FORM 10Q
                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                        Quarterly or Transitional Report


                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

     X            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
----------                 SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended October 31, 1999
                                                 ----------------

            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 0-21995
                                                -------

                          First Aviation Services Inc.
                          (Exact name of registrant as
                            specified in its charter)

            Delaware                                   06-1419064
            --------                                   -----------
           (State or other jurisdiction                (I.R.S. Employer
           of incorporation or organization)           Identification No.)

             15 Riverside Avenue, Westport, Connecticut, 06880-4214
             ------------------------------------------------------
                    (Address of principal executive offices)

                                 (203) 291-3300
                                 --------------
                           (Issuer's telephone number)

        -----------------------------------------------------------------
              (Former name, former address and formal fiscal year,
                          if changed since last report)


Indicate by check mark whether the registrant (1) 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__

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes __ No__

                      APPLICABLE ONLY TO CORPORATE ISSUERS



<PAGE>

The number of shares outstanding of the registrant's common stock as of December
3, 1999 is 9,113,532 shares.















                                       2

<PAGE>



                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements
----------------------------


                          First Aviation Services Inc.

                           Consolidated Balance Sheets
                      (in thousands, except share amounts)



<TABLE>
<CAPTION>

                                                                                        October 31,          January 31,
                                                                                           1999                  1999
                                                                                     ----------------        -----------
                                                                                      (unaudited)
<S>                                                                                    <C>                   <C>
Assets
Current assets:
   Cash and cash equivalents                                                             $    187            $      149
   Trade receivables, net of allowance for doubtful
     accounts of $335 and $312, respectively                                               14,013                 9,559
   Inventory, net of allowance for obsolete and slow
     moving inventory of $294 and $304, respectively                                       14,163                12,201
   Deferred income taxes                                                                    2,491                 2,638
   Prepaid expenses and other                                                               1,463                 1,185
   Other receivables                                                                        2,342                   323
   Net assets of subsidiary held for sale                                                  49,405                48,256
                                                                                         --------               -------
Total current assets                                                                       84,064                74,311

Plant and equipment, net                                                                    4,068                 3,168
Goodwill, net                                                                               1,790                 1,840
                                                                                         --------               -------
                                                                                         $ 89,922              $ 79,319
                                                                                         ========               =======
Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                                      $ 12,594              $  4,274
   Other accrued liabilities                                                                2,409                 1,541
   Accrued litigation costs                                                                   521                 2,840
   Income taxes payable                                                                     2,295                 2,083
   Short term credit line                                                                   7,450                 8,850
   Revolving line of credit                                                                14,479                13,895
                                                                                         --------               -------
Total current liabilities                                                                  39,748                33,483

   Minority interest                                                                        1,041                 1,041
   Obligations under capital leases                                                           324                   414
                                                                                         --------               -------

Total liabilities                                                                          41,113                34,938

Stockholders' equity:
   Common stock, $0.01 par value, 25,000,000 shares authorized,
     9,016,032 and 9,001,896 shares issued and
     outstanding, respectively                                                                 90                    90
   Additional paid-in capital                                                              38,576                38,515
   Retained earnings                                                                       10,143                 5,776
                                                                                         --------               -------
Total stockholders' equity                                                                 48,809                44,381
                                                                                         --------               -------

                                                                                         $ 89,922              $ 79,319
                                                                                         ========               =======

</TABLE>

See accompanying notes.




                                       3
<PAGE>


                          First Aviation Services Inc.

                Consolidated Statements of Operations (Unaudited)
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>

                                                                                              Three months ended
                                                                                               October 31, 1999
                                                                                           1999                  1998
                                                                                         --------              --------
<S>                                                                                      <C>                   <C>
Net sales                                                                                $ 21,053              $ 16,091
Cost of sales                                                                              17,115                12,978
                                                                                        ---------             ---------
Gross profit                                                                                3,938                 3,113
Selling, general and administrative expenses                                                3,422                 2,744
                                                                                        ---------             ---------
Operating income before corporate expenses
   and non-recurring charge                                                                   516                   369

Corporate expenses                                                                            440                   447
Non-recurring charge                                                                          410                     -
                                                                                        ---------             ---------
Loss from operations                                                                         (334)                  (78)
Net interest expense                                                                          152                   101
Minority interest in subsidiary                                                                 7                    10
                                                                                        ---------             ---------
Loss before benefit for income taxes                                                         (493)                 (189)
Benefit for income taxes                                                                      197                    57
                                                                                        ---------             ---------
Net loss from continuing operations                                                          (296)                 (132)

Net income from discontinued operation, net of provision
   for income taxes of $391 and $401, for the three
   months ended October 31, 1999 and 1998, respectively.                                    1,890                   936
                                                                                        ---------             ---------
Net income                                                                               $  1,594              $    804
                                                                                        =========             =========
Basic net income per common share:

Basic net loss from continuing operations per common share                               $  (0.03)             $  (0.01)
Basic net income from discontinued operation per common share                                0.21                  0.10
                                                                                        ---------             ---------
Basic net income per common share                                                        $   0.18              $   0.09
                                                                                        =========             =========

Shares used in the calculation of basic net income
  per common share                                                                      9,016,039             8,984,678
                                                                                        =========             =========
Net income per common share - assuming dilution:

Net loss from continuing operations per common
  share - assuming dilution                                                              $  (0.03)             $  (0.01)
Net income from discontinued operation per common
  share - assuming dilution                                                                  0.21                  0.10
                                                                                        ---------             ---------
Net income per common share - assuming dilution                                          $   0.18             $    0.09
                                                                                        =========             =========
Shares used in the calculation of net income per common
  share - assuming dilution                                                             9,016,039             8,984,678
                                                                                        =========             =========

</TABLE>


See accompanying notes.



                                       4
<PAGE>

                          First Aviation Services Inc.

                Consolidated Statements of Operations (Unaudited)
                       (in thousands except share amounts)

<TABLE>
<CAPTION>

                                                                                               Nine months ended
                                                                                                  October 31,
                                                                                           1999                  1998
                                                                                        ---------             ---------
<S>                                                                                      <C>                   <C>
Net sales                                                                                $ 59,175              $ 43,838
Cost of sales                                                                              47,984                35,395
                                                                                        ---------             ---------
Gross profit                                                                               11,191                 8,443
Selling, general and administrative expenses                                               10,037                 7,531
                                                                                        ---------             ---------
Operating income before corporate expenses
  and non-recurring charge                                                                  1,154                   912

Corporate expenses                                                                          1,603                 1,266
Non-recurring charge                                                                          410                     -
                                                                                        ---------             ---------
Loss from operations                                                                         (859)                 (354)
Net interest expense                                                                          448                   166
Minority interest in subsidiary                                                                31                    31
                                                                                        ---------             ---------
Loss before benefit for income taxes                                                       (1,338)                 (551)
Benefit for income taxes                                                                      535                   165
                                                                                        ---------             ---------
Net loss from continuing operations                                                          (803)                 (386)

Net income from discontinued operation, net of provision
  for income taxes of $1,037 and $63, for the nine months
  ended October 31, 1999 and 1998, respectively.                                            5,170                   147
                                                                                        ---------             ---------

Net income (loss)                                                                        $  4,367              $   (239)
                                                                                        =========             =========

Basic net income (loss) per common share:

Basic net loss from continuing operation per common share                                $  (0.09)             $  (0.04)
Basic net income (loss) from discontinued operation per common share                         0.57                  0.01
                                                                                        ---------             ---------

Basic net income (loss) per common share                                                 $   0.48              $  (0.03)
                                                                                        =========             =========

Shares used in the calculation of basic net income (loss)
  per common share                                                                      9,008,448             8,966,893
                                                                                        =========             =========
Net income (loss) per common share - assuming dilution:

Net loss from continuing operation per common
  share - assuming dilution                                                              $  (0.09)             $  (0.04)
Net income (loss) from discontinued operation per common
  share - assuming dilution                                                                  0.57                  0.01
                                                                                        ---------             ---------

Net income (loss) per common share - assuming dilution                                   $   0.48              $  (0.03)
                                                                                        =========             =========

Shares used in the calculation of net income (loss) per
  common share - assuming dilution                                                      9,008,448             8,966,893
                                                                                        =========             =========
</TABLE>


See accompanying notes.


                                       5

<PAGE>



                          First Aviation Services Inc.

                Consolidated Statements of Cash Flows (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>


                                                                                                Nine months ended
                                                                                                   October 31,
                                                                                           1999                 1998
                                                                                         --------              --------
<S>                                                                                      <C>                   <C>
Cash flows from operating activities
Net loss from continuing operations                                                      $   (803)              $  (386)
Adjustments to reconcile net income to net cash used
   in operating activities:
   Depreciation and amortization                                                              618                   377
   Deferred tax provision                                                                     147                     -
Changes in assets and liabilities:
   Trade receivables                                                                       (4,454)               (1,892)
   Inventories                                                                             (1,962)               (3,347)
   Prepaid expenses and other assets                                                         (278)                 (232)
   Other receivables                                                                       (2,019)                 (330)
   Accounts payable                                                                         8,320                 2,688
   Other accrued liabilities                                                                  868                  (219)
   Accrued litigation costs                                                                (2,319)                    -
   Income taxes payable                                                                       212                  (828)
                                                                                         --------              --------
Net cash used in operating activities of continuing operations                             (1,670)               (4,169)
Net income from discontinued operation                                                      5,170                   147
Net cash provided by operating activities of discontinued operation                         2,381                   371
                                                                                         --------              --------
Net cash provided by (used in) operating activities                                         5,881                (3,651)

Cash flows from investing activities
Purchases of plant and equipment of continuing operations                                  (1,468)               (1,961)
Purchases of plant and equipment of discontinued operation                                 (3,530)               (2,067)
                                                                                         --------              --------

Net cash used in investing activities                                                      (4,998)               (4,028)

Cash flows from financing activities
Net borrowings on revolving line of credit                                                    584                 2,594
Net borrowings (repayments) on short term line of credit                                   (1,400)                4,950
Principal payments on capital lease obligations                                               (90)                  (42)
Other                                                                                          61                    77
                                                                                         --------              --------

Net cash provided by (used in) financing activities of
  continuing operations                                                                      (845)                7,579
                                                                                         --------              --------

Net increase (decrease) in cash and cash equivalents                                           38                  (100)

Cash and cash equivalents at beginning of period                                              149                   237
                                                                                         --------              --------
Cash and cash equivalents at end of period                                               $    187              $    137
                                                                                         ========              ========
Supplemental cash flow disclosures:
   Interest paid                                                                         $    415              $    981
                                                                                         ========              ========
   Income taxes paid                                                                     $     90              $    600
                                                                                         ========              ========
   Acquisition of equipment through capital lease obligation                             $      -              $    187
                                                                                         ========              ========

</TABLE>


See accompanying notes.



                                       6
<PAGE>





                          First Aviation Services Inc.

             Notes to Consolidated Financial Statements (Unaudited)
                      (in thousands, except share amounts)

                                October 31, 1999

1.  Basis of Presentation

First Aviation Services Inc. ("First Aviation") and its subsidiaries, Aerospace
Products International, Inc. ("API") and National Airmotive Corporation ("NAC"),
(collectively, the "Company"), are headquartered in Westport, Connecticut. The
Company, through API, has become one of the leading suppliers of aircraft engine
parts and other aircraft parts and components to the general aviation industry
worldwide, while at the same time extending its third party logistics and
inventory management services to the commercial airline market. The Company,
through NAC, was a worldwide leader in providing services to aircraft operators
of some of the most widely used military, commercial, and general aviation
aircraft engines in the world, including the Lockheed Martin C-130 Hercules and
P3C Orion aircraft, and a large variety of aircraft and helicopters powered by
light turbine engines. NAC's operations included the repair and overhaul of gas
turbine engines and accessories, and the remanufacturing of engine components
and accessories. Customers of the Company include passenger and cargo airlines,
foreign governments, U.S. and foreign military services, fleet operators, fixed
base operators, certified repair facilities and industrial companies. The
accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all material adjustments,
including the elimination of intercompany balances and transactions, and normal
recurring accruals considered necessary for a fair presentation, have been
included in the accompanying unaudited financial statements. Operating results
for the three and nine months ended October 31, 1999 are not necessarily
indicative of the results that may be expected for the full year ending January
31, 2000. For further information, refer to the financial statements and
footnotes thereto included in the Company's Form 10-K/A for the year ended
January 31, 1999. As described in Note 6, on November 1, 1999 the Company
consummated the sale of the stock of NAC. Accordingly, NAC has been accounted
for as a discontinued operation and the net assets, results of operations and
cash flows of NAC have been reported separately in the accompanying consolidated
financial statements. Prior periods also have been restated to reflect NAC as a
discontinued operation.


2.  Other Receivables

During the quarter ended July 31, 1999 NAC was the successful bidder whereby
Pratt & Whitney Canada appointed NAC as an authorized Distributor and Designated
Overhaul Facility ("DDOF"), pursuant to an agreement between the two parties.
During that quarter NAC paid $4,000 towards the cost of the DDOF. As a result of
the sale of NAC, the DDOF was voided. Under the terms of the agreement between
the parties, $2,100 of the amount paid for the DDOF has been refunded to the
Company. This amount, which was received by the Company in the fourth quarter,
was included in other receivables in the accompanying consolidated balance
sheets. Other receivables also include vendor rebates receivable.


3.  Short Term Credit Line and Revolving Line of Credit

On September 2, 1999, the term of API's short term credit line was extended
until December 31, 1999. On December 1, 1999, the term was extended further
until March 30, 2000.

Simultaneous with the closing of the sale of NAC on November 1, 1999, the
Company utilized a portion of the proceeds from the sale to repay the entire
outstanding balance of the NAC revolving line of credit and terminated NAC's
credit agreement. As a result of the termination, borrowings under the credit
agreement have been reclassified as a current liability for all periods
presented.



                                       7
<PAGE>


4.  Accrued Litigation Costs

In March 1999, the jury decided in favor of the Company in litigation brought by
John F. Risko, a former director and manager, initiated in June 1997 against the
Company, National Airmotive Corporation, Aaron P. Hollander, Michael C. Culver,
First Equity Development Inc. and First Equity Group Inc. The Plaintiff's
allegations of wrongful termination, breach of contract, and various actions of
fraud, deceit and misrepresentation were dismissed. The plaintiff had sought
various damages as well as common shares of the Company. On a separate count,
the jury, in a split decision, awarded the plaintiff a cash bonus of $200.
During the quarter ended January 31, 1999, the Company accrued $3.1 million for
the costs of defending itself and its Directors against these claims. The
accrual included legal fees incurred through January 31, 1999, completion of the
trial, expert testimony, out-of-pocket costs, and the costs of an appeal.

During the quarter ended July 31, 1999, the Company and the former director and
manager settled the appeal. No additional charges were incurred by the Company
as a result of the settlement. The decrease in the accrual since the beginning
of the fiscal year is due to charges against the accrual, primarily for legal
fees. The balance of the accrual will be utilized by the end of the
fiscal year.

The Company continues to pursue recovery of the costs incurred in accordance
with the terms and conditions of a Directors and Officers insurance policy
maintained by the Company. The amount of recovery, if any, is not ascertainable
at this time.


5.  Earnings (Loss) per Common Share

For the three and nine months ended October 31, 1999 and 1998, respectively, the
denominator used in the calculation of net loss per common share from continuing
operations - assuming dilution was the same as basic loss per share because the
effect of warrants and options would have been antidilutive.


6.  Subsequent Events

Sale of NAC

On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. for $73 million, pursuant to a Stock Purchase
Agreement between First Aviation Services Inc. and Rolls-Royce North America,
Inc. dated as of September 9, 1999 (the "Agreement"). The sales price may be
increased or decreased by an amount not to exceed $3 million based upon the
change in net assets, as defined in the Agreement, from a target amount to
October 31, 1999, the day immediately preceding the closing date. The amount of
the adjustment is subject to audit, and is expected to be finalized within 120
days from the closing date.

Pursuant to the transaction, Rolls-Royce North America, Inc. acquired
substantially all of the assets and assumed certain liabilities of NAC,
excluding income tax and intercompany liabilities and debt. Net proceeds to the
Company, after paying NAC's outstanding debt and transaction expenses, and after
the net asset adjustment described above, will be approximately $50.0 million
before income taxes. The Company will realize a gain on the sale, after income
taxes, transaction fees and expenses. The gain will be recorded in the fourth
quarter of the current fiscal year when the gain was realized. Based upon
preliminary estimates the Company expects the net gain on the sale, after
applicable income taxes, to range between $9.7 million and $10.2 million.

Pursuant to the terms of an advisory agreement, upon the consummation of the
sale of NAC the Company paid First Equity Development Inc., a related party, a
"success fee" of $945. This amount is net of $360 of retainer fees previously
paid and expensed by the Company. The total fee will be charged against the gain
on the sale of NAC that will be recognized in the fourth quarter. The amount
previously expensed will be credited against corporate expenses in the fourth
quarter.


                                       8
<PAGE>



Summarized balance sheet and results of operations information for NAC is as
follows. Balance sheet information includes only those assets sold and the
liabilities assumed by the purchaser.


<TABLE>
<CAPTION>

                                                                    October 31,             October 31,
                                                                       1999                    1998
                                                                   ------------            ------------
<S>                                                                <C>                     <C>
Trade receivables, net                                             $     17,162            $     18,174
Inventories, net                                                         34,489                  39,556
Other current assets                                                      2,974                     690
                                                                   ------------            ------------
   Total current assets                                                  54,625                  58,420

Accounts payable                                                        (12,977)                (13,599)
Other current liabilities                                                (2,717)                 (4,170)
                                                                   ------------            ------------
Net current assets                                                       38,931                  40,651
Plant and equipment, net, and other assets                               10,474                   7,605
                                                                   ------------            ------------
Net assets of subsidiary held for sale                             $     49,405            $     48,256
                                                                   ============            ============

</TABLE>


<TABLE>
<CAPTION>

                                                           Three months ended                  Nine months ended
                                                     -------------------------------   -------------------------------
                                                      October 31,       October 31,      October 31,       October 31,
                                                         1999              1998             1999              1998
                                                     --------------   ---------------  ---------------    ------------
<S>                                                  <C>               <C>              <C>               <C>
Net sales                                              $  28,579         $  23,240        $  85,400         $  67,354
                                                       =========         =========        =========         =========

Earnings before interest & taxes                       $   2,726         $   1,719        $   7,457         $   1,381
Net interest expense                                         445               381            1,251             1,171
                                                       ---------         ---------        ---------         ---------
Earnings before income taxes                               2,281             1,338            6,206               210
                                                       =========         =========        =========         =========
Net income                                             $   1,890         $     936        $   5,170         $     147
                                                       =========         =========        =========         =========
</TABLE>


In connection with the sale, the Company provided Rolls-Royce Allison, an
affliate of Rolls-Royce North America, Inc., with assistance in developing a
request for proposal for the distribution of light-turbine engine parts. After
expenses the Company expects to realize a net gain of approximately $850 in the
fourth quarter.

Common stock buy back

On November 3, 1999, the Company announced that its Board of Directors had
authorized a repurchase program of up to 1,000,000 shares of the Company's
common stock. The purchases will be funded from a portion of the proceeds from
the sale of NAC.

Repurchases may be made from time-to-time in open market transactions, block
purchases, privately negotiated transactions or otherwise at prevailing prices.
No time limit has been given for the completion of the program.

Non-recurring charge

During the third quarter, API established a sales and distribution facility in
Montreal, Canada. Several of the initial employees were individuals previously
employed by a competitor of API. The competitor commenced litigation against API
and the individuals.

On November 17, 1999, API and the competitor filed with the court a consent to a
limited injunction that will affect API's marketing operations in Canada. As a
result of the consent and settlement, the Company recorded a pre-tax
non-recurring charge of $410 in the quarter ended October 31, 1999 to cover the
estimated cost of the settlement, including legal fees related to the matter. As
part of the settlement, the limited injunction will terminate on March 16, 2000.



                                       9
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition,
Results of Operations and Liquidity and Capital Resources
--------------------------------------------------------------------

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

Statements which are not historical facts in this report constitute
forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements, including those
concerning the Company's expectations, all involve risk and uncertainties that
may cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievement
expressed or implied by such forward looking statements. Such factors include,
among others, the Company's ability to obtain parts from its principal suppliers
on a timely basis, the ability to consummate suitable acquisitions, and other
items that are beyond the Company's control and may cause actual results to
differ from management's expectations.


General

On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. for $73 million, pursuant to a Stock Purchase
Agreement between First Aviation Services Inc. and Rolls-Royce North America,
Inc. dated as of September 9, 1999 (the "Agreement"). The sales price may be
increased or decreased by an amount not to exceed $3 million based upon the
change in net assets, as defined in the Agreement, from a target amount to
October 31, 1999, the day immediately preceding the closing date. The amount of
the adjustment is subject to audit, and is expected to be finalized within 120
days of the closing date.

Pursuant to the transaction, Rolls-Royce North America, Inc. acquired
substantially all of the assets and assumed certain liabilities of NAC,
excluding income tax and intercompany liabilities and debt. Net proceeds to the
Company, after paying down NAC's outstanding debt and transaction expenses, and
after the estimated net asset adjustment described above, will be approximately
$50.0 million before income taxes. The Company will realize a net gain on the
sale, after income taxes, transaction fees and expenses. The gain will be
recorded in the fourth quarter of the current fiscal year when the gain was
realized. Based upon preliminary estimates the Company expects the net gain on
the sale, after applicable income taxes, to range between $9.7 million and $10.2
million.

NAC has been accounted for as a discontinued operation. All amounts reported
herein have been restated to reflect NAC as a discontinued operation.


Results of Operations

Continuing Operations

Net Sales

The Company's net sales consist of sales of parts and components, and provision
of third party logistics and inventory management services. Net sales are
recorded when spare parts and components are shipped.

Net sales for the three months ended October 31, 1999, increased $5.0 million,
or 30.8%, to $21.1 million from $16.1 million for the three months ended October
31, 1998.

Net sales for the nine months ended October 31, 1999 increased $15.4 million, or
35.0%, to $59.2 million from $43.8 million in the nine months ended October 31,
1998.

During both the three and nine months ended October 31, 1999 net sales increased
as compared to the prior year as a result of increased market share and growth
in the logistics services business. Price reductions by competitors seeking to
regain market share are expected to affect the rate of growth in the near term.
The Company continues to expand, and invest in new product offerings as well as
the logistics and inventory management businesses.



                                       10
<PAGE>

Cost of Sales

Cost of sales for the three months ended October 31, 1999 increased $4.1
million, or 31.9%, to $17.1 million from $13.0 million for the three months
ended October 31, 1998. As a percentage of net sales, cost of sales increased to
81.3% compared to 80.7% for the three months ended October 31, 1998. The
increase in cost of sales was due to the increase in net sales.

Cost of sales for the nine months ended October 31, 1999 increased $12.6
million, or 35.6%, to $48.0 million from $35.4 million for the nine months ended
October 31, 1998. As a percentage of net sales, cost of sales increased to 81.1%
compared to 80.7% for the nine months ended October 31, 1998. The increase in
cost of sales was due to the increase in net sales.

Gross Profit

Gross profit for the three months ended October 31, 1999 increased $0.8 million,
or 26.5%, to $3.9 million from $3.1 million for the three months ended October
31, 1998. Gross profit as a percentage of net sales decreased to 18.7% from
19.3% as a result of changes in the mix of products sold.

Gross profit for the nine months ended October 31, 1999 increased $2.8 million,
or 32.5%, to $11.2 million from $8.4 million in the nine months ended October
31, 1998. Gross profit as a percentage of net sales decreased to 18.9% from
19.3% as a result of changes in the mix of products sold.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended October
31, 1999 increased $0.7 million, or 24.7%, to $3.4 million from $2.7 million for
the three months ended October 31, 1998. The increase is attributable to and
proportional to the growth in net sales and gross profit.

Selling, general and administrative expenses for the nine months ended October
31, 1999 increased $2.5 million, or 33.3%, to $10.0 million from $7.5 million in
the nine months ended October 31, 1998. The increase is attributable to and
proportional to the growth in net sales and gross profit.

Operating Income before Corporate Expenses and Non-recurring Charge

For the three months ended October 31, 1999, operating income before corporate
expenses and the non-recurring charge increased $0.1 million to $0.5 million,
compared to income of $0.4 million for the comparable period of the prior year.

For the nine months ended October 31, 1999, operating income before corporate
expenses and the non-recurring charge increased $0.3 million to $1.2 million,
compared to income of $0.9 million for the comparable period of the prior year.

Corporate Expenses

Corporate expenses for the three months ended October 31, 1999 were flat at $0.4
million compared to $0.4 million for the three months ended October 31, 1998.

Corporate expenses for the nine months ended October 31, 1999 increased $0.3
million, or 26.6%, to $1.6 million from $1.3 million for the nine months ended
October 31, 1998. The increase is attributable to increased expenditures in
connection with potential acquisitions and other corporate overhead.



                                       11
<PAGE>

Non-recurring charge

During the third quarter, API established a sales and distribution facility in
Montreal, Canada. Several of the initial employees were individuals previously
employed by a competitor of API. The competitor commenced litigation against API
and the individuals.

On November 17, 1999, API and the competitor filed with the court a consent to a
limited injunction that will affect API's marketing operations in Canada. As a
result of the consent and settlement, the Company recorded a pre-tax
non-recurring charge of $410 in the quarter ended October 31, 1999 to cover the
estimated cost of the settlement, including legal fees related to the matter. As
part of the settlement, the limited injunction will terminate on March 16, 2000.

Net Interest Expense and Other

Net interest expense and other for the three months ended October 31, 1999
increased $0.1 million, to $0.2 million from $0.1 million for the three months
ended October 31, 1998. The increase was attributable to an increase in the
average borrowings under the Company's credit facilities to support the
Company's growth and fund capital improvements.

Net interest expense and other for the nine months ended October 31, 1999
increased $0.2 million, to $0.4 million from $0.2 million in the nine months
ended October 31, 1998. The increase was attributable to an increase in the
average borrowings under the Company's credit facilities to support the
Company's growth and fund capital improvements.

Benefit for Income Taxes

The effective tax rate on continuing operations for the three and nine months
ended October 31, 1999 was 40%. Management estimates that the Company's
effective income tax rate on continuing operations for the fiscal year ended
January 31, 2000 will approximate 40%. The Company's effective income tax rate
on continuing operations for the three and nine months ended October 31, 1998
was approximately 30%. The Company's effective tax rate for the prior fiscal
year was less than statutory rates due to benefits that the Company derived from
the implementation of certain tax planning strategies.

The Company expected to realize the tax benefit of certain financial statement
accruals relating to NAC, not previously realized for income tax purposes, and
had established a valuation reserve of approximately $3 million (the "Valuation
Allowance"). The Company anticipates all of the income tax benefits of the
remaining financial accruals will be realized in the fourth quarter as a result
of the consummation of the sale of NAC. As a result, the Valuation Allowance
will be eliminated in its entirety during the current year.

Net Loss From Continuing Operations

For the three months ended October 31, 1999, the Company incurred a net loss
from continuing operations of approximately $0.3 million. This compares to a net
loss from continuing operations of approximately $0.1 million for the comparable
period of the prior year. The increase in the net loss is due principally to the
non-recurring charge recorded during the quarter ended October 31, 1999. No
non-recurring charge was recorded during the comparable quarter of the prior
year.

For the nine months ended October 31, 1999, the Company incurred a net loss from
continuing operations of approximately $0.8 million. This compares to a net loss
from continuing operations of approximately $0.4 million for the comparable
period of the prior year. The increase in the net loss is due principally to a
combination of the non-recurring charge recorded during the quarter ended
October 31, 1999 and the increase in corporate expenses that offset the
increase in operating income at API. No non-recurring charge was recorded during
the comparable period of the prior year.




                                       12
<PAGE>


Net Income From Discontinued Operation

Net income for the three months ended October 31, 1999 from the discontinued
operation increased $1.0 million to $1.9 million from $0.9 million for the three
months ended October 31, 1998. The increase in net income was due to a
combination of increased sales and a lower effective income tax rate.

Net income for the nine months ended October 31, 1999 from the discontinued
operation increased $5.1 million to $5.2 million from $0.1 million for the nine
months ended October 31, 1998. The increase in net income was due to a
combination of increased sales, the absence of any charges for restructuring,
and a lower effective income tax rate. During the nine months ended October 31,
1998 NAC had recorded a pre-tax $2.8 million restructuring charge to restructure
and streamline operations.


Liquidity and Capital Resources

The Company's liquidity requirements arise principally from its working capital
needs, principally inventory and trade receivables. Since January 31, 1999 trade
receivables have grown at a rate in excess of the growth in net sales. The
growth in trade receivables is due to the increase in net sales as well as a
higher than normal amount of drop shipments realized at the end of the quarter.
The Company has undertaken a review of its credit policies and its procedures
relating to the recording of transactions involving drop shipments. The growth
in working capital has been funded with the expansion of trade payables.
Management expects future growth in the Company's working capital requirements
to be funded by cash on hand or bank debt, and to more accurately reflect the
growth of the business.

The Company's cash used in continuing operations for the nine months ended
October 31, 1999 was $1.7 million, compared to a use of cash of $4.2 million for
the nine months ended October 31, 1998. Cash used for investing activities of
continuing operations during these same periods was $1.5 million and $2.0
million, respectively. Cash used in financing activities of continuing
operations during the nine months ended October 31, 1999 was $0.8 million,
compared to cash provided of $7.6 million for the nine months ended October 31,
1998. Net cash provided by the discontinued operation was $4.0 million for the
nine months ended October 31, 1999, compared to a use of $1.5 million for the
comparable period of the prior year.

On November 3, 1999, the Company announced that its Board of Directors had
authorized a repurchase program of up to 1,000,000 shares of the Company's
common stock. The purchases will be funded from a portion of the proceeds from
the sale of NAC that closed on November 1, 1999. Repurchases may be made from
time-to-time in open market transactions, block purchases, privately negotiated
transactions or otherwise at prevailing prices. No time limit has been given for
the completion of the program.

In addition to the share repurchase program, the Company will use the proceeds
from the sale of NAC to fund current operations and the Company's growth, and to
continue to pursue potential acquisitions.

The Company has not declared or paid any cash dividends or distributions on its
common stock since its inception. The Company anticipates that, for the
foreseeable future, all earnings will be retained for use in the Company's
business and no cash dividends will be paid on its common stock. The Company's
current credit facilities prohibit the payment of cash dividends from either
subsidiary to First Aviation, except with the lender's consent, and contain
other covenants and restrictions. Any payment of cash dividends in the future on
the common stock will be dependent upon the Company's financial condition,
results of operations, current and anticipated cash requirements, plans for
expansion, the ability of its subsidiaries to pay dividends or otherwise make
cash payments or advances to it and restrictions, if any, under any future debt
obligations, as well as other factors that the Board of Directors deems
relevant.



                                       13
<PAGE>

Borrowings under API's $10.0 million revolving credit facility approximated $7.5
million at October 31, 1999. On September 2, 1999, the term of API's short-term
credit line was extended until December 31, 1999. On December 1, 1999, the term
was extended further until March 30, 2000.

Borrowings under NAC's $40.0 million credit facility approximated $14.5 million
at October 31, 1999. Simultaneous with the consummation of the sale of NAC on
November 1, 1999, the Company utilized a portion of the proceeds from the sale
to repay the entire outstanding balance of the NAC revolving line of credit and
terminated NAC's credit agreement. As a result of the termination, borrowings
under the credit agreement have been reclassified as a current liability for all
periods presented.

On March 5, 1997, the Company completed the acquisition of API from AMR Combs,
Inc. ("AMR Combs"). In conjunction with the Company's acquisition of API, AMR
Combs purchased 10,407 shares of API Series A Cumulative Convertible Preferred
Stock, $0.001 par value, with dividends payable quarterly at $4.00 per share
(the "Preferred Stock"). In addition, First Aviation, API and AMR Combs entered
into a Stockholders Agreement. Pursuant to this agreement, AMR Combs agreed that
it would not sell its shares of the Preferred Stock or the shares of API common
stock into which the Preferred Stock is convertible (collectively the "API
Acquisition Shares") for a minimum period of three years. API has the right to
redeem the API Acquisition Shares at any time. After March 5, 2000, AMR Combs
has the right to cause API to repurchase the API Acquisition Shares. The Company
has, under certain circumstances, the ability to defer AMR Combs' ability to
cause API to repurchase the API Acquisition Shares. The redemption price is
equal to the fair market value of the API Acquisition Shares as determined by an
independent appraisal.

The Stockholders Agreement also contains certain other rights, including: (i) a
right of first refusal on the part of First Aviation with respect to any
proposed sale of the API Acquisition Shares, (ii) the right of First Aviation to
require AMR Combs to participate, on a pro rata basis, with it in the sale of
the capital stock of API to a third party, (iii) the right of AMR Combs to elect
to participate, on a pro rata basis, in the sale of the capital stock of API to
a third party, and (iv) piggyback and demand registration rights granted to AMR
Combs with respect to the API Acquisition Shares. The demand registration rights
are not exercisable until three years after the closing of the acquisition of
API, and, if API has not previously closed an underwritten public offering of
its common stock at the time AMR Combs elects to exercise its demand
registration rights, API may elect to treat the demand as an exercise by AMR
Combs of its put option with respect to the API Acquisition Shares. First
Aviation has no plans to cause API to conduct a public offering of its
securities.

On March 5, 1999 AMR Combs was acquired by Signature Flight Support, an
affiliate of BBA Group Plc.

Based upon current and anticipated levels of operations, the Company believes
that its cash flow from operations, combined with cash on hand from the sale of
NAC and borrowings available under the existing lines of credit, will be
sufficient to meet its current and anticipated cash operating requirements for
the foreseeable future, including scheduled interest and principal payments,
capital expenditures, minority interest requirements and working capital needs.


Year 2000

The Company has been working on resolving the potential impact of the year 2000
on the processing of date-sensitive information by the Company's computerized
information systems. The year 2000 problem is the result of computer programs
being written using two digits (rather than four) to define the applicable year.
Any of the Company's programs and systems that have time-sensitive software may
be unable to interpret dates beyond the year 1999. This could result in
miscalculations and/or system failures, causing disruptions of operations
controlled by such systems or devices.



                                       14
<PAGE>

The Company and each of its operating subsidiaries have conducted comprehensive
reviews of their systems and have developed plans to address any possible issues
related to the impact of the year 2000 problem on both information technology
("IT") and non-IT systems (e.g., embedded technology). These plans address the
year 2000 issue in multiple phases, including (i) determining an initial
inventory of the Company's systems, equipment, vendors, customers and third
party administrators that may be vulnerable to system failures or processing
errors as a result of year 2000 issues, (ii) assessing and prioritizing of
inventoried items to determine risks associated with their failure to be year
2000 compliant, (iii) testing of systems and equipment to determine year 2000
compliance, and (iv) remediating and implementing systems and equipment. For
those systems that the Company determines are not currently year 2000 compliant,
implementation of the required changes is expected to be completed during the
remainder of this fiscal year.

As of October 31, 1999, all critical hardware and software systems utilized by
the Company in continuing operations had been tested and/or verified as either
year 2000 compliant or appropriate remediation was undertaken to effect
compliance. Certain non-critical software systems determined not to be year 2000
compliant had been or will be modified or converted to compliant systems.
Conversion of non-critical systems is in process. Testing systems utilized to
verify compliance include the posting to the systems of a date on or after
January 1, 2000 as though the date were effective. The Company has tested all of
its critical IT and non-IT systems. Any necessary additional modifications or
replacements are scheduled to be completed during the balance of the fiscal
year.

The Company continues to contact its customers, major suppliers and vendors to
assess their status relating to year 2000 readiness and/or compliance, and the
potential impact on operations if such third parties are not successful in
ensuring that their systems are year 2000 compliant in a timely manner. The
Company could suffer potential business interruptions and/or incur costs,
damages or losses related thereto if other third parties, such as governmental
agencies (e.g., Federal Aviation Administration), are not year 2000 compliant.
The Company could be materially affected by the failure of any of its customers,
suppliers, vendors or other third parties to be year 2000 compliant.

A failure by the Company, its customers, major suppliers or vendors, or any
third party with which the Company interacts, to resolve a material year 2000
issue could result in the interruption in, or failure of, certain normal
business activities or operations and could materially and adversely affect the
Company's financial condition, results of operations and cash flows. The Company
is currently assessing those scenarios in which unexpected failures could have a
material adverse effect on the Company and anticipates that it will develop
contingency plans, as deemed appropriate, designed to deal with such scenarios.
Based on current plans and assumptions, the Company does not expect that the
year 2000 issue will have a material adverse impact on the Company as a whole.
Due to the general uncertainty inherent in the year 2000 issue, however, there
can be no assurance that all year 2000 issues will be foreseen and corrected on
a timely basis, or that no material disruption to the Company's business
operations will occur. Further, the Company's expectations are based on the
assumption that there will be no failure of external local, national or
international systems, including, but not limited to power, communications,
postal, transportation, or financial systems necessary for the ordinary conduct
of business.

Costs associated with the Company's year 2000 compliance effort, including
consulting costs and costs associated with internal resources used to modify
existing systems in order to achieve year 2000 compliance, are charged to
expense as incurred. Management estimates that the expenditures for continuing
operations relating specifically to the Company's year 2000 compliance effort
were not material. The Company does not separately track internal costs relating
to its year 2000 compliance effort.


                                       15
<PAGE>


                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1. Legal Proceedings
-------------------------

During the quarter ended October 31, 1999, API established a sales and
distribution facility in Montreal, Canada. Several of the initial employees were
individuals previously employed by a competitor of API. The competitor commenced
litigation against API and the individuals.

On November 17, 1999, API and AAR International, Inc. filed a consent to a
limited injunction with the Superior Court for the District of Montreal in the
Province of Quebec, Canada whereby both parties acknowledged the return to AAR
of certain materials possessed by the individuals hired by API, and that API
would refrain from directly solicitating certain potential customers in the
Canadian market, would avoid making any reference to the hiring of the
individuals in general advertisements, and would pay a reasonable approximation
of the plaintiff's expenses incurred in connection with the matter. The
injunction along with the restrictions on API's marketing operations will expire
on March 16, 2000. The limitations are not expected to have a material affect
upon the Company's servicing of the Canadian market.

Item 2. Changes in Securities
-----------------------------

NONE

Item 3. Defaults Upon Senior Securities
---------------------------------------

NONE

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

NONE

Item 5. Other Information
-------------------------

On September 9, 1999, the holders of 56% of the Company's outstanding common
stock executed a written consent in favor of the sale of all of the outstanding
capital stock of NAC to Rolls-Royce North America, Inc.

On October 12, 1999, the Company filed an Information Statement on Form 14C to
inform stockholders of the sale of NAC.

Item 6. Exhibits and Reports on Form 8-K
----------------------------------------

(a) Exhibits.

Exhibit
Number            Description of Exhibit

27.1              Financial Data Schedule
27.2              Restated Financial Data Schedule

(b) Reports on Form 8-K.

Form 8-K dated November 4, 1999 relating to the consummation of the sale of NAC.
Form 8-K dated November 10, 1999 relating to the Company's announcement of its
share repurchase program.



                                       16
<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                       First Aviation Services Inc.
                                       (Registrant)




Date: December 15, 1999                /s/ Michael C. Culver
                                       --------------------------------------
                                       Michael C. Culver,
                                       President, Chief Executive Officer and
                                       Director (Principal Executive Officer)


Date: December 15, 1999                /s/ John A. Marsalisi
                                       -----------------------------------------
                                       John A. Marsalisi,
                                       Vice President, Secretary, Director and
                                       Chief Financial Officer
                                       (Principal Financial and
                                       Accounting Officer)



                                       17