<PAGE>


                                      FORM 10-Q
                    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, 1997

_______  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
                                           
The number of shares outstanding of the registrant's common stock as of November
30,1997 is 8,916,464 shares.

<PAGE>

ITEM 1. FINANCIAL STATEMENTS.


                                         First Aviation Services Inc.

                                           Consolidated Balance Sheets
                                     (in thousands, except share amounts)

<TABLE>
<CAPTION>

<S>                                                                  <C>               <C>

                                                                     October 31        January 31
                                                                        1997              1997
                                                                     (unaudited)

Assets
Current assets:
Cash and cash equivalents                                               $  809         $       -
Accounts receivable, net of allowance for doubtful accounts
of $1,366 and $278, respectively                                         30,304            19,931
Inventories                                                              43,667            36,323
Deferred income taxes                                                     1,036             1,036
Prepaid expenses and other                                                2,358             1,375
                                                                      -------------------------------
Total current assets                                                     78,174            58,665

Plant and equipment, net                                                  4,060             2,793
Other assets, primarily goodwill                                          2,817               914
                                                                      -------------------------------
                                                                        $85,051         $  62,372
                                                                      -------------------------------
                                                                      -------------------------------


Liabilities and stockholders' equity 
Current liabilities:
Accounts payable                                                      $  14,195          $ 15,104
Accrued compensation and related expenses                                 1,859             1,948
Other accrued liabilities                                                 1,649             2,850
Income taxes payable                                                      1,258                 -
Due to shareholders                                                         241               176
Current portion of long term debt                                             -             1,100
                                                                      -------------------------------
Total current liabilities                                                19,202            21,178

Long term debt, less current portion                                     18,775            32,794
Other non-current liabilities                                             1,619             2,119
Minority interest                                                         1,006                 -

Stockholders' equity:
Preferred stock, $0.01 par value, liquidation preference of $660 at
January 31, 1997; 5,000,000 shares authorized; none issued and 
outstanding at October 31, 1997; 33,000 shares issued and
outstanding at January 31, 1997                                              -              1,650
Common stock, $0.01 par value; 25,000,000 shares authorized,
8,916,464 issued and outstanding at October 31, 1997; 3,556,665
shares issued and outstanding at January 31, 1997                           89                 36
Additional paid in capital                                              37,934              2,125
Retained earnings                                                        6,426              2,470
                                                                      -------------------------------
Total stockholders' equity                                              44,449              6,281
                                                                      -------------------------------
                                                                       $85,051           $ 62,372
                                                                      -------------------------------
                                                                      -------------------------------

                                                   2

</TABLE>

See accompanying notes

<PAGE>


                                          First Aviation Services Inc.

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

<TABLE>
<CAPTION>

<S>                                                                            <C>              <C>

                                                                                 Quarter ended
                                                                                    October 31
                                                                               1997            1996
                                                                               ----            ----


Net sales                                                                    $ 39,543       $24,422
Cost of sales                                                                  32,784        20,998
                                                                      -------------------------------
Gross profit                                                                    6,759         3,424
Selling, general and administrative expenses                                    4,329         2,038
                                                                      -------------------------------
Income from operations                                                          2,430         1,386
Interest expense                                                                  234           971
                                                                      -------------------------------
Income before provision for income taxes and extraordinary item and
preferred dividends                                                             2,196           415
Provision for income taxes                                                        549             -
                                                                      -------------------------------
Net income (loss)                                                               1,647          415
Preferred stock dividends                                                          11           33
                                                                      -------------------------------
Net income applicable to common stock                                         $ 1,636      $   382
                                                                      -------------------------------
                                                                      -------------------------------
Net income per common shares:
  Income applicable to common stock                                           $  0.18      $  0.08
                                                                      -------------------------------
Shares used in computation of net income applicable to common stock         9,066,31 4   4,993,383
                                                                      -------------------------------
                                                                      -------------------------------

</TABLE>
See accompanying notes

<PAGE>






                                       First Aviation Services Inc.

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

  
<TABLE>
<CAPTION>

<S>                                                                            <C>              <C>

                                                                                    Quarter ended
                                                                                      October 31
                                                                                 1997            1996
                                                                                 ----            ----


Net sales                                                                    $ 113,966        $76,776
Cost of sales                                                                   95,849         65,606
                                                                         -------------------------------
Gross profit                                                                    18,117         11,170
Selling, general and administrative expenses                                    11,118          6,163
                                                                         -------------------------------
Income from operations                                                           6,999          5,007
Interest expense                                                                 1,110          2,619
                                                                         -------------------------------
Income before provision for income taxes and extraordinary item
and preferred dividends                                                          5,889          2,388
Provision for income taxes                                                       1,469              -
                                                                         -------------------------------
Income before extraordinary item                                                 4,420          2,388
Extraordinary item:
     Loss on early extinguishment of debt (net of income
        tax benefit of $64 and $0)                                                (193)          (864)
                                                                         -------------------------------
Net income                                                                       4,227          1,524
Preferred stock dividends                                                           40             99
                                                                         -------------------------------
Net income applicable to common stock                                          $ 4,187       $  1,425
                                                                         -------------------------------
                                                                         -------------------------------
Net income per common shares:
  Income before extraordinary item applicable
    to common stock                                                            $  0.51       $   0.43
  Extraordinary item                                                             (0.02)         (0.16)
                                                                         -------------------------------
Net income applicable to common stock                                          $  0.49       $   0.27
                                                                         -------------------------------
                                                                         -------------------------------
Shares used in computation of net income applicable to common stock          8,612,586      5,290,972
                                                                         -------------------------------
                                                                         -------------------------------

</TABLE>
See accompanying notes

<PAGE>
                                                    4



                            First Aviation Services Inc. 
                                           
                  Consolidated Statements of Cash Flows  (Unaudited)
                                    (IN THOUSANDS)
                                           
                                                            Nine months ended
                                                                October 31

                                                            1997          1996
                                                            ----          ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                $    4,227   $  1,524
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:      
    Depreciation and amortization                                709        800
    Extraordinary item, loss on early
       extinguishment of debt                                    193        864
Changes in operating accounts:         
    Accounts receivable                                       (4,985)     5,451
    Inventories                                               (1,416)    (3,438)
    Prepaid expenses and other current assets                   (337)      (758)
    Deferred income taxes                                          0          -
    Other assets                                                 (64)         -
    Accounts payable and accrued expenses                     (5,002)    (7,572)
    Due to shareholders                                           65          -
    Income taxes payable                                       1,258          -
    Other non-current liabilities                             (1,280)    (1,073)
                                                          ----------------------
         
Net cash used in operating activities                         (6,632)    (4,202)
         
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of assets from former owners including 
acquisition costs                                            (11,216)        -
Payment for license rights                                         -       (250)
Purchase of plant and equipment                               (1,251)      (777)
                                                          ----------------------
Net cash used in investing activities                        (12,467)    (1,027)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Restricted Cash                                                    -       (544)
Proceeds from borrowings on long-term debt                    80,504    121,138
Repayments of borrowings on long-term debt                   (95,623)  (115,267)
Proceeds from sale of preferred stock of subsidiary            1,100           -
Proceeds from issuance of common stock, net of expenses       34,088           -
Proceeds from exercise to warrants to purchase common stock       70           -
Preferred stock dividends paid                                  (231)          -
Repayment of other non-current liabilities                         -        (98)
                                                          ----------------------
Net cash provided by financing activities                     19,908      5,229
         
Net increase in cash and cash equivalents                        809          -
Cash and cash equivalents at beginning of period                   -          -
                                                          ----------------------
Cash and cash equivalents at end of period                 $     809    $     -
                                                          ----------------------
                                                          ----------------------
Supplemental cash flow disclosures:         
    Cash interest paid                                     $   1,327    $  2,330
                                                          ----------------------
                                                          ----------------------
    Income taxes paid                                      $       -    $    545
                                                          ----------------------
                                                          ----------------------
SEE ACCOMPANYING NOTES

                                          5

<PAGE>


                             First Aviation Services Inc.
                                           
                Notes to Consolidated Financial Statements (Unaudited)
                                           
                                   October 31, 1997
                                           
1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of First Aviation
Services Inc. ("First Aviation" or 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.  The preparation of the consolidated financial statements also
requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements.  Actual results could differ
from those estimates.  In the opinion of management, all material adjustments,
consisting only of normal recurring accruals, considered necessary for a fair
presentation have been included in the accompanying unaudited consolidated
financial statements.  In addition, certain amounts for prior periods have been
reclassified to be comparable with the current period presentation.  Operating
results for the quarter and nine months ended October 31, 1997 are not
necessarily indicative of the results that may be expected for the full year
ending January 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's Form 10-K for the
year ended January 31, 1997.

2.  INITIAL PUBLIC OFFERING

The Company completed an initial public offering on March 5, 1997 of 3,900,000
shares of common stock, $0.01 par value per share ("the Offering").  The Company
received proceeds of approximately $34.1 million net of expenses of
approximately $4.9 million.  The net proceeds were used for, among other things,
the repayment of term and subordinated debt, and a paydown of the Company's
credit facility ($22.6 million), payment of accrued dividends on the preferred
stock ($0.2 million), and the acquisition of Aircrafts Parts International (the
"API Business") from AMR Combs Inc. ("AMR Combs") ($11.2 million) (see below).  

Immediately prior to the closing of the Offering, the following transactions
were completed: (i) all outstanding shares of the Series A Preferred Stock of
the Company were converted into 165,000 shares of common stock at the offering
price, (ii) all outstanding warrants to purchase the 1,293,335 shares of the
Company's common stock were exercised in full, (iii) the Company's certificate
of incorporation was amended to increase the authorized common stock of the
Company to 25,000,000 shares, and (iv) a 6.4549-to-1 stock split with respect to
common stock was effected.  Accordingly, all common share amounts have been
restated to give effect to the 6.4549-to-1 stock split.

The Company's common stock is quoted on The NASDAQ - National Market System
under the symbol FAVS. 

3.  ACQUISITION OF  THE API BUSINESS

On March 5, 1997 (the "Acquisition Date"), Aircraft Parts International Combs,
Inc., a majority owned subsidiary of the Company ("API Combs"), completed the
acquisition of the API Business from AMR Combs.  The purchase price for the API
Business was $11.2 million in cash, subject to further payment or reduction on a
dollar-for-dollar basis depending upon whether the net value of the assets for
the API Business as of the Acquisition Date (the "Net Asset Value") was greater
or less than $10,500,000. In conjunction with the acquisition of the API
Business, AMR Combs purchased from API Combs 11,000 shares (the "API Shares") of
Series A Cumulative Convertible Preferred Stock, $0.001 par value, of API Combs
at a price of $100 per share.  Such shares were issued on the Acquisition Date.
The purchase price for the API Shares is subject to adjustment as follows: if
the Net Asset Value was greater than $10,500,000, AMR Combs will pay API Combs
10% of the amount of such excess, and if the Net Asset Value was less than
$10,500,000, API Combs will pay AMR Combs 10% of the amount of such shortfall,
and in either case, the number of API Shares will be adjusted to maintain the
$100 per share purchase price for the API Shares. 

The acquisition was accounted for using the purchase method of accounting. 
Accordingly, the purchase price has been preliminarily allocated to the assets
acquired and liabilities assumed based on their estimated fair values, and the
balance of the purchase price has been included in other assets, primarily
goodwill, and is being amortized over 30 years.  In addition, the Company's
consolidated statements of operations include the operations of the API Business
from the Acquisition Date.  

                                          6

<PAGE>


                             First Aviation Services Inc.
                                           
                Notes to Consolidated Financial Statements (Unaudited)
                                           
                                   October 31, 1997
                                           
3.  ACQUISITION OF THE API BUSINESS (CONTINUED)

The following unaudited pro-forma summary has been prepared assuming that the
acquisition of the API Business had taken place at the beginning of the
respective periods after giving effect to certain pro-forma adjustments,
including, among others, amortization of intangibles arising from the
acquisition and the related income tax effects.  

                                               Quarter ended  Nine Months ended
                                                October 31     October 31
IN THOUSANDS, EXCEPT SHARE AMOUNTS (UNAUDITED)
                                      1996                  1997          1996
                                      ----                  ----          -----
Net sales                              $   35,443     $  117,191     $  101,538
                                       ----------     ----------     ----------
                                       ----------     ----------     ----------
Income before extraordinary item       $      -       $    4,337     $    2,979
                                       ----------     ----------     ----------
                                       ----------     ----------     ----------
Net income                             $      472     $    4,144     $    2,115
                                       ----------     ----------     ----------
                                       ----------     ----------     ----------
Net income per share applicable to
common stock                           $     0.09     $     0.48     $     0.38
                                       ----------     ----------     ----------
                                       ----------     ----------     ----------
Shares used in computation of net
income applicable to common stock       4,993,383       8,612,586     5,290,972
                                       ----------     ----------     ----------
                                       ----------     ----------     ----------
4.  INVENTORIES

Inventories consist of the following:
                                                                
                                        OCTOBER 31      JANUARY 31
                                           1997           1997
                                         -----------------------
                                             (in thousands)

Raw materials                          $ 19,903          $ 18,857
Work-in-process                           9,596            11,067
Finished goods                           14,168             6,399
                                        -------        ----------
                                       $ 43,667          $ 36,323
                                        -------        ----------
                                        -------        ----------

5.  NET INCOME PER COMMON SHARE AND SUPPLEMENTAL NET INCOME PER SHARE

Net income per common share is computed using the treasury stock method based on
the weighted average number of common shares and common stock equivalent shares
outstanding during the period, as adjusted retroactively for the aforementioned
stock split.   Shares from the assumed exercise of options and warrants granted
by the Company have been included in the computations of earnings per share for
all periods unless their inclusion would be anti-dilutive.  However, for
purposes of computing net income per common share for the period prior to the
Company's initial public offering, options and warrants granted by the Company
during the 12 months preceding the initial public offering date have been
included in the calculation of common stock and common stock equivalent shares
outstanding as if they were outstanding for all periods presented using the
treasury stock method and the public offering price of $10.00 per share

Supplemental net income per share for the quarter and nine months ended October
31, 1997 was $0.18 and $0.51 respectively.  Supplemental net income per share is
computed using the "if converted" method based on the pro forma weighted average
number of shares of common stock and common stock equivalents as defined above,
and preferred shares that were exchanged for common stock on a 1 for 6.4549
basis upon the closing of the Company's initial public offering, adjusted
retroactively for the aforementioned stock split.  Net income per share used in
the supplemental net income per share calculation was adjusted to reduce
dividends on preferred shares exchanged and decreased for interest expense and
the extraordinary item on subordinated debentures, which were redeemed with the
proceeds of the Company's initial public offering. 

                                          7

<PAGE>
                             First Aviation Services Inc.
                                           
                Notes to Consolidated Financial Statements (Unaudited)
                                           
                                   October 31, 1997
                                           
6.  IMPACT OF NEW ACCOUNTING STANDARD

In February, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, EARNINGS PER SHARE, which specifies a change in the
computation, presentation and disclosure requirements for earnings per share and
requires the restatement of all prior periods.  The Statement is required to be
adopted for periods ending after December 15, 1997.  Accordingly, the Company
will comply with the requirements of this standard; however, the Company does
not expect that the impact of applying this standard will be material.    

                                          8

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

First Aviation Services Inc. is 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.  The Company's operations
include repair and overhaul of gas turbine engines and accessories,
remanufacturing of engine components and accessories, and redistribution of new
and remanufactured parts.  With the acquisition of the API Business, the Company
has also become one of the leading suppliers of aircraft parts to the general
aviation industry worldwide.

First Aviation was formed in March 1995 to acquire all of the stock of National
Airmotive Corporation (NAC).  The acquisition was completed on June 1, 1995. 
Through NAC, the Company provides repair and overhaul services for several
engine types, including engines designed and manufactured by the Allison Engine
Company ("Allison"), a subsidiary of Rolls Royce USA.  The engines that NAC
repairs and overhauls include: (i) the engines that power the Lockheed Martin
C-130 "Hercules" cargo aircraft, the most popular cargo aircraft in the world;
(ii) the engines employed on most light helicopters; and (iii) industrial
turbine engines primarily used for power co-generation and gas transmission. 
The Company has also established itself as a leader in the remanufacturing of
engine parts and components for use in engine overhauls.

The Company believes it is positioned to benefit from certain industry trends
that favor independent repair and overhaul of aircraft engines including:
(i) increased outsourcing of repair and overhaul services by engine operators as
engine operators seek to reduce operating costs and turnaround time;
(ii) increasing consolidation among repair, overhaul and parts providers as
engine operators reduce the number of providers used for these services;
(iii) increased emphasis on the traceability of aircraft parts which has, in
turn, increased the required sophistication of information systems used by parts
distributors; (iv) growing demand for remanufactured parts as engine operators
seek to lower costs of repair and overhaul services; (v) increasing aviation
activity which, in turn, increases the demand for repair and overhaul services;
and (vi) increased demand by aircraft operators for third parties to manage and
maintain parts inventories so that aircraft operators may reduce their parts'
inventory.


NET SALES

Net sales for the quarter ended October 31, 1997 increased by $15.1 million or
61.9% to $39.5 million from $24.4 million in the quarter ended October 31, 1996.
Net sales for the nine months ended October 31, 1997 increased by $37.2 million
or 48.4% to $114 million from $76.8 million in the nine months ended October 31,
1996.  Net sales from repair and overhaul activities increased 2.1% while
revenues from parts sales increased by 327.4% for the quarter ended October 31,
1997 as compared to the quarter ended October 31, 1996.  Internal growth of
parts sales was 28.6% for the quarter ended October 31, 1997 as compared to the
quarter ended October 31, 1996.  Net sales from repair and overhaul activities
increased 3.3% and revenues from parts sales increased by 260% for the nine
months ended October 31, 1997 as compared to the nine months ended October 31,
1996.  Internal growth of parts sales was 25.5% during the nine months ended
October 21, 1997 as compared to the nine months ended October 31, 1996.  The
increase in parts sales is primarily attributable to the acquisition of  the API
Business coupled with an increase in parts sales at NAC and API.


COST OF SALES

Cost of sales for the quarter ended October 31, 1997 increased by $11.8 million
or 56.2% to $32.8 million from $21.0 million in the quarter ended October 31,
1996.  This increase was due to higher sales volume.  As a percentage of net
sales, cost of sales decreased by 3.1 percentage points to 82.9% from 86.0% in
the quarter ended October 31, 1996.  The reduction was attributable primarily to
higher margins earned in engine overhauls and component repairs.  Cost of sales
for the nine months ended October 31, 1997 increased by $30.2 million or 46% to
$95.8 million from $65.6 million and as a percentage of net sales decreased by
1.4 percentage points to 84.1% from 85.5% for the nine months ended October 31,
1996.

                                          9

<PAGE>

GROSS PROFIT

Gross profit for the quarter ended October 31, 1997 increased by $3.3 million or
97.4% to $6.8 million and as a percentage of net sales increased to 17.1% from
14.0% in the quarter ended October 31, 1996. Gross profit for the nine months
ended October 31, 1997 increased by $6.9 million or 62.2% to $18.1 million and
as a percentage of net sales increased to 15.9% from 14.6% in the nine months
ended October 31, 1996. Gross profit has increased as a result of the increased
sales volume of parts and higher margins earned in engine overhauls and
repairs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the quarter ended October 31,
1997 increased by $2.3 million or 112.4% to $4.3 million from $2 million in the
quarter ended October 31, 1996. Selling, general and administrative expenses for
the nine months ended October 31, 1997 increased by $5.0 million or 80.4% to
$11.1 million from $6.2 million in the quarter ended October 31, 1996.  The
increases are primarily attributable to the acquisition of the API Business and
the increase in sales noted above.

INTEREST EXPENSE - NET

Net interest expense for the quarter ended October 31, 1997 decreased by $0.7
million or 75.9% to $0.2 million from $1.0 million in the quarter ended October
31, 1996. Interest expense for the nine months ended October 31, 1997 decreased
by $1.5 million or 57.6% to $1.1 million from $2.6 million in the nine months
ended October 31, 1996. The decrease was attributable to (i) a reduction in the
average borrowings under the Company's credit facility, which was a direct
result of using a portion of the proceeds of the Company's initial public
offering to pay down such borrowings, (ii) the retirement of subordinated
debentures and (iii) the collection of interest assessed on customers' overdue
balances.

PROVISION FOR INCOME TAXES

Management estimates that the Company's effective income tax rate for the
quarter and nine-month periods ended October 31, 1997 is 25%.  The effective
income tax rate for the corresponding periods for fiscal 1996 was 0%.  The
Company's effective tax rate is less than statutory rates due to benefits that
the Company expects to derive from the implementation of certain tax saving
strategies including but not limited to the use of a Foreign Sales Corporation.

NET INCOME

Net income before extraordinary items for the quarter ended October 31, 1997
increased by 296.9% to $1.6 million from $0.4 million in the quarter ended
October 31, 1996.  Net income before extraordinary items for the nine months
ended October 31, 1997 increased by 85.1% to $4.4 million from $2.4 million in
the nine months ended October 31, 1996.  The increases in profitability reflects
the increased level of sales and gross profit, and reduced interest expense
noted above, offset by an increase in selling, general and administrative costs
and the provision for income taxes.

EXTRAORDINARY ITEM

Extraordinary charges during the nine months ended October 31, 1997 declined by
77.7% to $0.2 million (net of income tax benefit of $0.06 million) from $0.9
million recorded during the nine months ended October 31, 1996.  The
extraordinary charges reflect a write-off of costs associated with the early
extinguishment of certain debt.

NET INCOME PER COMMON SHARE

Net Income per common share is computed using the treasury stock method based on
the weighted average number of common shares and common stock equivalent shares
outstanding during the period, as adjusted  for the stock split that occurred in
conjunction with the initial public offering.  Shares from the assumed exercise
of options and warrants granted by the Company and shares issuable in connection
with the Company's convertible preferred stock have been included in the
computations of earnings per share for all periods unless their inclusion would
be anti-dilutive.  However, for purposes of computing net income per share,
options and warrants granted by the Company during the 12 months preceding the
initial public offering date, including those shares issuable in connection with
the anti-dilution provisions of certain warrant agreements, have been included
in the calculation of common stock and common stock equivalent shares
outstanding as if they were outstanding for all periods presented using the
treasury stock method and the public offering price of $10.00 per share.

                                          10

<PAGE>

Backlog at the end of the quarter was $23.6 million while backlog at November
31, 1997 was $25.4 million.
    
LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity requirements arise primarily from its working capital
needs, principally inventory and accounts receivable.  

In addition, the Company's cash used in operations for the nine months ended
October 31, 1997, was $6.6 million compared to $4.2 million in the nine months
ended October 31, 1996.  Cash used for investing activities during these same
periods was $12.5 million and $1.0 million, respectively.  Cash generated by
financing activities during these same periods was $19.9 million, and
$5.2 million, respectively.

Further, in connection with the acquisition of the API Business, API Combs
issued 11,000 shares (the "API Shares") of Series A Cumulative Convertible
Preferred Stock, subject to adjustment.  Such shares are convertible solely into
shares of common stock of API Combs.  The API Shares carry a $4.00 per share
annual dividend, payable quarterly.

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 the common stock.  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 expansions, 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.  Further, the Company's current credit facility
prohibits the payment of cash dividends, except with the lender's consent, and
contains other covenants and restrictions.

The Company is in the process of negotiating with major institutions to
establish a larger and less restrictive revolving credit and acquisition
facility.  Borrowings under the Company's current $40.0 million credit facility
were $18.8 million at October 31, 1997.

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


ALLISON

NAC's relationship with Allison Engine Company (Allison) began over 30 years ago
when NAC expanded its overhaul and repair operations to include support of
Allison gas turbine engines.  The Company is party to an Authorized Maintenance
Center (AMC) Agreement for each of the three Allison model lines it services. 
Each of the AMC Agreements allow the Company (i) to purchase engine parts from
Allison or certain approved vendors; (ii) specifies the terms on which the
Company purchases engines and engine parts from Allison, which include a
discount from list price and the ability to obtain credits upon the embodiment
of parts into a customer's engine; (iii) requires NAC to provide aftermarket
support for the Allison engines in specified regions identified in the AMC
Agreements; (iv) delineates the permitted physical sites at which NAC is
permitted to perform repair and overhaul services, store parts and inventory and
maintain marketing office; and (v) defines the working relationship between the
two companies in a number of areas.

The AMC Agreements for the Model 501 and Model 250 engines each expire by their
terms on December 31, 1997.  The agreements do provide NAC with the ability,
under certain terms, and conditions to renew the AMC Agreements for an 
additional three-year period for a renewal fee of $1 dollar each.

The Company and Allison have been, in accordance with the terms of the
agreements, cooperating on a number of initiatives, including the renewal of the
AMC Agreements.  Management believes that new agreements will be forthcoming in
the near future.  Allison and the Company have agreed to extend the term of the
existing agreements for a period of three months.  To the best of Management's
knowledge, Allison has offered to extend its current agreements with other
AMC's.  This extension is intended to facilitate the completion of the new
agreements.

                                          11

<PAGE>

SAFE HARBOR STATEMENT

Statements which are not historical facts in this report are forward looking
statements, made on a good faith basis.  Such forward looking statements,
including those concerning the Company's expectations, all involve risk and
uncertainties including the Company's ability to obtain parts from its principal
supplier on a timely basis, the ability to consummate suitable acquisitions, the
ability to expand its remanufacturing capabilities and other items that are
beyond the Company's control and may cause actual results to differ from
management's expectations. 

                                          12

<PAGE>


                             PART II - OTHER INFORMATION
                                           
ITEM 1. LEGAL PROCEEDINGS 

NONE

ITEM 2. CHANGES IN SECURITIES

NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

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

At the Company's Annual Meeting of Stockholders held on August 25, 1997, the
following proposals were adopted by the margins indicated.

To elect two directors for a term to expire at Annual Meeting of
    Stockholders in the Year 2000
    
                                  VOTES FOR           VOTES WITHHELD
                                  ---------           -------------- 
    Joshua S. Friedman            7,790,740                4,770
    Aaron P. Hollander            7,790,740                4,770

To ratify the appointment of Ernst & Young LLP as the Company's independent
    auditors for the fiscal year ending January 31, 1998
    
         For                      7,171,110
         Against                    619,450
         Abstained                    4,950

To amend the First Aviation Services Inc. Stock Incentive Plan

         For                      7,793,810
         Against                      1,100
         Abstained                      600

ITEM 5. OTHER INFORMATION 

NONE

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

EXHIBIT
NUMBER                  DESCRIPTION OF EXHIBIT

10.01         Letter extending the Authorized Maintenance Center
              agreement by and between NAC and Allison Engine
              Company for Model 250 engines

10.02         Letter extending the Authorized Maintenance Center
              agreement by and between NAC and Allison Engine
              Company for Model T56/501 engines

11.01         Statement re: Computation of per share earnings
              (historical basis)

11.02         Statement re: Computation of per share earnings
              (supplemental basis)

27.1          Financial Data Schedule

(b) Reports on Form 8-K.

NONE

                                          13

<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 11, 1997                /S/ MICHAEL C. CULVER              
                                       -------------------------------------
                                       Michael C. Culver,
                                       President, Chief Executive Officer and
                                       Director (Principal Executive Officer)


Date: December 11, 1997                /S/ JOHN A. MARSALISI                
                                       -----------------------------------------
                                       John A. Marsalisi,
                                       Vice President, Secretary, Director and 
                                       Chief Financial Officer (Principal
                                       Financial and Accounting Officer)



                                          14