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 April 30, 2004
                                       or
     TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from___________ to ____________

                         Commission File Number 0-21995
                                                -------

                          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__

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes __ No X


The number of shares outstanding of the registrant's  common stock as of June 1,
2004 is 7,296,960 shares.

<PAGE>

                          First Aviation Services Inc.

                                      Index

                         Part I - Financial Information
                         ------------------------------

Item 1.  Financial Statements  (Unaudited):

         Consolidated Condensed Balance Sheets.................................3
         Consolidated Condensed Statements of Operations.......................4
         Consolidated Condensed Statements of Cash Flows.......................5
         Notes to Consolidated Condensed Financial Statements................6-8

Item 2.  Management's Discussion and Analysis of Financial Condition,
         Results of Operations and Liquidity and Capital Resources..........9-13

Item 3.  Quantitative and Qualitative Disclosures about Market Risks..........13

Item 4.  Controls and Procedures..............................................13



                           Part II - Other Information
                           ----------------------------

Other Information.............................................................14


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

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

                          First Aviation Services Inc.

                      Consolidated Condensed Balance Sheets
                      (in thousands, except share amounts)

                                                         April 30,  January 31,
                                                           2004         2004
                                                       -----------  ------------
                                                       (unaudited)       *
Assets
Current assets:
      Cash and cash equivalents                           $23,745       $25,144
      Trade receivables, net of allowance for doubtful
         accounts of $1,411 and $1,418, respectively       15,164        13,499
      Inventory, net of allowance for obsolete and slow
       moving
         inventory of $938 and $1,013, respectively        21,492        22,344
      Prepaid expenses and other                            1,001         1,032
                                                       -----------  ------------

Total current assets                                       61,402        62,019

Plant and equipment, net                                    3,019         2,963
                                                       -----------  ------------

                                                          $64,421       $64,982
                                                       ===========  ============

Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                                    $11,331        $9,561
      Accrued compensation and related expenses               861         1,116
      Other accrued liabilities                             1,409         1,260
      Income taxes payable                                    942           939
                                                       -----------  ------------

Total current liabilities                                  14,543        12,876

      Revolving line of credit                             12,650        14,500
      Minority interest in subsidiary                       1,041         1,041
                                                       -----------  ------------

Total liabilities                                          28,234        28,417

Stockholders' equity:

      Common stock, $0.01 par value, 25,000,000 shares
       authorized,
          9,135,699 shares issued                              91            91
      Additional paid-in capital                           38,358        38,375
      Retained earnings                                     7,144         7,554
      Accumulated other comprehensive income
       (loss)                                                 211           238
                                                       -----------  ------------

                                                           45,804        46,258
      Less:  Treasury stock, at cost, 1,838,739 and
       1,851,606
          shares, respectively                             (9,617)       (9,693)
                                                       -----------  ------------

Total stockholders' equity                                 36,187        36,565
                                                       -----------  ------------

Total liabilities and stockholders' equity                $64,421       $64,982
                                                       ===========  ============

See accompanying notes.

  * Balances were derived from the audited balance sheet as of January 31, 2004.


                                       3
<PAGE>


                          First Aviation Services Inc.

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


                                                           Three months ended
                                                                April 30,
                                                           2004         2003
                                                        -----------  -----------

Net sales                                                  $30,215      $25,605
Cost of sales                                               24,603       20,731
                                                        -----------  -----------

Gross profit                                                 5,612        4,874
Selling, general and administrative expenses                 4,990        4,266
Corporate expenses                                             930          490
                                                        -----------  -----------

Income (loss) from operations                                 (308)         118
Net interest income (expense) and other                        (82)          89
Minority interest in subsidiary                                (10)         (10)
                                                        -----------  -----------

Income (loss) before income taxes                             (400)         197
Provision for income taxes                                     (10)         (77)
                                                        -----------  -----------

Net income (loss)                                            $(410)        $120
                                                        ===========  ===========


Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution:

Basic net income (loss) per share, and net income (loss)
     per share - assuming dilution                          $(0.06)       $0.02
                                                        ===========  ===========

Weighted average shares outstanding - basic              7,290,048    7,251,355
                                                        ===========  ===========

Weighted average shares outstanding - assuming
 dilution                                                      n/a    7,258,903
                                                        ===========  ===========

See accompanying notes.


                                       4
<PAGE>


                          First Aviation Services Inc.

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

                                                             Three months ended
                                                                 April 30,
                                                              2004       2003
                                                            ---------  ---------
Cash flows from operating activities
Net income (loss)                                              $(410)      $120
Adjustments to reconcile net income (loss) to net
     cash from operating activities - non-cash charges:
      Depreciation and amortization                              232        339
      Compensation paid through issuance of stock                 58          4
(Increase) decrease in current assets:
      Trade receivables                                       (1,708)       395
      Inventory                                                  816        368
      Prepaid and other                                           28       (417)
Increase (decrease) in current liabilities:
      Accounts payable                                         1,771        447
      Accrued compensation and related expenses, and other
       accrued liabilities                                       (32)      (151)
      Income taxes payable                                        (4)        75
                                                            ---------  ---------

Net cash provided by operating activities                        751      1,180

Cash flows from investing activities
Purchases of plant and equipment                                (292)      (127)
Disposals of plant and equipment                                   2          -
                                                            ---------  ---------

Net cash used in investing activities                           (290)      (127)

Cash flows from financing activities
Borrowings on revolving line of credit                        12,650     14,500
Repayments on revolving line of credit                       (14,500)   (14,500)
Principal payments on capital lease obligations and other          -         (6)
                                                            ---------  ---------

Net cash used in financing activities                         (1,850)        (6)
                                                            ---------  ---------

Net increase (decrease) in cash and cash equivalents          (1,389)     1,047

Effect of exchange rates on cash                                 (10)        35

Cash and cash equivalents at beginning of period              25,144     26,013
                                                            ---------  ---------

Cash and cash equivalents at end of period                   $23,745    $27,095
                                                            =========  =========

Supplemental cash flow disclosures:
      Interest paid                                              $14        $13
      Income taxes paid                                          $19         $-


See accompanying notes.


                                       5
<PAGE>


                          First Aviation Services Inc.

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

                                 April 30, 2004

1.  Basis of Presentation

First Aviation Services Inc. ("First Aviation"),  together with its wholly owned
subsidiaries  Aircraft  Products  International,  Ltd. ("API Ltd.") and API Asia
Pacific Inc. ("API Asia Pacific"), and its majority-owned  subsidiary, Aerospace
Products International,  Inc. ("API"), (collectively,  the "Company"), is one of
the premier  suppliers  of  services to the  aviation  industry  worldwide.  The
services the Company provides the aviation industry include the sale of aircraft
parts and  components,  the  provision  of  supply  chain  management  services,
overhaul and repair services for brakes and starter/generators, and the assembly
of custom hoses.  The Company's  principal  executive  offices are located at 15
Riverside Avenue, Westport,  Connecticut 06880. Customers of the Company include
original equipment  manufacturers,  aircraft manufacturers,  passenger and cargo
airlines,  fleet  operators,   corporate  aircraft  operators,  flight  training
schools,  fixed base operators,  certified  repair  facilities,  governments and
military services.  The accompanying  unaudited consolidated condensed financial
statements  of the Company  have been  prepared in  accordance  with  accounting
principles  generally  accepted  in the  United  States  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 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  consolidated
condensed  financial  statements.  Operating  results for the three months ended
April  30,  2004  are not  necessarily  indicative  of the  results  that may be
expected  for the  full  fiscal  year  ending  January  31,  2005.  For  further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto included in the Company's Form 10-K for the year ended January 31, 2004.


2.  Weighted Average Shares Outstanding - Assuming Dilution

The following sets forth the  denominator  used in the computation of net income
(loss) per share - assuming dilution:


                                                      Three months ended
                                                           April 30,
                                                      2004            2003
                                                  ------------    ------------
  Denominator:
    Denominator for basic net income (loss)
       per share - weighted average shares          7,290,048       7,251,355

    Effect of dilutive employee stock options           9,122           7,548
                                                  ------------    ------------

    Denominator for net income (loss) per
       share - assuming dilution, adjusted
          weighted average shares and assumed       7,299,170       7,258,903
          dilutions
                                                  ============    ============


3.  Stock Options Issued to Employees

In lieu of cash, the Company's  directors elect to receive their compensation in
the form of the Company's  stock. The value of stock issued is equivalent to the
compensation  expense,  and the  number of shares  issued is based upon the fair
market value per share at the date issued.  For the three months ended April 30,
2004 and April 30, 2003, the Company issued 12,867 and 880 shares  respectively,
to directors in lieu of board fees.

                                       6
<PAGE>

The Company  generally  grants stock options to its employees for a fixed number
of shares with an exercise  price equal to the fair market value of the stock on
the date of grant. As permitted under Statement of Financial Accounting Standard
No. ("FAS") 123,  "Accounting  for  Stock-Based  Compensation",  the Company has
elected to follow  Accounting  Principles Board Opinion No. 25,  "Accounting for
Stock Issued to Employees",  and related interpretations in accounting for stock
awards to employees.  No  compensation  expense was recognized  during the three
months  ending  April 30, 2004 and 2003 since all grants were issued at the fair
market value of the Company's common stock at the date of grant.

The  Company is required to  disclose  the fair  value,  as defined,  of options
granted to employees and the related compensation expense. The fair value of the
stock options  granted was estimated at the date of grant using a  Black-Scholes
option-pricing  model. The Black-Scholes  option-pricing model was developed for
use in  estimating  the fair  value  of  traded  options  that  have no  vesting
restrictions and are fully  transferable.  In addition,  option valuation models
require the input of highly subjective assumptions, including the expected stock
price volatility.  In management's opinion, because the Company's employee stock
options  are  not  publicly  traded,  and  have  characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input  assumptions can materially  affect the fair value estimate,  the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

The fair value of each option  issued was  estimated  at the date of grant using
the following assumptions for the three months ended April 30:


                                                 2004                 2003
                                           -----------------     ---------------

   Expected dividend yield                      0.0%                  0.0%
   Risk-free interest rate                      3.6%                  2.0%
   Expected volatility                         31.9%                 37.8%
   Expected life of option                      5.0 years             5.0 years
   Weighted-average fair value of
    options granted during the quarter       $  1.56               $  0.99

Using the above noted  assumptions and the  weighted-average  fair value of each
option  granted,  the net income (loss) and earnings (loss) per share that would
have been  recorded  if the  estimated  fair value of options  granted  had been
recorded as an expense was:


                                                       Three months ended
                                                           April 30,
                                                      2004            2003
                                                 ---------------  --------------

  Net income (loss) as reported                  $    (410)       $      120

  Pro forma net compensation expense for
    issuance of stock options                            19               30
                                                 ---------------  --------------

  Pro forma net income (loss)                    $    (429)               90
                                                 ===============  ==============

  Basic net income (loss) per share, and net
  income (loss) per share - assuming dilution
  as reported                                    $   (0.06)       $     0.02

  Pro forma basic net income (loss) per share,
  and net income (loss) per share - assuming
  dilution                                       $   (0.06)       $     0.01
                                                 ===============  ==============


                                       7
<PAGE>

4.  Accumulated Other Comprehensive Income (Loss)

The accumulated other comprehensive  income (loss) resulted from the translation
of accounts  into U.S.  dollars  where the  functional  currency is the Canadian
dollar.  The decrease during the three months ended April 30, 2004 was due to an
increase  in the  value of the U.S.  dollar  relative  to the  Canadian  dollar.
Comprehensive income (loss) for the periods shown was as follows:

                                                      Three months ended
                                                           April 30,
                                                    2004              2003
                                                --------------    --------------

  Net income (loss) as reported                 $    (410)        $      120

  Pro forma net impact of foreign currency
    translation adjustments - gain (loss)             (27)               180
                                                --------------    --------------

  Comprehensive net income (loss)               $    (437)        $      300
                                                ==============    ==============


5.  Income Taxes

The Company  recorded a provision for income taxes related to foreign income tax
expense estimates for operations in Canada and the Philippines. The Company does
not record a tax benefit for U.S. tax purposes on any operating  losses incurred
due to the  deferred  tax  valuation  allowance  recorded  and  the  uncertainty
involving  the future use of these tax  benefits.  If the Company did not record
the deferred tax valuation  allowance,  the effective  income tax rate (benefit)
for the three months ended April 30, 2004 would be 39%. The effective income tax
rate for the three months ended April 30, 2003 was 39%. Management will evaluate
the Company's  income tax position as the year  progresses and expects to adjust
the rate as necessary.


6.  Related Parties
The Company and First Equity Development Inc. ("First Equity"), the wholly-owned
subsidiary of First Equity Group, Inc., the majority stockholder of the Company,
have an advisory agreement on a month-to-month basis effective February 1, 2004.
Pursuant to the terms of this agreement,  First Equity provides the Company with
investment and financial  advisory services  relating to potential  acquisitions
and other  financial  transactions.  The  agreement  can be terminated by either
party upon 30 days written  notice to the other party.  During each of the three
months ended April 30, 2004,  and 2003,  the Company paid First Equity  retainer
fees of $90, and no Success Fee.

The Company and First  Equity have  entered into an  arrangement  whereby  First
Equity  provides  the Company  with  various  additional  services to assist the
Company. These services are not part of the advisory agreement, described above,
but derive from the work First Equity  performs under the agreement.  Therefore,
First Equity does not charge the Company  additional fees in connection with the
provision  of such  services.  These  services  include (i)  detailed  financial
modeling  for new  business  proposals,  (ii)  Board of  Directors  presentation
analysis,  (iii) investor relations  marketing and  presentations,  (iv) various
analysis for API, including  benchmarking,  financial analysis,  and competetive
market analyses,  and (v) other financial  analyses for the  Company,  including
stock buy-back,  valuations,  and capital structure analyses.  The Company's CEO
and CFO have unlimited access to these resources when requested.

The Company  subleases  from First  Equity  approximately  3,000  square feet of
office  space in  Westport,  Connecticut.  The leased  space is  utilized by the
Company as its corporate  headquarters.  First Equity also utilizes space in the
same premises.  The sublease,  which became  effective  April 21, 1997, is for a
period of ten years,  and is cancelable by either party with six months  notice.
The Company has the option to renew the  sublease for two  additional  five-year
periods.  Lease payments under this sublease totaled approximately $20, for each
of the three months ended April 30, 2004, and 2003.

The Company and First Equity share certain common expenses that arise from
sharing office space in Westport, CT. The amounts are included in the Company's
corporate expenses, and include expenses such as telephone, computer consulting,
office cleaning, office supplies and utilities. The allocations are reviewed by
the Company's CFO and the Controller of First Equity each month. In addition, a
member of the Company's Audit Committee reviews the allocation of expenses
quarterly. In addition, the amounts reimbursed by the Company are the actual
costs incurred for the expense. The Company reimbursed First Equity, $11, and
$16, for the three months ended April 30, 2004, and 2003 respectively.

                                       8
<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 of
Act 1995.

  Certain statements discussed in Item 2, "Management's  Discussion and Analysis
  of Financial  Condition and Results of Operations",  Item 3, "Quantitative and
  Qualitative  Disclosures  about  Market  Risks",  Item 1 of  Part  II,  "Legal
  Proceedings"  and  elsewhere  in this  this  Quarterly  Report  on  Form  10-Q
  constitute  forward-looking  statements  within  the  meaning  of the  Private
  Securities Litigation Reform Act of 1995.  Forward-looking  statements are not
  statements  of historical  facts,  but rather  reflect the  Company's  current
  expectations  concerning  future  events  and  results.  Such  forward-looking
  statements,  including those  concerning the Company's  expectations,  involve
  known and unknown risks,  uncertainties  and other factors,  some of which are
  beyond the Company's  control,  that may cause the Company's  actual  results,
  performance or achievements,  or industry results, to be materially  different
  from any future results,  performance or achievements  expressed or implied by
  such forward-looking statements. Such risks, uncertainties and other important
  factors  include,  at a minimum,  the  Company's  ability to obtain  parts and
  components from its principal suppliers on a timely basis,  depressed domestic
  and international market and economic  conditions,  especially those currently
  facing the  aviation  industry  as a whole,  the impact of changes in fuel and
  other freight related costs,  relationships with its customers, the ability of
  the Company's  customers to meet their  financial  obligations to the Company,
  the ability to obtain and service supply chain management  contracts,  changes
  in regulations  or accounting  standards,  the ability to consummate  suitable
  acquisitions and expand, and other items that are beyond the Company's control
  and may cause  actual  results to differ from  management's  expectations.  In
  addition,  specific  consideration  should  be  given to the  various  factors
  described  in Item 7,  "Management's  Discussion  and  Analysis  of  Financial
  Condition and Results of Operations",  in the Company's  Annual Report on Form
  10-K for the year ended  January 31,  2004.  We  disclaim  any  obligation  or
  undertaking  to  provide  any  updates  or  revisions  to any  forward-looking
  statement to reflect any change in our  expectations  or any change in events,
  conditions,  or  circumstances on the which the  forward-looking  statement is
  based.

General

First Aviation Services Inc. ("First Aviation"),  together with its wholly owned
subsidiaries,  Aircraft Parts  International,  Ltd.  ("API Ltd."),  and API Asia
Pacific Inc. ("API Asia Pacific"), and its majority-owned subsidiary,  Aerospace
Products International,  Inc. ("API"), (collectively,  the "Company"), is one of
the premier  suppliers  of  services to the  aviation  industry  worldwide.  The
services the Company provides the aviation industry include the sale of aircraft
parts and  components,  the  provision  of  supply  chain  management  services,
overhaul and repair services for brakes and starter/generators, and the assembly
of custom hoses.

The Company's  principal executive offices are located at 15 Riverside Avenue in
Westport,  Connecticut 06880. Certain filings that First Aviation makes with the
U.S.  Securities  and Exchange  Commission  are  available  on First  Aviation's
corporate website at www.favs.com.  These public filings also can be obtained by
calling    our    investor    relations    department,    or   by    e-mail   at
first@firstaviation.com.

Critical Accounting Policies

There have been no significant  changes in those accounting policies the Company
considers  critical from those described under the caption "Critical  Accounting
Policies",  included  in  Item  7,  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations",  in the Company's Annual Report
on Form 10-K for the year ended January 31, 2004.

Results of Operations

Net Sales

The Company's  net sales consist of sales of services to the aviation  industry,
including  parts  and  components  supply  services,   supply  chain  management
services,  and component  overhaul and repair  services.  Net sales are recorded
when parts and components are shipped and title transfers to the customer,  when

                                       9
<PAGE>

supply chain  management  services have been  provided to the customer,  or when
overhauled  and repaired  items are  completed and shipped back to the customer.
Shipping and handling  billed to customers are included in net sales.  The terms
and nature of supply chain  management  services are  stipulated  in a long-term
contract  between  the  Company  and the  customer.  The  Company  provides  its
facilities,  personnel  and systems to provide the  services at less cost to the
customer.  In  providing  services  where the Company  distributes  inventory on
behalf  of its  customer,  the  Company  may use its own  inventory  or hold its
customers' inventory without taking ownership of such inventory.  In cases where
the Company  does not take  ownership  of its  customers'  inventory,  net sales
generally  are  recognized  as a fee  based on the  sales  value of the  product
shipped through the Company's facilities, and not the sales value of the product
itself.

Net sales for the three months ended April 30, 2004 increased  $4.6 million,  or
18.0%,  to $30.2 million from $25.6 million for the three months ended April 30,
2003.  During  the three  months  ended  April  30,  2004 net sales of parts and
components  increased in a majority of the customer  sectors the Company serves,
compared to the  comparable  period of the prior year,  with  general  aviation,
corporate flight departments,  large corporate maintenance,  repair and overhaul
facilities, retail, and airline sectors mainly contributing to the increase. The
increases  are  attributable  to the rebound of global air traffic in the latter
half of 2003 from  depressed  levels as well as an  improving  overall  economy,
leading to  increases in the  corresponding  need for  maintenance  and repairs.
Sales to  airlines,  while  improving  over  previously  low  levels,  are still
affected by difficult industry  conditions,  and continued  additional  security
measures that  especially  affected the  commercial  airline  markets.  Sales of
services to customers for providing supply chain  management  services were flat
compared to the prior year period.

The  majority of the  increase in sales  occurred in the U.S.  market,  although
increases in sales growth also occurred for various  customer  sectors served in
Asia and Canada.  Sales in Asia to all customer  sectors served improved for the
three  months  ended April 30,  2004 over the prior year period  ended April 30,
2003.  Leading the  increases  were general  aviation and airlines  sales due to
improving  market  conditions for general  aviation and more airline activity in
the Asia region, than existed in the prior year period. Sales in Canada improved
primarily in the general aviation customer sector,  which represents the bulk of
sales in  Canada,  but there  were also  improvements  in the  airline  customer
sector.  Sales in Europe improved in the customer  sectors for general  aviation
and  large  corporate  maintenance,  repair  and  overhaul,  but were  offset by
reductions in the airline  customer  sector.  The Latin America  region also had
sales increases in the airline customer sector,  over the prior period, but this
was offset by declines in the general  aviation  customer  sectors.  The Company
continues to be cautious  with  respect to providing  credit to customers in the
Latin American region, and this has a negative impact on sales.

Freight revenue is a component of net sales and it represents  freight billed to
customers.  Freight  revenue for the three months ended April 30, 2004 increased
4% to $596,000  from  $572,000 for the three  months ended April 30, 2003.  This
increase  was   primarily   due  to  the   increase  in  sales,   however  at  a
disproportionately  lower  rate  of  increase,  due  to  increases  in  customer
incentives resulting from promotional activities and industry competition.

Sales to  Original  Equipment  Manufacturers  (OEM's)  were  level for the three
months ended April 30, 2004 over the prior year period ended April 30, 2003,  as
the Company did not add to its existing customer contracts.

Cost of Sales

Cost of sales consists of costs of inventory sold,  direct costs to overhaul and
repair parts and  components,  and direct costs of providing  services.  Freight
costs for parts and components sold are also included in cost of sales.

Cost of sales for the three months ended April 30, 2004  increased $3.9 million,
or 18.7%,  to $24.6  million from $20.7 million for the three months ended April
30,  2003.  Cost of sales for the three  months  ended April 30, 2004  increased
compared to the prior year  principally  due to the  increase  in net sales.  In
addition,  the  increase  in cost of sales  was due to an  increase  in  freight
expenses for products delivered to customers.

The increase in the  percentage  of cost of sales  compared to net sales for the
three months  ended April 30, 2004  compared to the three months ended April 30,
2003, was due to the increase in sales of products and components  versus supply
chain management services  contracts,  the latter representing a larger share of
the mix in the prior year period versus the current year period.

                                       10
<PAGE>

Gross Profit

Gross profit for the three months ended April 30, 2004  increased  $0.7 million,
or 15.1%, to $5.6 million from $4.9 million for the three months ended April 30,
2003,  due to the increase in sales in the current year quarter versus the prior
year quarter.  Gross profit as a percentage of net sales  decreased to 18.6% for
the three  months  ended April 30,  2004,  from 19.0% for the three months ended
April 30, 2003.  Gross  profit  margin for the three months ended April 30, 2004
decreased compared to the comparable period of the prior year principally due to
an increase in the mix in sales of parts and components which have a lower gross
profit margin relative to supply chain management contracts.

Gross profit is also impacted by net freight expenses,  which represents freight
expense  recorded in cost of sales,  less  freight  billed to  customers  in net
sales. Net freight expenses  decreased gross profit by 3.6% for the three months
ended April 30,  2004,  compared to a decrease of 2.7% in the three month period
ended April 30,  2003,  due  primarily  to increased  customer  incentives  from
promotional activities offering customers reduced freight on shipments.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses for the three months ended April
30, 2004 increased $0.7 million,  or 17.0% to $5.0 million from $4.3 million for
the three  months  ended  April 30,  2003.  The  increase  is  primarily  due to
increases in salaries and payroll costs related to increases in sales personnel,
and  the  implementation  of a  new  customer  initiative  requiring  additional
temporary warehouse personnel costs. Other expenses contributing to the increase
in expenses  for the three  months  ended  April 30, 2004 over the three  months
ended April 30, 2003, include sales related travel expenses, expenses related to
the departure of personnel,  and legal expenses related to general legal matters
and ongoing litigation.

Corporate Expenses

Corporate  expenses  for the three months  ended April 30, 2004  increased  $0.4
million, or 89.8%, to $0.9 million,  from $0.5 million incurred during the three
months ended April 30, 2003.  For the three months ended April 30, 2004 over the
prior year  quarter,  the  Company  incurred  an  additional  $208,000  in legal
expenses related to updating our corporate governance policies under new SEC and
NASDAQ exchange rules,  responding to a dissident  shareholder's  proposal,  and
activities in connection with a proxy contest for the 2004 annual meeting. Other
increases in the current  year  quarter  over the prior year quarter  related to
salary and payroll  expenses of $84,000,  travel expense of $16,000,  consulting
services related to changes in management $73,000, and general legal expenses of
$13,000.

Net Interest Income (Expense) and Other

During the three months ended April 30, 2004, interest income from investing the
Company's cash in short term investments, decreased $71,000 to $10,000, compared
to $81,000 in the  comparable  period of the prior year. The decrease was due to
an adjustment to invested  cash  equivalent  balances in the quarter ended April
30,  2003.  In addition,  the  decrease  was also due to lower cash  balances to
invest,  and lower interest  rates,  in the current year quarter ended April 30,
2004 over the prior year quarter ended April 30, 2003.  Other expense  increased
$97,000  in the three  months  ended  April 30,  2004 to  $76,000,  as a gain on
foreign currency exchange of $21,000,  in the three months ended April 30, 2003,
moved to a loss on foreign  currency  exchange of $76,000,  due  primarily  to a
weakening  Canadian  dollar  that  is  used as the  functional  currency  of the
Canadian subsidiary. Interest expenses for the three months ended April 30, 2004
were  essentially  unchanged from the amounts recorded in the three months ended
April 30, 2003.

Provision for Income Taxes

The Company  recorded a provision for income taxes related to foreign income tax
expense estimates for operations in Canada and the Philippines. The Company does
not record a tax benefit for U.S. tax purposes on any operating  losses incurred
due to the  deferred  tax  valuation  allowance  recorded  and  the  uncertainty
involving the future use of these tax benefits.

If the  Company  did not  record  the  deferred  tax  valuation  allowance,  the
effective  income tax rate  (benefit)  for the three months ended April 30, 2004
would be 39%. The effective income tax rate for the three months ended April 30,
2003 was 39%.  Management will evaluate the Company's income tax position as the
year progresses and expects to adjust the rate as necessary.

                                       11
<PAGE>

Net Income (Loss) and Net Income (Loss) per Share

The Company had a net loss of $0.4  million,  or $(0.06) per share for the three
months ended April 30, 2004,  compared to net income of $0.1  million,  or $0.02
per share for the three months ended April 30, 2003.  The decrease in net income
was due to the reasons described in the preceding sections.

Liquidity and Capital Resources
-------------------------------

The Company's liquidity  requirements arise principally from its working capital
needs.  In  addition,  the Company has  liquidity  requirements  to fund capital
expenditures  to support  its  current  operations,  and  facilitate  growth and
expansion.  The Company funds its liquidity  requirements  with a combination of
cash on hand,  cash flows  from  operations  and from  borrowings.  The  Company
manages its cash and debt to minimize its interest expense.

Cash and cash  equivalents  at any time may consist of a  combination  of demand
deposits,  money market or  short-term,  high-grade  bond funds,  and short-term
certificates of deposit.

The reduction in cash for the three months ended April 30, 2004  principally was
the result of a net  reduction in  long-term  debt during the three months ended
April 30, 2004 over the prior year three months ended April 30, 2003.

For the three months ended April 30, 2004 the Company generated $751,000 of cash
from operating activities, compared to $1.2 million for the three months ended
April 30, 2003. The decrease in cash generated in the current year compared to
the comparable period of the prior year was due to the net loss for the quarter,
and an increase in receivables on the increase in sales for the three months
ended April 30, 2004, offset by increases in cash due to inventory reductions
during the current year compared to the comparable period of the prior year, as
inventory levels were reduced due to more optimal levels, and increases in
accounts payable due to increased sales activity in the current year quarter.
The Company continues to focus on managing its overall working capital. Cash
used in investing activities was $0.3 million and $0.1 million during the three
months ended April 30, 2004 and 2003, respectively, due primarily to purchases
of plant and equipment. The Company expects that its aggregate capital
expenditure requirements for the year ending January 31, 2005 will range from
approximately $0.9 million to $1.0 million. Management expects to fund these
requirements from cash on hand, cash flows from operations, and from borrowings.
Net cash used in financing activities during the three months ended April 30,
2004 was $1.9 million, compared to $-0- financing activity for the three months
ended April 30, 2003, as the Company utilized cash to reduce a portion of its
outstanding debt in the current year quarter.

API has a $20 million revolving line of credit through a Commercial Revolving
Loan and Security Agreement (the "Facility"). Borrowings under this Facility
bear interest equal to the LIBOR rate plus 1.5% and are limited to specified
percentages of eligible trade receivables and inventories of API. The Facility
contains a number of covenants, including restrictions on mergers,
consolidations and acquisitions, the incurrence of indebtedness, transactions
with affiliates, the creation of liens, and limitations on capital expenditures.
Pursuant to the terms and conditions of the Facility, the payment of dividends
on API's common stock is prohibited, except with the lender's consent, and API
is required to maintain minimum levels of net worth and specified interest
expense coverage ratios. Substantially all of API's domestic assets are pledged
as collateral under the Facility, and First Aviation guarantees all borrowings
under the Facility. Borrowings under the Facility totaled $12.7 million at April
30, 2004 at an interest rate of approximately 2.6%. These borrowings were drawn
down in April 2004. Approximately $5.5 million was available under the Facility
at April 30, 2004. In May 2004, the Company repaid all $12.7 million of the debt
outstanding. The Facility expires July 1, 2005; therefore, borrowings under the
Facility are classified as long term. Management believes that the carrying
amount of the Company's borrowings approximates fair market value because the
interest rate is variable and resets frequently.

On January 6, 2003, the Company announced that its Board of Directors,  in light
of the Company's  cash  position,  had approved a special cash dividend of $1.00
per share.  The  dividend  was paid on January 30,  2003.  The total paid to the
stockholders was $7.3 million.  The Company previously had not declared nor paid
any cash dividends or  distributions  on its common stock since its inception in
1997. At this time,  the Company  anticipates  that all future  earnings will be
retained for use in the Company's business. Any payment of cash dividends in the

                                       12
<PAGE>

future on the  Company's  common  stock  will be  dependent  upon the  Company's
financial  condition,  its 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 any other factors that the
Board of Directors deems relevant.

In conjunction  with the Company's  acquisition of API in 1997, AMR Combs,  Inc.
("AMR Combs")  purchased  10,407  shares of API Series A  Convertible  Preferred
Stock,  $0.001 par value,  with  annual  dividends  of $4.00 per share,  payable
quarterly (the "Convertible  Preferred Stock").  API has the right to redeem the
Convertible Preferred Stock at any time. AMR Combs has the right to cause API to
repurchase  the  Convertible  Preferred  Stock.  The Company has,  under certain
circumstances,  the  ability  to  defer  AMR  Combs'  ability  to  cause  API to
repurchase the Convertible Preferred Stock. The redemption price is equal to the
fair  market  value  of the  Convertible  Preferred  Stock as  determined  by an
independent appraisal.

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 cash flow from operations, combined with cash on hand, and the availability
under the  Facility,  will be  sufficient  to meet its current  and  anticipated
operating cash  requirements  for the foreseeable  future,  including  scheduled
interest  and  principal  payments,  capital  expenditures,   minority  interest
requirements, working capital needs, and cash required for acquisitions that the
Company may pursue.

Contractual Obligations
-----------------------

There have been no material changes outside the ordinary course of the Company's
business in the Company's  specified  contractual  obligations  disclosed in the
Company's Annual Report on Form 10-K for the year ended January 31, 2004.


Item 3. Quantitative and Qualitative Disclosures about Market Risks
-------------------------------------------------------------------

The  Company's  Canadian   operations  utilize  the  Canadian  dollar  as  their
functional  currency,  while the  Company's  Asian  operation  utilizes the U.S.
dollar as its functional currency.  The Company has transactions  denominated in
Canadian dollars and Philippine  pesos.  Foreign currency  transaction  exposure
principally  arises from the  transfer  of foreign  currency to and/or from U.S.
dollars from one  subsidiary  to another  within the  Company,  and from foreign
currency  denominated trade  receivables.  Currency  transaction and translation
exposures  are not hedged.  Foreign  currency  transaction  gains and losses are
included in earnings, and gains or losses will increase in significance with the
growth of the Canadian  operations.  Unrealized  currency  translation gains and
losses resulting from the translation of foreign  subsidiaries balance sheets to
U.S.  dollars are not recorded as income or expense,  but are  recognized in the
Balance  Sheet  as  other  comprehensive  income  or  loss  as  a  component  of
Stockholder's  Equity.  The Company does have risk  principally  relating to the
translation of accounts in which the Canadian dollar is the functional currency.
During  the three  months  ended  April 30,  2004,  the  Company  experienced  a
comprehensive  loss of $27,000,  due to a decrease in the value of the  Canadian
dollar relative to the U.S. dollar.

Borrowings of the Company are denominated in U.S. dollars.  Management  believes
that the carrying  amount of the Company's  borrowings  approximates  fair value
because the interest rates are variable and reset frequently.


Item 4. Controls and Procedures
-------------------------------

The Company's  management  evaluated,  with the  participation  of the Company's
principal executive and principal  financial officers,  the effectiveness of the
Company's  disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e)  under the Securities  Exchange Act of 1934, as amended (the "Exchange
Act")), as of April 30, 2004. Based on their evaluation, the Company's principal
executive  and  principal   financial  officers  concluded  that  the  Company's
disclosure controls and procedures were effective as of April 30, 2004.

There  has been no change  in the  Company's  internal  control  over  financial
reporting (as defined in Rules  13a-15(f) and 15d-15(f)  under the Exchange Act)
that occurred during the Company's fiscal quarter ended April 30, 2004, that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                                       13
<PAGE>

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

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

The Company's business exposes it to possible claims for personal injury,  death
or property  damage that may result from a failure of certain parts  serviced by
the Company or spare parts and components  sold by it, or in connection with the
provision of its supply chain  management  services.  The Company  takes what it
believes  to be  adequate  precautions  to  ensure  the  quality  of the work it
performs and the  traceability  of the  aircraft  parts and  components  that it
sells.  The  original  equipment   manufacturers  that  manufacture  the  parts,
components and supplies that the Company sells carry liability  insurance on the
products they manufacture.  In addition,  the Company maintains what it believes
is adequate liability insurance to protect it from any claims.

In the normal  conduct of its business,  the Company also is involved in various
claims and lawsuits,  none of which, in the opinion of the Company's management,
will have a material,  adverse  impact on the Company's  consolidated  financial
position. The Company maintains what it believes is adequate liability and other
insurance to protect it from such claims.  However,  depending on the amount and
timing,  unfavorable  resolution  of any of these  matters could have a material
effect on the Company's consolidated  financial position,  results of operations
or cash flows in a particular period.

The Company previously disclosed a lawsuit, filed on June 28, 2000, by BE
Aerospace (formerly known as SMR Technologies, Inc.), as plaintif, against API
in the U.S. District Court for the Western District of Tennessee, Western
Division at Memphis, alleging breach of a distribution agreement. This lawsuit
was dismissed in March 2004 for lack of subject matter jurisdiction. The
plaintiff filed for breach of contract on June 28, 2000 and was awarded partial
summary judgment in the amount of $77,000 plus interest, totaling approximately
$94,000. The plaintiff was then granted permission in April 2003 to amend its
pleadings for damages to sue for approximately $13.1 million. In March 2004, API
was able to have the entire lawsuit dismissed. API has filed a motion to recover
its costs. On June 2, 2004, the plaintiff re-filed its lawsuit in the Circuit
Court of Tennessee for Shelby County, Tennessee, against API, claiming
unspecified damages for breach of a distribution agreement, and $77,295 for
parts delivered to API, plus interest.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
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
-------------------------

NONE

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

(a) Exhibits.

31.1      Certification of Chief Executive Officer required by Rule 13a-14(a).

31.2      Certification of Chief Financial Officer required by Rule 13a-14(a).

32.1      Certification  of Chief Executive  Officer  required by Rule 13a-14(b)
          and 18 U.S.C. Section 1350 (furnished herewith).

32.2      Certification  of Chief Financial  Officer  required by Rule 13a-14(b)
          and 18 U.S.C. Section 1350 (furnished herewith).

(b) Reports on Form 8-K.

      NONE


                                       14
<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: June 14, 2004                 /s/ Michael C. Culver
                                    --------------------------------------------
                                    Michael C. Culver,
                                    President, Chief Executive Officer and
                                    Director (Principal Executive Officer)


Date: June 14, 2004                 /s/ Robert G. Costantini
                                    --------------------------------------------
                                    Robert G. Costantini,
                                    Chief Financial Officer (Principal Financial
                                    and Accounting Officer)


                                       15
<PAGE>


                                INDEX TO EXHIBITS


Exhibit No.                        Description
-----------                        -----------

31.1      Certification of Chief Executive Officer required by Rule 13a-14(a).

31.2      Certification of Chief Financial Officer required by Rule 13a-14(a).

32.1      Certification  of Chief Executive  Officer  required by Rule 13a-14(b)
          and 18 U.S.C. Section 1350 (furnished herewith).

32.2      Certification  of Chief Financial  Officer  required by Rule 13a-14(b)
          and 18 U.S.C. Section 1350 (furnished herewith).


                                       16