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 July 31, 2000
                                                 -------------

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

                  For the transition period from___________ to ____________

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

                               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__



The number of shares outstanding of the registrant's common stock as of
September 8, 2000 is 7,686,210 shares.



<PAGE>



                          First Aviation Services Inc.

                                      Index

                         Part I - Financial Information

<TABLE>
<S>                                                                                                           <C>
Item 1.  Financial Statements  (Unaudited):

         Condensed Consolidated Balance Sheets....................................................................3
         Condensed Consolidated Statements of Operations........................................................4-5
         Condensed Consolidated Statements of Cash Flows..........................................................6
         Notes to 2000 Condensed Consolidated Financial Statements..............................................7-9

Item 2.  Management's Discussion and Analysis of Financial Condition, Results of Operations and
         Liquidity and Capital Resources......................................................................10-14


                   Part II - Other Information and Signatures

Other Information and Signatures..............................................................................15-16
</TABLE>




                                       2

<PAGE>





                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements

                          First Aviation Services Inc.

                      Condensed Consolidated Balance Sheets
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                July 31,           January 31,
                                                                                  2000                2000
                                                                            -----------------    ----------------
Assets                                                                        (unaudited)
<S>                                                                         <C>                  <C>
Current assets:
   Cash and cash equivalents                                                  $   34,377           $   50,104
   Trade receivables, net of allowance for doubtful accounts of
     $883 and $820, respectively                                                  15,963               13,810
   Inventory, net of allowance for obsolete and slow moving inventory
     of $407 and $414, respectively                                               20,599               14,142
   Prepaid expenses, deferred income taxes and other                               3,344                2,582
                                                                            -----------------    ----------------
Total current assets                                                              74,283               80,638

Plant and equipment, net                                                           6,392                3,980
Goodwill, net                                                                      1,741                1,774
                                                                            -----------------    ----------------
                                                                              $   82,416           $   86,392
                                                                            =================    ================

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                           $   13,265           $    8,264
   Accrued compensation and related expenses                                         802                3,156
   Other accrued liabilities                                                       2,128                4,752
   Income taxes payable                                                            1,683                6,858
   Revolving line of credit and current portion of
     obligations under capital leases                                             11,758                  163
                                                                            -----------------    ----------------
Total current liabilities                                                         29,636               23,193

   Revolving line of credit                                                            -                7,900
   Minority interest in subsidiary                                                 1,041                1,041
   Obligations under capital leases                                                  282                  115
                                                                            -----------------    ----------------
Total liabilities                                                                 30,959               32,249

Stockholders' equity:
   Common stock, $0.01 par value, 25,000,000 shares authorized,
     7,686,210 and 8,133,997 shares outstanding, respectively                         91                   91
   Additional paid-in capital                                                     38,673               38,615
   Retained earnings                                                              20,829               21,306
                                                                            -----------------    ----------------
                                                                                  59,593               60,012
                                                                            -----------------    ----------------

   Less:  Treasury stock, at cost                                                 (8,136)              (5,869)
                                                                            -----------------    ----------------
Total stockholders' equity                                                        51,457               54,143
                                                                            -----------------    ----------------

                                                                              $   82,416           $   86,392
                                                                            =================    ================
</TABLE>

See accompanying notes.


                                       3
<PAGE>


                          First Aviation Services Inc.

           Condensed Consolidated Statements of Operations (Unaudited)
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>


                                                                                 Three months ended
                                                                                      July 31,
                                                                             2000                  1999
                                                                       -----------------     -----------------
<S>                                                                       <C>                   <C>
Net sales                                                                 $   23,410            $   20,089
Cost of sales                                                                 18,685                16,408
                                                                       -----------------     -----------------

Gross profit                                                                   4,725                 3,681
Selling, general and administrative expenses                                   4,414                 3,348
E-commerce initiative                                                            441                     -
Corporate expenses                                                               829                   567
                                                                       -----------------     -----------------

Loss from operations                                                            (959)                 (234)
Net interest income (expense) and other                                          367                  (154)
Minority interest in subsidiary                                                  (11)                  (12)
                                                                       -----------------     -----------------

Loss before benefit for income taxes                                            (603)                 (400)
Benefit for income taxes                                                         241                   293
                                                                       -----------------     -----------------

Net loss from continuing operations                                             (362)                 (107)

Income from discontinued operation,
   net of provision for income taxes of $453                                       -                 1,553
                                                                       -----------------     -----------------

Net income (loss)                                                         $     (362)           $    1,446
                                                                       =================     =================


Basic net income per common share and net income per common
   share - assuming dilution:

Net loss from continuing operations per common share                      $    (0.05)           $    (0.01)
Net income from discontinued operation per common share                            -                  0.17
                                                                       -----------------     -----------------

Basic net income per common share and net income per common
   share - assuming dilution                                              $    (0.05)           $     0.16
                                                                       =================     =================

Shares used in the calculation of basic net income per common
   share and net income per common share - assuming dilution               7,682,082             9,007,652
                                                                       =================     =================

</TABLE>

See accompanying notes.


                                       4
<PAGE>


                          First Aviation Services Inc.

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

<TABLE>
<CAPTION>


                                                                             Six months ended
                                                                                 July 31,
                                                                         2000                 1999
                                                                   -----------------    -----------------
<S>                                                                <C>                  <C>
Net sales                                                             $   45,228           $   38,122
Cost of sales                                                             36,260               30,869
                                                                   -----------------    -----------------

Gross profit                                                               8,968                7,253
Selling, general and administrative expenses                               8,428                6,576
E-commerce initiative                                                        636                    -
Corporate expenses                                                         1,576                1,202
                                                                   -----------------    -----------------

Loss from operations                                                      (1,672)                (525)
Net interest income (expense) and other                                      898                 (296)
Minority interest in subsidiary                                              (21)                 (24)
                                                                   -----------------    -----------------

Loss before benefit for income taxes                                        (795)                (845)
Benefit for income taxes                                                     318                  338
                                                                   -----------------    -----------------

Net loss from continuing operations                                   $     (477)          $     (507)

Income from discontinued operation,
   net of provision for income taxes of $645                                   -                3,281
                                                                   -----------------    -----------------

Net income (loss)                                                     $     (477)          $    2,774
                                                                   =================    =================


Basic net income per common share and net income per common
   share - assuming dilution:

Net loss from continuing operations per common share                  $    (0.06)          $    (0.05)
Net income from discontinued operation per common share                        -                 0.36
                                                                   -----------------    -----------------

Basic net income per common share and net income per common
   share - assuming dilution                                          $    (0.06)          $     0.31
                                                                   =================    =================

Shares used in the calculation of basic net income per common
   share and net income per common share - assuming dilution           7,833,311            9,004,821
                                                                   =================    =================

</TABLE>

See accompanying notes.


                                       5
<PAGE>



                          First Aviation Services Inc.

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

<TABLE>
<CAPTION>
                                                                          Six months ended
                                                                              July 31,

                                                                      2000                 1999
                                                                -----------------    -----------------
<S>                                                             <C>                  <C>
Cash flows from operating activities
Net loss from continuing operations                             $        (477)          $     (507)

Adjustments to reconcile net income to net cash used in
   operating activities:
   Depreciation and amortization                                          581                  396
Changes in assets and liabilities:
   Trade receivables                                                   (2,153)              (3,134)
   Inventories                                                         (6,457)                (401)
   Prepaid expenses, deferred income taxes and other                     (762)                (283)
   Accounts payable                                                     5,001                5,138
   Accrued compensation and related expenses,
      and other accrued liabilities                                      (462)                 113
   Income taxes payable                                                     -                 (338)
                                                                -----------------    ----------------

Net cash provided by (used in) operating activities
   of continuing operations                                            (4,729)                 984
Net cash provided by (used in) operating activities
   of discontinued operation                                           (9,691)               3,761
                                                                -----------------    ----------------

Net cash provided by (used in) operating activities                   (14,420)               4,745

Cash flows from investing activities
Purchases of plant and equipment of continuing operations              (2,645)                (896)
Purchases of plant, equipment and other assets of
   discontinued operation                                                   -               (6,854)
                                                                -----------------    ----------------

Net cash used in investing activities                                  (2,645)              (7,750)

Cash flows from financing activities
Net borrowings on revolving line of credit                              3,600                3,138
Repurchases of common stock for treasury                               (2,267)                   -
Principal payments on capital lease obligations                           (53)                 (55)
Other                                                                      58                   61
                                                                -----------------    ----------------

Net cash provided by financing activities
   of continuing operations                                             1,338                3,144
                                                                -----------------    ----------------

Net increase (decrease) in cash and cash equivalents                  (15,727)                 139

Cash and cash equivalents at beginning of period                       50,104                  149

                                                                -----------------    ----------------
Cash and cash equivalents at end of period                      $      34,377           $      288
                                                                =================    ================

Supplemental cash flow disclosures:
   Interest paid                                                $         352           $      236
                                                                =================    ================
   Income taxes paid                                            $       5,175           $       92
                                                                =================    ================
   Acquisition of equipment through capital lease obligation    $         315           $        -
                                                                =================    ================
</TABLE>

See accompanying notes.


                                       6
<PAGE>





                          First Aviation Services Inc.

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

                                  July 31, 2000

1.  Basis of Presentation

First Aviation Services Inc. ("First Aviation") and its subsidiaries, Aerospace
Products International Inc. ("API"), Aircraft Products International Ltd., API
Asia Pacific Inc. and AeroV Inc. ("AeroV") (collectively, the "Company"), are
headquartered in Westport, Connecticut. The Company is one of the leading
suppliers of aircraft parts and components to the aviation industry worldwide,
and is a provider of third party logistics and inventory management services to
the aerospace industry. Customers of the Company include passenger and cargo
airlines, fleet operators, corporate aircraft operators, fixed base operators,
certified repair facilities, governments and military services. AeroV is the
Company's electronic procurement platform designed exclusively for the aerospace
industry. The accompanying unaudited condensed consolidated financial statements
of the Company have been prepared in accordance with generally accepted
accounting principles for interim financial information, and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all material adjustments, including the elimination of intercompany
balances and transactions, and normal recurring accruals considered necessary
for a fair presentation, have been included in the accompanying unaudited
condensed consolidated financial statements. Operating results for the three and
six months ended July 31, 2000 are not necessarily indicative of the results
that may be expected for the full fiscal year ending January 31, 2001. 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, 2000. As described in Note 5, on November 1, 1999 the Company consummated
the sale of the stock of its former wholly owned subsidiary, National Airmotive
Corporation ("NAC"). Accordingly, NAC has been accounted for as a discontinued
operation and the prior year results of its operations and cash flows have been
condensed and reported separately in the accompanying condensed consolidated
financial statements.


2.  Earnings (Loss) per Common Share and Treasury Stock

For the three and six months ended July 31, 2000 and 1999, respectively, the
denominator used in the calculation of net loss per common share from continuing
operations - assuming dilution was the same as basic loss per share because the
effect of warrants and options would have been antidilutive.

On March 24, 2000 the Company purchased a 458,818 share block of its common
stock for $2,267.


3.  Revolving Line of Credit

On March 30, 2000, API entered into a $20 million commercial revolving loan and
security agreement. Borrowings under this credit 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 credit agreement contains a number
of covenants on API, including restrictions on mergers, consolidations and
acquisitions, the incurrence of indebtedness, transactions with affiliates, the
creation of liens and limitations on capital expenditures. The credit agreement
also requires API to maintain minimum levels of net worth and specified interest
expense coverage ratios, and restricts the payment of dividends on API's common
stock. Substantially all of API's domestic assets are pledged as collateral
under this credit facility. Borrowings under the facility are guaranteed by
First Aviation. While the agreement will expire on May 1, 2001, the Company
anticipates that it will be able to renew or replace the facility.




                                       7
<PAGE>





4.  Software Development

The Company accounts for software development costs in accordance with the
American Institute of Certified Public Accountants Statement of Position ("SOP")
98-1, Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use, which was issued in March 1998. During the three and six months
ended July 31, 2000 the Company capitalized approximately $910 and $1,410
respectively, of software development costs incurred in connection with the
Company's e-commerce initiative. These costs have been included in plant and
equipment in the accompanying condensed consolidated balance sheets. The Company
will amortize these costs in accordance with the SOP over an expected three-year
period beginning later in the year ended January 31, 2001.


5.  Sale of NAC

On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. for $73 million, pursuant to a Stock Purchase
Agreement between First Aviation Services Inc. and Rolls-Royce North America,
Inc. dated as of September 9, 1999 (the "Agreement"). NAC's operations included
the repair and overhaul of gas turbine engines and accessories, and the
remanufacturing of engine components and accessories.

Pursuant to the Agreement, Rolls-Royce North America, Inc. acquired
substantially all of the assets and assumed certain liabilities of NAC,
excluding income tax liabilities, debt, amounts due to parent (First Aviation)
and any contingent liabilities resulting from the Company's liquidation of its
former defined benefit plan. During the quarter ended July 31, 2000 the sales
price was adjusted based upon the change in net assets, as defined in the
Agreement, resulting in a decrease in the sales price of approximately $2.1
million. The amount paid had been accrued previously.

Summarized results of operations information for NAC are as follows.
<TABLE>
<CAPTION>

                                                                        Three months           Six months
                                                                           ended                 ended
                                                                       July 31, 1999         July 31, 1999
                                                                      -----------------     -----------------
        <S>                                                             <C>                   <C>
        Net sales                                                       $     28,801          $     56,821
                                                                        ============          ============

        Earnings before interest & taxes                                       2,446                 4,732
        Net interest expense                                                     440                   806
                                                                        ------------          ------------
        Earnings before income taxes                                           2,006                 3,926

        Net income                                                      $      1,553          $      3,281
                                                                        ============          ============
</TABLE>

Pursuant to the Agreement, the Company remains subject to certain
indemnification provisions resulting from the sale. The Company believes that
none of the indemnification provisions will lead to a claim that would have a
material adverse impact upon the Company. However, depending on the amount and
timing, unfavorable resolution of any of these potential claims could have a
material effect on the Company's consolidated financial position, results of
operations or cash flows in a particular period.

During the year ended January 31, 2000 the Company accrued for certain costs
related to the sale of NAC. During the three and six months ended July 31, 2000,
$2,150 and $2,466, respectively, was charged against the accruals, for
compensation and other expenses. At July 31, 2000 approximately $1.6 million of
accruals remain relating to the sale of NAC. In addition, during the six months
ended July 31, 2000 the Company paid approximately $5.2 million of income tax
liabilities that arose as a result of the sale.



                                       8
<PAGE>




6.  Subsequent Event - Strategic Alliance with ARINC

During the six months ended July 31, 2000 the Company announced the formation of
AeroV, the Company's electronic procurement platform designed to enable easy
communication between the internet and airlines' legacy systems. On September 1,
2000, AeroV executed a Service Collaboration Agreement ("SCA"), a Stockholders
Agreement and a Subscription Agreement with ARINC Incorporated ("ARINC")
(collectively, the "Agreements"). Pursuant to the terms and conditions of the
Agreements, ARINC will receive a total of 25% of the common stock of AeroV.
Under the terms of the SCA, ARINC will provide certain services, including
access to ARINC's network system, exclusively to AeroV for a period of three
years, after which the agreement may be extended automatically for additional
one-year periods. The SCA also specifies revenue sharing and operating
activities.


                                       9
<PAGE>




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

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

Information included in this Quarterly Report on Form 10-Q may contain
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. In evaluating such statements as well as the future prospects of the
Company, specific consideration should be given to various factors, including
the Company's ability to obtain parts from its principal suppliers on a timely
basis, market conditions, the ability to consummate suitable acquisitions, the
ability to attract customers and users to its online marketplace systems, 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 discussed in this Quarterly Report on
Form 10-Q.


General

The Company is a worldwide leader in supplying aircraft parts and components to
the aviation industry worldwide, as well as providing the aerospace industry
third party logistics and inventory management services. The Company is the
fastest growing distributor and third party logistics provider in the aerospace
industry.

The Company's executive offices are located at 15 Riverside Avenue in Westport,
Connecticut, 06880. Further information about the Company can be found on the
worldwide web at www.firstaviation.com. The Company can be reached via e-mail at
first@firstaviation.com.

During the six months ended July 31, 2000 the Company formed AeroV and
established API Asia Pacific Inc., a new sales and distribution center at the
former Clark Air Force Base in the Philippines. Costs of the start-up of AeroV
have been disclosed separately in the accompanying condensed consolidated
statements of operations. Costs relating to the establishment, start up and
operation of the Philippines facility have been included in selling, general and
administrative expenses in the accompanying condensed consolidated statements of
operations.

On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. pursuant to the Agreement. As a result, NAC has
been accounted for as a discontinued operation. All prior year amounts reported
herein have been restated to reflect NAC as a discontinued operation.


Results of Operations

Net Sales

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

Net sales for the three months ended July 31, 2000, increased $3.3 million, or
16.5%, to $23.4 million from $20.1 million for the three months ended July 31,
1999.

Net sales for the six months ended July 31, 2000 increased $7.1 million, or
18.6%, to $45.2 million from $38.1 million for the six months ended July 31,
1999.


                                       10
<PAGE>





Net sales during the three and six months ended July 31, 2000 increased compared
to the prior year as a result of the Canadian expansion, increased domestic
market share, and growth in the Company's repair and overhaul activities and
logistics services business. Despite softness in the airline markets and
aggressive pricing by competitors seeking to regain market share, the Company's
growth has continued within management's expectation. The Company continues to
expand geographically, and to invest in new product offerings as well as the
logistics and inventory management businesses.

Cost of Sales

Cost of sales for the three months ended July 31, 2000 increased $2.3 million,
or 13.9%, to $18.7 million from $16.4 million for the three months ended July
31, 1999. As a percentage of net sales, cost of sales decreased to 79.8%
compared to 81.7% for the comparable period of the prior year.

Cost of sales for the six months ended July 31, 2000 increased $5.4 million, or
17.5%, to $36.3 million from $30.9 million for the six months ended July 31,
1999. As a percentage of net sales, cost of sales decreased to 80.2% compared to
81.0% for the comparable period of the prior year.

Gross Profit

Gross profit for the three months ended July 31, 2000 increased $1.0 million, or
28.4%, to $4.7 million from $3.7 million for the three months ended July 31,
1999. Gross profit as a percentage of net sales increased to 20.2% from 18.3% as
a result of margin improvement in most products and services.

Gross profit for the six months ended July 31, 2000 increased $1.7 million, or
23.6%, to $9.0 million from $7.3 million for the six months ended July 31, 1999.
Gross profit as a percentage of net sales increased to 19.8% from 19.0% as a
result of margin improvement in most products and services.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended July 31,
2000 increased $1.1 million, or 31.8%, to $4.4 million from $3.3 million for the
three months ended July 31, 1999. The increase is attributable to the growth in
net sales and gross profit, and expenses incurred in connection with the start
up and operation of the Company's Asia Pacific location.

Selling, general and administrative expenses for the six months ended July 31,
2000 increased $1.8 million, or 28.2%, to $8.4 million from $6.6 million for the
six months ended July 1999. The increase is attributable to the growth in net
sales and gross profit, and expenses incurred in connection with the start up
and operation of the Company's Asia Pacific location.

E-commerce Initiative

The e-commerce initiative expenses for the three and six months ended July 31,
2000 of $0.4 million and $0.6 million, respectively, relate to the start up of
AeroV.

Corporate Expenses

Corporate expenses incurred during the three months ended July 31, 2000
increased $0.2 million to $0.8 million compared to $0.6 million for the three
months ended July 31, 1999. The increase is due principally to legal fees
incurred for litigation previously initiated by the Company for a copyright
infringement suit and a suit involving insurance reimbursement.

Corporate expenses incurred during the six months ended July 31, 2000 increased
$0.4 million to $1.6 million compared to $1.2 million for the six months ended
July 31, 1999. The increase is due to the growth of the Company and the
incurrence of legal fees, as explained in the preceding paragraph.


                                       11
<PAGE>





Net Interest Income (Expense) and Minority Interest in Subsidiary

Net interest income (expense) and other expenses for the three months ended July
31, 2000 increased $0.5 million to net income of $0.3 million from a net expense
of $0.2 million for the three months ended July 31, 1999. The increase was
attributable to interest earned on cash balances during the three months ended
July 31, 2000. No interest income was earned during the three months ended July
31, 1999.

Net interest income (expense) and other expenses for the six months ended July
31, 2000 increased $1.2 million to net income of $0.9 million from a net expense
of $0.3 million for the six months ended July 31, 1999. The increase was
attributable to interest earned on cash balances during the six months ended
July 31, 2000. No interest income was earned during the three months ended July
31, 1999.

Benefit for Income Taxes

The effective tax rate on continuing operations for both the three and six
months ended July 31, 2000 was 40%. Management estimates that the Company's
effective income tax rate on continuing operations for the year ended January
31, 2001 will approximate 40%. The Company's effective income tax rate on
continuing operations for the three months ended July 31, 1999 was 73.3%. The
high tax rate was due to the intraperiod allocation of income taxes between
continuing operations and the discontinued operation. The Company's effective
income tax rate on continuing operations for six months ended July 31, 1999 was
40%.

Net Loss from Continuing Operations

For the three months ended July 31, 2000, the Company incurred a net loss from
continuing operations of approximately $0.4 million. This compares to a net loss
from continuing operations of $0.1 million for the comparable period of the
prior year. The increase in the net loss is due principally to start up and
operational expenses incurred in connection with the Company's Asia Pacific
expansion, its e-commerce initiative, and the incurrence of legal fees,
partially offset by increased gross profit and interest income earned in the
current fiscal year.

For both the six months ended July 31, 2000 and 1999, the Company incurred a net
loss from continuing operations of approximately $0.5 million. Growth in sales
and gross profit for the six months ended July 31, 2000, as well as interest
income earned, were offset by the start-up expenses, e-commerce expenses and
legal fees described in the preceding paragraph.

Income from Discontinued Operation

Net income for the three and six months ended July 31, 1999 from the
discontinued operation was $1.6 million and $3.3 million, respectively. No
income was earned during the three and six months ended July 31, 2000 due to the
sale of NAC in the last quarter of the prior fiscal year.

Net Income

The Company incurred a loss of $0.4 million for the three months ended July 31,
2000, as compared to net income of $1.4 million for the three months ended July
31, 1999. The decrease was due to the reasons described in the section Net Loss
From Continuing Operations.

The Company incurred a loss of $0.5 million for the six months ended July 31,
2000, as compared to net income of $2.8 million for the six months ended July
31, 1999. The decrease was due to the reasons described in the section Net Loss
From Continuing Operations.



                                       12
<PAGE>





Liquidity and Capital Resources

The Company's liquidity requirements arise principally from its working capital
needs, which have increased due to growth and expansion. In addition, the
Company has liquidity requirements to fund capital expenditures. The Company
funds its liquidity requirements with a combination of cash on hand, cash flows
from operations and from borrowings. The Company is using cash management
techniques to reduce its interest expense on borrowings.

The Company's cash used in operating activities of continuing operations for the
six months ended July 31, 2000 was $4.7 million, compared to cash provided of
$1.0 million for the six months ended July 31, 1999. The decrease in cash
provided by operating activities during the six months ended July 31, 2000
compared to the comparable period of the prior year was due principally to an
inventory build up as a result of new product lines and international
expansion. Cash used in investing activities of continuing operations during
these same periods was $2.6 million and $0.9 million, respectively. The increase
in cash used for investing activities was due principally to investments made
relating to the Company's international expansion and e-commerce initiative.
Cash provided by financing activities during the six months ended July 31, 2000
was $1.3 million, compared to cash provided of $3.1 million for the six months
ended July 31, 1999. Cash provided by financing activities during the six months
ended July 31, 2000 included approximately $2.3 million used to repurchase
shares of the Company's common stock.

During the six months ended July 31, 2000 the Company finalized the sales price
of NAC, resulting in a payment of approximately $2.1 million to the purchaser.
In addition, liabilities of approximately $2.5 million that related to the sale
were paid. Both the sales price adjustment and the sale liabilities had been
accrued previously. The Company also paid approximately $5.2 million in income
tax payments related to the gain on the sale. At July 31, 2000 approximately
$1.6 million of accruals remain relating to the sale of NAC.

In a series of authorizations, the Company's Board of Directors established a
stock repurchase program of up to 1,660,000 shares of the Company's common
stock. Repurchases may be made from time-to-time in open market transactions,
block purchases, privately negotiated transactions or otherwise at prevailing
prices. No time limit has been given for the completion of the program. Through
January 31, 2000 the Company had repurchased a total of 1,000,000 shares of its
common stock at an aggregate cost of approximately $5.9 million, or $5.87 per
share. On March 24, 2000, the Company purchased an additional 458,818 share
block of its common stock for approximately $2.3 million, or $4.94 per share.
After this transaction, repurchases under the program totaled 1,458,818 shares
at an aggregate cost of approximately $8.1 million, or approximately $5.58 per
share. Approximately 200,000 shares still may be repurchased under this program.

The Board of Directors of the Company has authorized a cash investment of up to
$2.8 million in AeroV, the Company's e-commerce initiative. The Company expects
that the funds will be invested during the year ending January 31, 2001. This
authorization is in addition to the technology enhancements being undertaken at
API.

The Company invests its cash and cash equivalents in certificates of deposit and
commercial paper with maturities when purchased of three months or less.

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


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<PAGE>





On March 30, 2000, API entered into a $20 million commercial revolving loan and
security agreement. Borrowings under this credit 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 credit agreement contains a number
of covenants on API, including restrictions on mergers, consolidations and
acquisitions, the incurrence of indebtedness, transactions with affiliates, the
creation of liens and limitations on capital expenditures. The credit agreement
also requires API to maintain minimum levels of net worth and specified interest
expense coverage ratios, and restricts the payment of dividends on API's common
stock. Substantially all of API's domestic assets are pledged as collateral
under this credit facility. Borrowings under the facility are guaranteed by
First Aviation. While the agreement will expire on May 1, 2001, the Company
anticipates it will be able to renew or replace the facility. Borrowings under
this facility totaled approximately $11.5 million at July 31, 2000.

In conjunction with the Company's acquisition of API, AMR Combs, Inc. ("AMR
Combs") purchased 10,407 shares of API Series A Cumulative Convertible Preferred
Stock, $0.001 par value, with dividends payable quarterly at $4.00 per share
(the "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 its cash flow from operations, combined with cash on hand and borrowings
available under the existing line of credit, will be sufficient to meet its
current and anticipated cash operating requirements for the foreseeable future,
including scheduled interest and principal payments, capital expenditures,
minority interest requirements and working capital needs. In addition, the
Company may use its cash on hand to pursue potential acquisitions.



                                       14
<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

NONE.

Item 5. Other Information

NONE.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

Exhibit
Number                       Description of Exhibit
-------                      ----------------------

27.1              Financial Data Schedule

(b) Reports on Form 8-K.

     Form 8-K dated June 23, 2000 announcing the signing of a Memorandum of
     Understanding to form an e-commerce alliance between AeroV Inc. and ARINC.
     Also announced Federal Express as the alliance's transportation service.



                            [Signature page follows]



                                       15
<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: September 14, 2000            /s/ Michael C. Culver
                                 -------------------------------------------
                                 Michael C. Culver,
                                 President, Chief Executive Officer and
                                 Director (Principal Executive Officer)


Date: September 14, 2000            /s/ John A. Marsalisi
                                 -------------------------------------------
                                 John A. Marsalisi,
                                 Vice President, Secretary, Director and
                                 Chief Financial Officer (Principal Financial
                                 and Accounting Officer)




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