   S-4   (File
         Share   Award No.           333-08065), filed on July 12, 1996.
         Plan.

                                 16
<PAGE>

 10.2.2  401(k) Plan.                Incorporated  by  reference  to  Exhibit 10-H to the
                                     Company's Annual Report on Form 10-K  for the fiscal
                                     year ended May 31, 1992 (the "1992 Form 10-K").

 10.2.3  Bonus Plan.                 Incorporated  by  reference to Exhibit 10.2.4 to the
                                     1992 Form 10-K.

 10.2.4  Cafeteria                   Incorporated  by  reference to Exhibit 10.2.5 of the
         Plan.                       Company's  Annual Report on Form 10-K for the fiscal
                                     year ended May 31, 1993.

 10.2.5  Form                        of Incorporated  by  reference to Exhibit 10.2.5 to the
         Option                      1996 Form 10-K.
         Certificate
         (Employee
         Non-Qualified
         Stock
         Option).

 10.2.6  Form of                     Incorporated  by  reference to Exhibit 10.2.6 to the
         Option                      1996 Form 10-K.
         Certificate
         (Director
         Non-Qualified
         Stock
         Option).

 10.2.7  Form of                     Incorporated  by  reference to Exhibit 10.2.7 to the
         Option                      1996 Form 10-K.
         Certificate
         (Incentive
         Stock
         Option).

 10.14   Commission                  Incorporated  by  reference  to Exhibit 10.14 to the
         Agreement                   1996 Form 10-K.
         Dated
         December 1,
         1995  between
         the
         Registrant
         and      J.M.
         Associates,
         Inc.

 10.15   Operating                   Incorporated  by  reference  to Exhibit 10.14 to the
         Air41    LLC,               Exhibit 10.15 to the 1999 Form 10-K
         dated as of
         September 9,
         1998,  by and
         between
         AirCorp, Inc.
         and the
         Company

 10.16   Office  Lease                Incorporated  by  reference  to Exhibit 10.17 to the
         Agreement                    1997 Form 10-K.
         dated January
         31,      1997
         between   the
         Registrant
         and     Globe
         Corporate
         Center,    as
         amended.

 10.17   Lease                        Incorporated  by  reference  to Exhibit 10.18 to the
         Agreement                    1997 Form 10-K.
         dated   March
         31,      1997
         between   the
         Registrant
         and  Port 95-
         4, Ltd.

 21      Subsidiaries                 Filed herewith.

 23      Consent of Grant Thornton    Filed herewith.

 27      Financial                    Filed herewith.
         Data
         Schedule.
</TABLE>

     The  Company  did  not  file  a  Current Report on Form 8-K during the last
quarter  of  the  fiscal  year  covered  by  this  Annual  Report.



<PAGE>
                                   SIGNATURES


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized this 28th day
of  August,  2000.


     International  Airline  Support  Group,  Inc.,
a  Delaware  corporation


By:       /s/  A.A.  Dyer  III
   ---------------------------
      Alexius  A.  Dyer  III
      Chairman  of  the  Board,  Chief  Executive  Officer
      and  President


     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  on Form 10-K has been signed below by the following persons on behalf of
the  Company  and  in  the  capacities  and  on  the  dates  indicated.


SIGNATURE     TITLE     DATE
---------     -----     ----


  /s/  A.A.  Dyer  III     Chairman  of  the  Board, Chief Executive Officer and
----------------------
                           President  and  Director
Alexius  A.  Dyer  III     (Principal  Executive  Officer)     August  28,  2000


 /s/  George  Murnane  III
---------------------------
George  Murnane  III     Executive  Vice  President, Chief Operating Officer and
                         Director                              August  28,  2000


  /s/  James  M.  Isaacson  Chief  Financial  Officer,  Treasurer
--------------------------
      James  M. Isaacson    and Secretary  (Principal Financial Officer and
                            Principal Accounting Officer)      August  28,  2000


  /s/  F.  Dixon  McElwee,  Jr.
-------------------------------
       F.  Dixon  McElwee,  Jr.   Director                     August  28,  2000


  /s/  E.  James  Mueller
-------------------------
       E.  James  Mueller         Director                     August  28,  2000

<PAGE>






















                      [THIS PAGE INTENTIONALLY LEFT BLANK]


<PAGE>


            INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARY

                          INDEX TO FINANCIAL STATEMENTS


                                                                 PAGE
                                                                 ----

Report  of  independent  certified  public  accountants          F-2

Consolidated  balance  sheets  as  of  May  31,  2000
  and  1999                                                      F-3

Consolidated  statements  of earnings for the years ended
  May 31, 2000, 1999 and 1998                                    F-4

Consolidated statement of stockholders' equity (deficit)
  for the years ended May 31, 2000,  1999 and 1998               F-5

Consolidated statements of cash flows for the years ended
  May 31, 2000, 1999 and 1998                                    F-6

Notes  to  consolidated  financial  statements                   F-8

Schedule  II  -  Valuation  and  qualifying  accounts            S-1


<PAGE>


                                       F-2


                     FINANCIAL  STATEMENTS  AND  REPORT
                     OF  INDEPENDENT  CERTIFIED
                     PUBLIC  ACCOUNTANTS

                     INTERNATIONAL  AIRLINE  SUPPORT
                     GROUP,  INC.  AND  SUBSIDIARIES

                     MAY  31,  2000,  1999  AND  1998


<PAGE>
                                       F-2

                       [Letterhead of Grant Thornton LLP]






                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS



Board  of  Directors  and  Stockholders
International  Airline  Support  Group,  Inc.

We  have  audited  the accompanying consolidated balance sheets of International
Airline  Support  Group,  Inc. and Subsidiaries as of May 31, 2000 and 1999, and
the  related  consolidated statements of earnings, stockholders' equity and cash
flows  for  each  of  the  three  years  ended  May  31,  2000.  These financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States.  Those  standards  require that we plan and perform the
audit  to obtain reasonable assurance about whether the financial statements are
free  of  material  misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit  also  includes  assessing  the accounting principles used and significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the  consolidated  financial position of International
Airline  Support  Group, Inc. and Subsidiary as of May 31, 2000 and 1999 and the
consolidated  results of its operations and its consolidated cash flows for each
of  the three years ended May 31, 2000, in conformity with accounting principles
generally  accepted  in  the  United  States.

We  have  also  audited Schedule II of International Airline Support Group, Inc.
and  Subsidiaries  for  each  of  the  three  years  ended May 31, 2000.  In our
opinion,  this  schedule  presents  fairly,  in  all  material  respects,  the
information  required  to  be  set  forth  therein.



                                        /s/  Grant  Thornton  LLP


Miami,  Florida
July  21,  2000


<PAGE>

The  accompanying  notes  are  an  integral  part  of  these  statements.

                                       F-4
           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                          May  31,
                                               ---------------------------
                                                 2000                 1999
                                             -----------          -----------
<S>                                         <C>                 <C>
Current  assets
     Cash  and  cash  equivalents          $     721,111       $     892,283
     Accounts  receivable,  net  of
      allowance  for  doubtful  accounts
       of  $172,722  in  2000  and
       $342,420  in  1999                      2,647,215           2,812,500
     Inventories                              12,807,512          11,131,059
     Deferred  tax  benefit                    1,053,888           1,128,302
     Other  current  assets                      583,626             134,274
                                                 -------             -------
                    Total current assets      17,813,352          16,098,418

Property  and  equipment
     Aircraft  in  operations                  1,114,919              -
     Aircraft  and engines held for lease     12,832,298           4,593,854
     Leasehold  improvements                     176,594             157,175
     Machinery  and  equipment                 1,074,576             988,983
                                               ---------             -------
                                              15,198,387           5,740,012
     Less  accumulated  depreciation           2,263,110           1,734,503
                                               ---------           ---------

            Property  and  equipment,  net    12,935,277           4,005,509

Other  assets
     Investment  in  joint  venture            3,860,136           2,373,572
     Deferred  debt  costs,  net                 228,066             360,406
     Deferred  tax  benefit                      345,883           1,071,959
     Deposits  and  other  assets                   -                 66,155
                                                    -                 ------
                                               4,434,085           3,872,092
                                               ---------           ---------

                                        $     35,182,714    $     23,976,019
                                        =     ==========    =     ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current  liabilities
     Current  maturities  of
     long-term  obligations              $     1,748,642    $      1,455,600
     Accounts  payable                         1,359,998           2,034,888
     Accrued  liabilities                      1,261,147           1,084,332
                                               ---------           ---------
          Total  current  liabilities          4,369,787           4,574,820

Long-term  obligations,  less  current
     maturities                               18,345,079           8,138,059

Commitments  and  contingencies                   -                    -

Stockholders'  equity
     Preferred  stock  -  $.001  par
      value;  authorized  2,000,000  shares;
      no  shares  outstanding  in  2000
      and  1999,  respectively                    -                    -
     Common  stock  -  $.001  par  value;
      authorized  20,000,000  shares;
      issued  and  outstanding  2,661,723
      and  2,655,723  shares  in  2000
       and  1999,  respectively                    2,661               2,655
     Additional  paid-in  capital             13,902,909          13,936,089
     Retained earnings (accumulated deficit)     527,769            (728,824)
     Common  stock  in  treasury,  at  cost
      -  471,525  and  467,325  shares
        in 2000 and 1999, respectively        (1,965,491)         (1,946,780)
                                              ----------          ----------
           Total  stockholders'  equity       12,467,848          11,263,140

                                        $     35,182,714   $      23,976,019
                                        =     ==========   =      ==========
</TABLE>

The  accompanying  notes  are  an  integral  part  of  this  statement.
<PAGE>
           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS


<TABLE>
<CAPTION>
                                                                        Years  Ended  May  31,
                                                            ---------------------------------------------
                                                             2000                1999                1998
                                                        -----------          ----------          ----------
<S>                                                  <C>               <C>                   <C>
Revenues
     Net  sales                                    $     23,479,801    $     24,344,083     $    25,647,782
     Lease  and  service  revenue                         2,724,365           3,327,859           2,314,830
                                                        -----------          ----------          ----------
                    Total  revenues                      26,204,166          27,671,942          27,962,612

Cost  of  sales                                          17,350,142          18,196,982          16,781,517
Selling,  general  and  administrative  expenses          5,805,426           5,062,525           5,344,171
Depreciation                                              1,091,816           1,146,912           1,060,397
                                                          ---------           ---------           ---------

                    Total  costs                         24,247,384          24,406,419          23,186,085

Equity  in  net  earnings  of  unconsolidated
  joint  venture                                          1,757,114           1,026,359              -
                                                          ---------           ---------          ----------

                    Income from operations                3,713,896           4,291,882           4,776,527

Interest  expense                                         1,707,998           1,314,503           1,647,770
Interest  and  other  (income)  expense                     (51,185)            (13,082)            286,018
                                                        -----------          ----------          ----------
                    Earnings  before  income  taxes       2,057,083           2,990,461           2,842,739

Provision  (benefit)  for  income  taxes                    800,490           1,036,145          (2,819,933)
                                                        -----------          ----------          ----------
                    Net  earnings                   $     1,256,593     $     1,954,316     $     5,662,672
                                                          =========           =========           =========
Per  share  data:
     Earnings  per  common  share  -  basic         $           .57     $           .77     $          2.29

     Weighted  average  shares  outstanding
       used  in  basic calculation                        2,189,539           2,550,940           2,471,025
                                                          =========           =========           =========

     Earnings  per  common  share  -  diluted       $           .55     $           .72     $          2.03

     Weighted  average  shares  outstanding  used
       in  diluted calculation                            2,268,472           2,720,513           2,793,414
                                                          =========           =========           =========

</TABLE>

The  accompanying  notes  are  an  integral  part  of  this  statement.
<PAGE>
                                       F-7

           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)


<TABLE>
<CAPTION>
                                                                        Unrealized        Retained      Common
                    Common  Stock                        Additional      Loss  on          Earnings     Stockin
                      Number  of        Par              Paid-In          Equity        (Accumulated    Treasury,
                       Shares          Value             Capital         Security          Deficit)     at  Cost          Total
                      ---------      ----------        -------------  -------------       ----------    ----------     -----------
<S>                  <C>            <C>               <C>               <C>          <C>                  <C>        <C>
Balance  at  June  1,
  1998                2,395,095     $     2,395     $    13,003,686     $     -     $     (8,345,812)     $     -    $   4,660,269

Exercise  of  stock
  options               167,572             167             507,924           -                 -               -          508,091

Unrealized  loss  on
  equity  security          -                -                 -          (22,545)              -               -          (22,545)

Net  earnings               -                -                 -             -             5,662,672            -        5,662,672
                      ---------      ----------        -------------  -------------       ----------      ----------  ------------

Balance  at  May  31,
  1998                2,562,667           2,562          13,511,610       (22,545)        (2,683,140)           -       10,808,487

Exercise  of  stock
  options                93,056              93             288,394          -                 -                -          288,487

Tax  benefit  from
  exercise of  stock
  options                  -                 -              136,085          -                 -                -          136,085

Repurchase  of  common
  stock                    -                 -                 -             -                 -         (1,946,780)    (1,946,780)

Sale  of  equity
  security                 -                 -                 -           22,545              -               -            22,545


Net  earnings              -                 -                 -             -             1,954,316           -         1,954,316
                      ---------      ----------        -------------  -------------       ----------      ----------  ------------

Balance  at  May  31,
  1999                2,655,723          2,655           13,936,089          -              (728,824)    (1,946,780)    11,263,140

Exercise  of  stock
  options                 6,000              6               19,557          -                  -              -            19,563
Repurchase  of  stock
  options                  -                 -              (52,737)         -                  -              -           (52,737)

Repurchase  of  common
  stock                    -                 -                 -             -                  -          (18,711)        (18,711)

Net  earnings              -                 -                 -             -             1,256,593          -          1,256,593
                      ---------      ----------        -------------  -------------       ----------      ----------  ------------

Balance  at  May
  31,  2000       $   2,661,723     $     2,661     $     13,902,909   $     -         $     527,769   $ (1,965,491) $  12,467,848
                        =======      ==========           ==========   ============    =============   ============= =============
</TABLE>



The  accompanying  notes  are  an  integral  part  of  this  statement.


<PAGE>
           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                     Years  Ended  May  31,
                                                                        --------------------------------------------
                                                                        2000                1999                1998
                                                                     ----------          ----------          ----------
<S>                                                              <C>                 <C>                 <C>
Cash  flows  from  operating  activities:
     Net  earnings                                              $     1,256,593     $     1,954,316     $     5,662,672
     Adjustments  to  reconcile  net  earnings  to  net  cash
       provided  by  operating  activities:
          Depreciation  and  amortization                             1,423,653           1,299,728           1,159,731
          Gain on sale of aircraft and engines held for lease          (108,611)           (865,276)           (267,109)
          Unrealized  loss  on  equity  securities                         -                 22,545                -
          Earnings  of  joint  venture                               (1,757,114)         (1,026,359)               -
          Decrease  (increase)  in  deferred  tax  benefit              800,490             898,754          (2,890,247)
          Decrease  (increase)  in  accounts  receivable                 91,497          (1,632,740)            374,270
          (Increase)  decrease  in  inventories                      (1,676,453)            613,865             (99,640)
          (Increase)  decrease  in  other  current  assets             (449,352)             60,324             (95,833)
          Decrease  (increase)  in  other assets                         66,155              68,378             220,467
          (Decrease)  increase  in  accounts  payable  and
            accrued  liabilities                                       (617,418)            (60,778)            104,669
                                                                        --------         ----------          ----------
              Net cash (used  in) provided by operating activities     (970,560)          1,332,757           4,168,980

Cash  flows  from  investing  activities:
     Distributions received from joint venture                          360,000             240,000                -
     Cash  acquired  in  acquisition                                      4,754                -                   -
     Capital  expenditures,  including  aircraft  held  for  lease  (10,011,392)         (3,786,356)         (1,126,085)
     Sale  (purchase)  of  investments                                   -                   92,194            (114,729)
     Investment  in  joint  venture                                     (89,450)         (1,587,213)               -
     Proceeds  from  sale  of  aircraft  and  engines  held
       for  lease                                                     1,176,000           5,875,000             667,000
     Purchase stock of Diamond Aviation                                (125,000)              -                    -
                                                                        --------         ----------          ----------

              Net cash provided by (used in) investing activities    (8,685,088)            833,625            (573,814)

Cash  flows  from  financing  activities:
     Net  borrowings  (payments)  under  line  of  credit             3,866,961           2,047,754          (2,391,856)
     Borrowings  under  term  loans                                   7,300,000           2,576,000           3,100,000
     Payments  under  term  loans                                    (1,630,600)         (4,677,963)         (4,807,347)
     Purchase  of  treasury  stock                                      (18,711)         (1,946,780)              -
     Repurchase  of  stock  options                                     (52,737)              -                   -
     Proceeds  from  the  exercise  of  stock  options                   19,563             288,487             508,091
     Increase  in  deferred  debt  costs                                   -                   -                (31,376)
                                                                       --------           ---------             -------

              Net cash (used in) provided by financing activities     9,484,476          (1,712,502)         (3,622,488)
                                                                      ---------          ----------          ----------

Net  increase  (decrease)  in  cash  and  cash  equivalents            (171,172)            453,880             (27,322)

Cash and cash equivalents at beginning of year                          892,283             438,403             465,725
                                                                      ---------          ----------          ----------
Cash  and  cash  equivalents  at end of year                      $     721,111       $     892,283       $     438,403
                                                                  =============       =============       =============

Supplemental  disclosures  of  cash  flow  information
     Cash  paid  during  the  year  for:
          Interest                                                $   1,501,503     $     1,161,687     $     1,505,630
                                                                  =============     ===============     ===============
          Income  taxes                                           $      20,000      $       58,298     $       139,995
                                                                  =============     ===============     ===============

Non-cash  investing  and  financing  activities:
     Tax  benefit  resulting  from  exercise  of stock options    $       -         $       136,085     $          -
                                                                  =============     ===============     ===============


                                                                     (continued)


<PAGE>
           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                                                                                         Years  Ended  May  31,
                                                                            --------------------------------------------
                                                                              2000                1999                1998
                                                                           ----------          ----------          ----------

In  May  2000,  the  Company  purchased  all  of  the  outstanding  stock
  of  Diamond  Aviation  for  approximately  $125,000  in  cash  and
  approximately  $880,000  in  assumed  debt.  In  conjunction  with
  this  acquisition,  the  Company  recorded  the  following  assets
  and  liabilities:

     Cash                                                               $       4,754
     Accounts  receivable                                               $      73,788
     Aircraft  in  operations                                           $   1,114,919
     Accounts  payable  and  accrued  expenses                          $    (114,758)
     Debt                                                               $  (1,078,703)


</TABLE>



The  accompanying  notes  are  an  integral  part  of  these  statements.


<PAGE>


           INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           MAY 31, 2000, 1999 AND 1998


NOTE  A  -  DESCRIPTION  OF  COMPANY  BUSINESS  AND  SIGNIFICANT
     ACCOUNTING  POLICIES

     International  Airline Support Group, Inc. and Subsidiaries (the "Company")
is  primarily  engaged  in  the  sale  of  aircraft,  aircraft parts, leasing of
aircraft and engines and related services.  In addition, with the acquisition of
Diamond  Aviation  (Note  B), the Company is engaged in the operation of a small
regional airline.  Since its inception in 1982, the Company has become a primary
source  of  replacement  parts  for  widely operated aircraft models such as the
McDonnell  Douglas  MD-80  and  DC-9,  and  Embraer  EMB-120.

     a)     Basis  of  Presentation
            -----------------------

          The  consolidated  statements  include  the  accounts of International
Airline  Support  Group and its wholly-owned subsidiaries.  The related entities
are  collectively  referred  to  as  the ("Company").  All material intercompany
transactions  and  balances  have  been  eliminated  in  the  consolidation.

     b)     Cash  and  Cash  Equivalents
            ----------------------------

          The  Company  considers  all  highly  liquid investments with original
maturities  of  three  months  or  less  at  the  time  of  purchase  to be cash
equivalents

     c)     Inventories
            -----------

          Inventories  are  stated  at the lower of cost or market.  The cost of
aircraft,  engines and aircraft parts is determined on a specific identification
basis.

     d)     Property  and  Equipment
            ------------------------

          Property  and  equipment  are  stated  at  cost,  less  accumulated
depreciation.  Depreciation  is provided for in amounts sufficient to relate the
cost  of  depreciable assets, less their estimated salvage values, to operations
over  their estimated life utilizing straight-line and accelerated methods.  The
estimated  lives  of  the depreciable assets range from 3 to 12 years.  Overhaul
costs  on  aircraft  held  for  lease  are  capitalized and depreciated over the
estimated  service  life  of the overhaul.  For income tax purposes, accelerated
methods  of depreciation are generally used.  Deferred income taxes are provided
for  the difference between depreciation expense for tax and financial reporting
purposes.

          Subsequent to May 31, 2000, the Company transferred an aircraft with a
cost  of approximately $1.9  million from Aircraft and engines held for lease to
Aircraft  in  operations.

     e)     Deferred  Debt  Costs
            ---------------------

          The  deferred debt costs relate to the costs associated with obtaining
the  Senior  Secured  Revolving Credit Loan Facility and the Senior Secured Term
Loans.  These  costs are being amortized using the interest method over the life
of  the  respective  debt  issue.  Accumulated  amortization at May 31, 2000 and
1999,  was  $524,083  and  $391,743,  respectively.






                                                                     (continued)

NOTE  A  -  DESCRIPTION  OF  COMPANY  BUSINESS  AND  SIGNIFICANT
     ACCOUNTING  POLICIES  -  Continued

     f)     Earnings  Per  Share
            --------------------

          Basic  net  earnings  per  share  equals  net  earnings divided by the
weighted average shares outstanding during the year.  The computation of diluted
net  earnings  per  share  includes  dilutive  common  stock  equivalents in the
weighted  average  shares  outstanding.  The  reconciliation  between  the
computations  is  as  follows:

<TABLE>
<CAPTION>
                                             Basic              Basic        Diluted         Diluted
                     Net  Earnings           Shares              EPS          Shares             EPS
                  ----------------          ---------     -----------       ----------    ----------
<S>                <C>                      <C>            <C>               <C>           <C>
          2000     $     1,256,593          2,189,539     $      .57         2,268,472     $     .55
          1999     $     1,954,316          2,550,940     $      .77         2,720,513     $     .72
          1998     $     5,662,672          2,471,025     $     2.29         2,793,414     $    2.03

</TABLE>

          Included  in  diluted  shares are common stock equivalents relating to
options  of  78,933, 169,573, and 322,389 for 2000, 1999 and 1998, respectively.

     g)     Revenue Recognition
            --------------------

          Revenue from the sale of parts is recognized when products are shipped
to  the customer.  Revenue from aircraft and engine sales is recognized when the
Company  has  received  consideration for the sales price, the risk of ownership
has  passed  to  the buyer, and collectibility is reasonably assured.  Lease and
service  revenue  are  recognized  on an accrual basis, unless collectibility is
uncertain.

          Included  in  net  sales  is  revenue from the exchange of parts. This
revenue  is  recognized  when  the  Company has fulfilled all of its obligations
under  the  exchange  agreement.

     h)     Employee  Benefit  Plan
            -----------------------

          In  fiscal  1992,  the Company established a contributory 401(K) plan.
The  plan  is a defined contribution plan covering all eligible employees of the
Company, to which the Company makes certain discretionary matching contributions
based  upon  the  level  of its employees' contributions.  The amount charged to
earnings  in fiscal 2000, 1999 and 1998 was insignificant.  The Company does not
provide  any  health  or  other  benefits  to  retirees.

     i)     Fair  Value  of  Financial  Instruments
            ---------------------------------------

          The  carrying  value  of cash and cash equivalents, trade receivables,
and  accounts payable approximate fair value due to the short-term maturities of
these  instruments.  The  carrying  value  of the debt under the Senior Facility
approximates  fair  value  as  it  is  floating  rate  debt.

     j)     Income  Taxes
            -------------

          Income  taxes  are  provided based on earnings reported for tax return
purposes  in addition to a provision for deferred income taxes.  Deferred income
taxes  are  provided in order to reflect the tax consequences in future years of
differences  between  the  financial  statement  and  tax  basis  of  assets and
liabilities  at  each  year  end.

                                                                     (continued)

NOTE  A  -  DESCRIPTION  OF  COMPANY  BUSINESS  AND  SIGNIFICANT
     ACCOUNTING  POLICIES  -  Continued

     k)     Management  Estimates
            ---------------------

          The  preparation  of  the  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
the disclosure of contingent assets and liabilities at the date of the financial
statements  and  revenues  and  expenses  during  the reporting periods.  Actual
results  could  differ  from  those  estimates.

     l)     New  Accounting  Pronouncement
            ------------------------------

          In  June  1998,  the  FASB  issued  Statement  of Financial Accounting
Standards  (FAS)  No.  133,  "Accounting  for Derivative Instruments and Hedging
Activities."  FAS  No.  133,  as  amended  by FAS 138, establishes standards for
accounting  and  reporting  for  derivative  instruments,  and  conforms  the
requirements  for  treatment  of  different  types  of hedging activities.  This
statement  is  effective  for  all  fiscal  years beginning after June 15, 2000.
Management  does  not  expect  this standard to have a significant impact on the
Company's  operations.

     m)     Business  Segment  and  Geographic  Area  Information
            -----------------------------------------------------

          The  Company sells aircraft and aircraft parts, and leases aircraft to
foreign  and  domestic  customers.  In addition, with the acquisition of Diamond
Aviation  (Note  B), the Company is engaged in the operation of a small regional
airline.  Most  of  the  Company's sales take place on an unsecured basis, and a
majority  of  the  sales  are to aircraft operators.  The Company's revenues are
derived  primarily  from  customers  located in the United States and all of the
Company's  long-lived  assets  are  located  in the United States.  One customer
accounted  for  12%  of  the Company's sales in fiscal 2000 and another customer
accounted  for 11% of the Company's sales in fiscal 2000. No customers accounted
for  more  than  10%  of  the  Company's  sales  in  fiscal  1999  and  1998.

     n)     Accounting  for  Stock  Based  Compensation
            -------------------------------------------

          The  Company  accounts  for  non-qualified  options  issued  to
non-employees,  under  SFAS 123, "Accounting for Stock Based Compensation."  The
exercise  price of all options granted by the Company equals the market price at
the  date of grant.  Thus, no compensation expense is recognized.  The Company's
employee  stock  option  plan  is accounted for using the intrinsic value method
under  APB 25.  The Company provides disclosure of certain pro forma information
as  if  the  fair  value-based method had been applied in measuring compensation
expense  (see  Note  H).

o)     Reclassifications
       -----------------

Certain  prior period amounts have been reclassified to conform with the current
year  presentation.


<PAGE>
NOTE  B  -  ACQUISITION

     In  April  2000,  the  Company  purchased  all  of the outstanding stock of
Diamond  Aviation,  doing business as North-South Airways (North-South), a small
regional  airline  located  in  Statesboro,  Georgia  that operates under an Air
Carrier  Certificate  under  Part 135 of the regulations of the Federal Aviation
Administration.  The Company purchased North-South for approximately $125,000 in
cash  and  approximately  $880,000  in  assumed  debt.  The acquisition has been
accounted  for  as  a  purchase and accordingly, the assets and liabilities have
been  recorded  at  their  estimated fair values at the date of acquisition.  No
goodwill  was  recorded  as  a  result  of  this  acquisition.  The  results  of
operations  of  Diamond  Aviation  are included in the accompanying consolidated
statement of earnings as of the date of the acquisition.  As the amounts are not
material,  the  unaudited  proforma  consolidated  results  of operations of the
Company  as if the acquisition had occurred at the beginning of  fiscal 2000 and
1999  are  not  disclosed.

NOTE  C  -  INVESTMENT  IN  JOINT  VENTURE

     On September 16, 1998, the Company entered into a joint venture (the "Air41
Joint  Venture")  for  the acquisition of 20 DC-9-41H aircraft from Scandinavian
Airlines  System  ("SAS").  The  aircraft were leased back to SAS and the leases
had  an  average  term  of  39 months.  The Company's original investment in the
Air41 Joint Venture was $1.4 million, which represents a 50% ownership interest.
The  Company's  Air41  Joint  Venture partner is AirCorp, Inc., a privately held
company.  The  aircraft  purchases  were  financed  through  the  joint venture,
utilizing non-recourse debt to the partners.  In connection with this financing,
the  Company  had  to post a $1.5 million letter of credit.  The Company and its
joint  venture  partner are collectively guarantors on the Air41 Joint Venture's
obligation  as the lessor of the aircraft.  The Air41 Joint Venture is accounted
for  under  the  equity  method  and the leases are treated as operating leases.

     The  joint  venture  partners  are exploring opportunities for the aircraft
after  the  end  of the term of the leases with SAS.  Such opportunities include
releasing  the  aircraft with SAS, leasing the aircraft to one or more different
lessee(s),  selling  the aircraft, parting out the aircraft, or directly placing
the aircraft into either passenger or cargo service.  In fiscal 2000, one of the
aircraft  came  off  of lease and was then leased to another unrelated party. At
this time, the joint venture has no firm commitment for the other aircraft after
the  SAS  leases  expire.  A condensed summary of the joint venture's operations
follows:

                                             As  of                  As  of
                                        May  31,  2000           May  31,  1999
                                        ---------------          ---------------

    Partners'  capital  accounts       $     7,720,272          $     4,747,144
                                       ===============          ===============


                                                                 Period  from
                                                                September  16,
                                                                1999 (Date of
                                                                of Inception)
                                        Year  Ended                Through
                                      May  31,  2000           May  31,  2000
                                     ---------------          ---------------

          Revenues                  $     14,475,000         $     10,200,000
          Expenses                        10,960,773                8,147,282
                                          ----------                ---------

          Net  earnings             $      3,514,227         $      2,052,718
                                    ================         ================

     Included  in  the Company's consolidated retained earnings is approximately
$2,783,000  relating  to  the Company's share in the earnings of the Air41 Joint
Venture.


NOTE  D  -  INVENTORIES

     Inventories  at  May  31,  2000  and  1999  consisted  of  the  following:

                                            2000                   1999
                                      -------------        -------------
          Aircraft  parts           $     7,382,143      $     8,679,059

          Aircraft  and  engines
           available  for  sale           5,425,369            2,452,000
                                    ---------------      ---------------

                                    $     12,807,512     $    11,131,059
                                    ================     ===============
NOTE  E  -  LONG-TERM  OBLIGATIONS

     Long-term  obligations at May 31, 2000 and 1999 consisted of the following:

                                               2000                   1999
                                           ------------          -------------
         Senior  Secured  Revolving
          Credit  Loans                $     11,009,490     $      7,053,829

          Term  Loans                         9,084,231            2,539,830
                                              ---------            ---------

                                             20,093,721            9,593,659

          Less:  Current  maturities          1,748,642            1,455,600
                                              ---------            ---------
                                       $     18,345,079      $     8,138,059
                                       ================      ===============

     In  October  1996 the Company entered into a Credit Agreement with the Bank
of  New  York, which provided for a $3 million term loan (Term Loan-A) and up to
an  $11  million  revolving  credit.  The  Credit  Facility  is  secured  by
substantially  all  of the assets of the Company and availability of amounts for
borrowing is subject to certain limitations and restrictions.  The interest rate
on the Credit Facility which fluctuates based on certain financial ratios of the
Company,  was  the  lenders  prime  rate less .25% (9.25% at May 31, 2000).  The
revolving  line  of credit was increased to $13 million in March 1997 and to $14
million  in  fiscal  1998.  As  of May 31, 2000, the available line of credit is
approximately  $1.7  million.  The  credit  agreement includes certain covenants
which  provide,  among other things, restrictions relating to the maintenance of
consolidated  net  worth and other financial ratios, as well as a restriction on
the  payment  of  dividends.

     During  fiscal  1998,  the Credit Agreement was amended twice to create two
additional  term  loan  facilities  (term  loans C and D) in the amounts of $1.5
million and $1.6 million and to add $1 million (for capital expenditures) to the
revolving  credit  line.  The  two  additional term loans were repaid in full in
fiscal 1998.  In fiscal 1999, the Company borrowed an additional $1.8 million on
these  additional  term  loans of which $900,000 was paid prior to end of fiscal
1999.

     During  fiscal  2000,  the  Credit Agreement was amended twice to create an
additional term loan facility (term loans E and F) in the amount of $7.3 million
to  finance  the  purchase  of  three  aircraft.

     The  scheduled maturities of long-term obligations in each of the next four
years  until  maturity  subsequent  to  May  31,  2000  are  as follows:  2001 -
$1,748,642  and  2002  -  $18,345,078.



NOTE  F  -  COMMITMENTS  AND  CONTINGENCIES

     Leases
     ------

     The  Company  leases warehouse facilities, office space, as well as certain
equipment  under  long-term  operating  lease  agreements.  Rental expense under
these  leases  for the years ended May 31, 2000, 1999 and 1998 was approximately
$279,000,  $286,900  and  $280,000,  respectively.  At  May 31, 2000, the future
minimum  payments  on  non-cancellable  operating leases are as follows:  2001 -
$287,406,  2002  -  $274,061,  2003  -  $50,442,  and  2004  -  $29,425.

     The  Company  currently  leases  aircraft  and  engines  to customers under
long-term  operating lease agreements.  In addition to minimum base rentals, the
lease  agreements  often  require additional rent based upon aircraft and engine
usage.  The  net  investment  in  aircraft  and  engines  held  for or leased to
customers was approximately $11,513,000 and $3,749,000 at May 31, 2000 and 1999,
respectively.  At  May  31,  2000,  the future rental income under the long-term
operating leases are as follows:  2001 - $1,344,000,  2002 - $1,263,000,  2003 -
$1,020,000  and  2004  -  $510,000.

NOTE  G  -  INCOME  TAXES

     The  provision (benefit) for income taxes for the years ended May 31, 2000,
1999  and  1998  is  as  follows:

<TABLE>
<CAPTION>
                                  2000                1999                1998
                               ----------          ----------          ----------
<S>                           <C>               <C>                 <C>
  Current  provision:
          Federal               $     -          $     76,138       $     69,906
          State                       -                  -                  -
                                ---------         -----------        ------------
                                      -                76,138             69,906

          Deferred  provision     800,490             960,007         (2,889,839)
                                ---------         -----------        ------------
                                $ 800,490        $  1,036,145       $ (2,819,933)
                                  =======           =========         ==========

     The tax effect of the Company's temporary differences and carry forwards is
as follows:

                                                    2000                 1999
                                                -----------          -----------
          Deferred  tax  (benefits)  -  current:
               Bad  debt  reserve                  (62,000)            (129,000)
               Inventory  capitalization          (358,000)            (311,000)
               Accrued  payroll                    (86,000)            (169,000)
               Accrued  vacation                   (14,000)             (15,000)
               Reserve  for  inventory            (534,000)            (504,000)
                                                  --------              --------

                                          $     (1,054,000)    $     (1,128,000)
                                          =================     ================

          Deferred  tax  liabilities
                   (benefits)  -  non-current:
               Air41  Joint  Venture      $        281,000     $        210,000
               Depreciation and amortization     3,879,000              513,000
               Net  operating  loss
                carryforward - federal          (3,923,000)          (1,327,000)
               Net  operating  loss
                carryforward  -  state            (388,000)            (256,000)
               Minimum  tax  credit  -  federal   (222,000)            (303,000)
               Other,  net                          27,000               91,000
                                                    ------               ------
                                            $     (346,000)    $     (1,072,000)
                                            ==============     ================
</TABLE>

NOTE  G  -  INCOME  TAXES  -  Continued

     The  Company  recorded  a  valuation  allowance  equal to the amount of the
deferred  tax  benefits at May 31, 1997.  In fiscal 1998, the Company completely
relieved  the $2,586,000 valuation allowance as they determined that it was more
likely than not that the Company would recognize the deferred tax benefits based
on  the  Company's recent earnings history and management's estimate that future
profits  will  be  sufficient  to  realize  these  benefits.

     The  following  table  summarizes  the  differences  between  the Company's
effective  tax  rate  and  the  statutory  federal  rate  as  follows:

                                              2000        1999        1998
                                           -------     -------     -------

          Statutory  federal  rate           34.0%       34.0%       34.0%
          Tax  expense(benefit)  from
            net  operating loss carryforward   .7%         -       (134.2)
          State  income  taxes                 -          1.7         -
          Other                               4.2%       (1.1)        1.0
                                           -------   --------    --------
          Effective  tax  rate               38.9%       34.6%      (99.2)%
                                           ======       ======      =======

     The  Company  has net operating loss carryforwards for federal tax purposes
of  approximately  $11.5 million.  The net operating losses will expire in years
2010  through 2020.  The Company also has a federal minimum tax credit carryover
of  approximately  $222,000  which may be utilized in future years to the extent
that  the  regular  tax  liability exceeds the alternative minimum tax.  Certain
provisions  of  the  tax  law  may  limit  the  net  operating  loss  and credit
carryforwards  available for use in any given year in the event of a significant
change  in  ownership  interest.

NOTE  H  -  STOCK  OPTIONS

Under  the  terms  of  the  Company's  1996  Stock Option Plan (the "Plan"), the
Company  has  967,782  shares  of  common  stock  reserved.  As of May 31, 2000,
166,207  shares are available to be issued under the Plan. The exercise price of
all  options  granted by the Company to the employees equals the market price at
the  date  of  the  grant.  No  compensation  expense  has been recognized.  The
options, other than those issued to the executive officers, vest immediately and
expire  10  years  from  the  date  of  the  grant.

     On December 3, 1998, the Company's Board of Directors approved and ratified
the  repricing  of  certain unexercised employee stock options granted under the
Company's  stock option plans.  As a result, options granted to purchase 131,173
shares  of the Company's common stock were repriced from $4.50 - $6.94 per share
to  $3.31  per  share.  The 131,173 shares are reflected in both the granted and
cancelled  captions  in  the  accompanying  table for fiscal year ending May 31,
1999.  The  pro  forma effect on earnings from this repricing is included in the
pro  forma  net  earnings  shown  below.





                                                                     (continued)

NOTE  H  -  STOCK  OPTIONS  -  Continued

     Had  compensation  expense  for  the  Stock  Option  Plan and non-qualified
options  to  employees been determined based on the fair value of the options at
the  grant  dates  consistent  with  the  method  of SFAS 123, the Company's net
earnings and earnings per share would have been changed to the pro forma amounts
below.

<TABLE>
<CAPTION>

                                           2000                 1999                 1998
                                      -----------          -----------          -----------
<S>                             <C>                  <C>                   <C>
     Net  earnings
          As  reported            $     1,256,593      $     1,954,316       $    5,662,672
          Pro  forma              $     1,222,093      $     1,743,076       $    5,400,656

     Basic earnings per share
          As reported             $           .57      $           .77       $         2.29
          Pro forma               $           .56      $           .68       $         2.19

     Diluted earnings per share
          As  reported            $           .55      $           .72       $         2.03
          Pro  forma              $           .54      $           .64       $         1.93
</TABLE>

     The above pro forma disclosures may not be representative of the effects on
reported  net  earnings  for  future  years as certain options vest over several
years  and  the  Company  may  continue  to  grant  options  to  employees.

     The fair value of each option grant is estimated on the date of grant using
the  binomial  option-pricing  model  with  the  following  weighted-average
assumptions  used  for  grants  in  fiscal  2000,  1999  and 1998, respectively:
dividend  yield of 0.0 percent for all years; expected volatility of 40 percent,
40  percent  and  30  percent;  risk-free  interest  rates of 6.50 percent; 5.50
percent  and  6.0  percent;  and  expected  holding  periods  of  4  years.

     A  summary of the status of the Company's fixed stock options as of May 31,
2000,  1999  and  1998, and changes during the years ending on those dates is as
follows:

<TABLE>
<CAPTION>

                                                May  31, 2000                May 31, 1999            May  31,  1998
                                              -----------------             ---------------          ---------------
                                                    Weighted  -                  Weighted  -             Weighted  -
                                                     Average                      Average                 Average
                                                    Exercise                     Exercise                Exercise
                                            Shares     Price             Shares     Price         Shares   Price
                                           --------   ------             -------   ------        --------  --------
<S>                                        <C>        <C>               <C>        <C>           <C>        <C>
    Outstanding  at
       beginning  of  year                  593,154     3.12             563,210   $ 3.42         598,609   $  2.99
     Granted                                 25,000     3.44             254,173     3.31         137,173      4.82
     Exercised                               (6,000)    3.26             (93,056)    3.10        (167,572)     3.03
     Cancelled                              (82,207)    3.10            (131,173)    4.78          (5,000)     3.00
                                           --------   ------             -------   ------        --------  --------
     Outstanding  at
       end of year                          529,947     3.13             593,154     3.12         563,210      3.42
                                           ========   ======            ========   ======         =======   =======
     Options  exercisable
       at  end  of  year                    447,185                      437,174                  415,012
     Weighted-average
       fair  value  of  options
       granted  during
       the year                          $     1.38                   $     1.28               $     1.90

</TABLE>

                                                                     (continued)

NOTE  H  -  STOCK  OPTIONS  -  Continued

     The  following  information applies to options outstanding at May 31, 2000:

<TABLE>
<CAPTION>
                                                        Options  Outstanding              Options  Exercisable
                                                        --------------------             -----------------------
                                                              Weighted  -
                                                               Average
                                                              Remaining          Weighted  -                     Weighted  -
            Ranges  of                                       Contractual          Average                        Average
          Exercise  Prices              Shares                  Life            Exercise Price      Shares     Exercise Price
         -----------------            --------              ------------         -----------      ----------   --------------
<S>       <C>                        <C>                   <C>                  <C>              <C>           <C>
          $2.75  -  $3.44              529,947               7.35  years         $     3.13         447,185     $     3.16
                                      ========                                                      =======
</TABLE>

NOTE  I  -  STOCK  REPURCHASE

     In  the  third  quarter  of 1999, the Company began acquiring shares of its
common stock in connection with a stock repurchase program approved by the Board
of  Directors in December 1998.  During fiscal 2000 and the six months ended May
31,  1999, the Company repurchased 4,200 and 467,325 shares, respectively of its
common  stock  for  a total expenditure of $18,711 and $1,946,780, respectively.
The  Company  does  not  currently  have  a formal plan in place to purchase any
additional  shares;  however,  the  Company  is  authorized by the Board to make
further  purchases  if  deemed  to be in the best interests of the Company.  Any
such  purchases  must  be  also  approved  by  the  Company's  bank.

NOTE  J  -  RELATED  PARTY  TRANSACTIONS

     Under  the commission agreement entered into with the Company during fiscal
1994,  an  outside director is entitled to 3-4% of revenues generated from sales
to  customers  brought in by the director plus a fixed monthly fee.  The Company
paid  the  outside  director  approximately $60,000, $96,000 and $96,000 for the
years ended May 31, 2000, 1999 and 1998.  In early fiscal 2001, the Company paid
the  outside  director  an additional $60,000. This agreement can be canceled by
either  party  at  any  time.

     In  connection  with  obtaining  the  Credit Agreement with the Bank of New
York,  the  Company agreed to pay the  placement agent a $250,000 placement fee.
A  director  of  the  Company  was a principal of the placement agent. In fiscal
1997,  the  Company  paid  the  placement  agent  $200,000  of this fee, and the
remaining  $50,000  was paid in fiscal 1998.  In addition, the Company paid this
director  $86,000  during both fiscal 1999 and 1998 for services rendered to the
Company  in  connection  with  the  identification and evaluation of acquisition
opportunities.

     An  executive  of the Company's partner in the Air41 Joint Venture was also
an  executive  of  one  of  the Company's significant customers until the fourth
quarter  of  fiscal  2000.  Total  sales  to  this  significant  customer  were
approximately  $826,000,  $1.6 million, and $2 million in fiscal 2000, 1999, and
1998,  respectively.  As  of May 31, 2000 and 1999, the accounts receivable from
this significant customer was approximately $157,000 and $109,000, respectively.
During fiscal 1999, the Company purchased three engines from the Company's joint
venture  partner  for  $3,120,000.






                                                                     (continued)

NOTE  J  -  RELATED  PARTY  TRANSACTIONS  -  Continued

     An  executive  officer of the Company is a member of the Board of Directors
of  one  of  the  Company's  customers.  The  Company  both  purchases and sells
inventory  to this customer.  Total sales to this customer were $80,000, $33,847
and  $0  in  fiscal  2000,  1999 and 1998, respectively.  As of May 31, 2000 and
1999,  the  accounts receivable from this customer was approximately $20,000 and
$69,000,  respectively.  Total  purchases  from this customer were approximately
$1.6  million,  $1.2 million and $0 in fiscal 2000, 1999 and 1998, respectively.
In  fiscal  1999,  the  Company received $250,000 of consulting income from this
customer.  As  of  May  31,  2000  and  1999,  the Company has a payable to this
customer  of  $104,288  and  $756,049,  respectively.

NOTE  K  -  FOURTH  QUARTER  ADJUSTMENTS

     In  fiscal  1998,  the  Company  recorded  a  fourth quarter tax benefit of
approximately  $1,100,000  as  a  result  of  adjusting  the Company's estimated
deferred  tax  assets.

NOTE  L  -  ACCRUED  LIABILITIES

     Accrued  liabilities  at  May  31, 2000 and 1999 consisted of the following
items:

                                            2000                 1999
                                        -----------          -----------

     Customer  deposits                 $   189,554          $   350,097
     Accrued  payroll                       555,101              597,442
     Accrued  property  taxes                88,795               48,214
     Other                                  427,697               88,579
                                            -------               ------

                                    $     1,261,147      $     1,084,332
                                    ===============      ===============

NOTE  M  -  EMPLOYMENT  AGREEMENTS

     In October 1996, the Company entered into employment agreements with two of
its  executive  officers  with a term of five years.  The agreements provide the
officers  with  a  certain  minimum  annual  salary  plus bonus.  The agreements
provide  the officers with an option to terminate their agreements and receive a
lump  sum payment equal to the officer's average annual compensation paid by the
Company  for  the most recent two years upon a change in control of the Company.



<PAGE>
NOTE  N  -  QUARTERLY  FINANCIAL  INFORMATION  (UNAUDITED)

<TABLE>
<CAPTION>
                                  First             Second             Third             Fourth
              Year               Quarter            Quarter           Quarter           Quarter              Total
        ---------------         ----------         -----------       -----------       ----------          ---------
<S>                             <C>                <C>               <C>               <C>                <C>
                                                         (In  Thousands,  Except  for  Per  Share  Information)

     2000
     ----
     Revenues                 $     8,999        $     6,207       $     5,359       $     5,639       $     26,204
     Operating  income              1,297              1,118               622               677              3,714
     Net  earnings  available
       for  common  shareholders      597                454               116                90              1,257
     Earnings  per  share  -  basic   .27                .21               .05               .04                .57
     Earnings  per  share  -  diluted .25                .20               .05               .04                .55*

     1999
     ----
     Revenues                 $     5,575        $     5,836       $     5,729      $     10,532       $     27,672
     Operating  income              1,017              1,226             1,246               803              4,292
     Net  earnings  available
       for  common  shareholders      442                539               555               418              1,954
     Earnings  per  share  -  basic   .17                .21               .22               .17                .77
     Earnings  per  share  -  diluted .16                .20               .21               .15                .72


</TABLE>

*     Difference  of  $.01  from statement of earnings for fiscal 2000 full year
due  to  use of the average quarterly stock prices in the quarterly earnings per
share - diluted calculations, while the fiscal 2000 full year earnings per share
-  diluted  calculation  uses  the  average  yearly  stock  price.


<TABLE>
<CAPTION>
                                     S-1
                  INTERNATIONAL AIRLINE SUPPORT GROUP, INC. AND SUBSIDIARIES

                                        SCHEDULE II
                             VALUATION AND QUALIFYING ACCOUNTS

                            YEARS ENDED MAY 31, 1998, 1999 AND 2000


<S>                                                           <C>             <C>             <C>            <C>
       COLUMN A                                                COLUMN B        COLUMN C        COLUMN D        COLUMN E
   --------                                               --------        --------        --------        --------
                                                                          Additions
                                                                              ----------
                                                              Balance at      Charged to                      Balance at
                                                              Beginning       Costs and                       End of
       Description                                            of Period       Expenses        Deductions      Period
       -----------                                           -----------     -----------      ----------      ----------

Year ended May 31, 1998
-----------------------

  Reserves deducted from assets to which they apply:

     Allowance for possible losses on accounts receivable    $  610,476      $   74,648       $  171,124(a)   $  514,000
                                                             ==========      ==========       ==========      ==========

     Inventory obsolescense reserve                          $  210,847      $  752,717       $       -       $  963,564
                                                             ==========      ==========       ==========      ==========

Year ended May 31, 1999
-----------------------

  Reserves deducted from assets to which they apply:

     Allowance for possible losses on accounts receivable    $  514,000      $       -        $   171,580(a)  $  342,420
                                                             ==========      ==========       ===========     ==========

     Inventory obsolescense reserve                          $  963,564      $  376,000       $        -      $1,339,564
                                                             ==========      ==========       ===========     ==========
Year ended May 31, 2000
-----------------------

  Reserves deducted from assets to which they apply:

     Allowance for possible losses on accounts receivable    $  342,420      $  172,893       $  342,591(a)   $  172,722
                                                             ==========      ==========       ==========      ==========

     Inventory obsolescense reserve                          $1,339,564      $  107,518       $       -       $1,447,082
                                                             ==========      ==========       ==========      ==========

(a)  Write-off of accounts receivable against the reserve.

</TABLE>



Atlanta-1854286  v1-8/26/00  11:54  AM
Atlanta-1854286  v1-8/26/00  11:54  AM

                                   EXHIBIT 21


                              LIST OF SUBSIDIARIES
                              --------------------



ISAG  -  Virgin  Islands, Inc.                          United States Virgin
Islands

Diamond  Aviation,  Inc.                                Georgia
    d/b/a  North-South  Airways

North-South  Airways,  Inc.                             Delaware



EXHIBIT  23

                                AUDITOR'S CONSENT


     We  have  issued  our  report  dated  July  21,  2000,  accompanying  the
consolidated financial statements and schedule appearing in the Annual Report of
International  Airline Support Group, Inc. and Subsidiaries on Form 10-K for the
year ended May 31, 2000.  We hereby consent to the incorporation by reference of
the  aforementioned  report  in  the  Registration  Statements  of International
Airline  Support  Group,  Inc.  and Subsidiaries on Forms S-8 (Registration Nos.
333-13979,  333-41231  and  333-90523).


/s/  Grant  Thornton  LLP

Miami,  Florida
August  28,  2000