Aviation Sales Company Announces Third Quarter and Nine Months 2001 Results of Operations; Updates Market on Status of Its Proposed Restructuring and NYSE Listing.

Business Editors

GREENSBORO, N.C.--(BUSINESS WIRE)--Nov. 29, 2001

Aviation Sales Company (NYSE: AVS) today announced its results of operations for the three and nine months ended September 30, 2001.

Revenues from continuing operations for the 2001 three and nine month periods were $61.3 million and $213.7 million, compared to $81.3 million and $278.3 million for the comparable 2000 periods. The Company's loss from continuing operations for the 2001 three and nine month periods was $38.1 million and $103.1 million, compared to losses of $27.7 million and $39.8 million for the 2000 comparable periods. The Company's net loss, including its loss from discontinued operations, was $40.4 million ($2.69 per diluted share) and $109.7 million ($7.31 per diluted share) for the 2001 three and nine month periods, compared to $82.3 million ($5.48 per diluted share) and $115.2 million ($7.67 per diluted share) for the comparable periods in 2000.

The Company reported that its three and nine month 2001 operating results were significantly impacted by non-cash charges aggregating $29.4 million and $76.8 million, respectively. These non-cash charges included writedowns of notes receivables and other assets, aggregating $11.1 million and $45.6 million, respectively, for the 2001 three and nine month periods, which relate to the Company's joint venture with Kellstrom Industries, Inc. (Kellstrom, according to its SEC filings, is experiencing substantial financial difficulties), the writedown during 2001 of goodwill and leasehold improvements relating to the Company's Oscoda engine and airframe facilities and its Winston-Salem airframe facilities, the writedown in full of the Company's investment in a joint venture formed to manufacture and install kits to convert Boeing 727 aircraft from passenger configuration to cargo configuration, and a $9.0 million writedown in the carrying value of the Company's Miramar, Florida warehouse and office facility (which facility is currently subleased to Kellstrom).

The Company further reported that operating results in 2001 were also impacted by a reduction in market opportunities due to adverse market conditions, including the impact on the MR&O markets caused by the September 11th terrorist attacks. These adverse conditions have caused customers to delay maintenance on their aircraft or park older aircraft. Operating results for 2001 have also been adversely impacted by increased competition in the airframe heavy maintenance market, which has spread outsourced heavy maintenance among a larger group of providers and has caused a decline in gross margins. The Company believes that these conditions will continue to impact results of operations during the fourth quarter of 2001, but that cost containment efforts taken during 2001, combined with an increase in outsourced maintenance which is expected during the first half of 2002, should return the Company to profitability during 2002.

The Company also reported on the status of its previously announced restructuring. In August 2001 the Company reached an agreement with the holders of 73.02% of its outstanding senior subordinated notes to restructure those notes. The Company also previously reported that it intends to conduct a rights offering to the holders of its outstanding common stock to raise $20 million to fund the cash portion of the note restructuring, to pay the expenses of the restructuring and for working capital, and that Lacy J. Harber, the Company's principal stockholder, has agreed to purchase the unsold allotments in the rights offering. In September 2001, the Company filed registration statements relating to the note exchange and the rights offering, which have not yet become effective. The Company further reported that its lenders have recently approved the terms of the proposed restructuring and that the Company currently expects to complete its restructuring early in the first quarter of 2002.

The Company also reported that it has been advised by the New York Stock Exchange that the NYSE has determined to suspend the trading of the Company's common stock on the NYSE effective immediately prior to the opening of the market on Thursday, December 6, 2001 and to seek to delist the Company's common stock from the NYSE. The Company believes that the NYSE's decision was based upon the Company having fallen below one of the NYSE's continued listing requirements (that the Company have a total market capitalization and stockholders' equity of not less than $50 million) and because the average closing price of the Company's common stock has fallen below $1.00 for more than 30 consecutive trading-days. While the NYSE had previously approved the Company's plan to allow the Company's common stock to remain on the NYSE while the Company sought to bring itself back into compliance with the NYSE's continued listing standards, the Company believes that the NYSE recently reconsidered its decision due to (i) the significant non-cash charges which the Company recorded over the last two quarters (as described above) which had not been anticipated when the Company originally submitted its plan to the NYSE, and (ii) the Company's common stock being traded below $1.00 per share for more than the last 30 trading days. The Company expects that its shares will be quoted on the Bulletin Board maintained by the NASD effective on December 6, 2001.

Aviation Sales Company is a leading independent provider of fully integrated aviation maintenance, repair and overhaul (MR&O) services for major commercial airlines and maintenance and repair facilities. Aviation Sales Company currently operates four MR&O businesses: TIMCO, which, with its three locations, is one of the largest independent providers of heavy aircraft maintenance services in North America; Aerocell Structures, which specializes in the MR&O of airframe components, including flight surfaces; Aircraft Interior Design, which specializes in the refurbishment of aircraft interior components; and TIMCO Engine Center, which refurbishes JT8D engines. The Company also operates TIMCO Engineered Systems, which provides engineering services to our MR&O operations and our customers.

This press release contains certain forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. A number of factors, including those identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and those identified below, could adversely affect the Company's ability to obtain these results: the Company's ability to satisfy the conditions to its previously announced bond exchange offer and rights offering, the Company's ability to continue to generate sufficient working capital to meet its operating requirements and service its indebtedness, the Company maintaining good working relationships with its vendors and customers, the Company's ability to achieve gross margins at which it can be profitable, including margins on services the Company performs on a fixed price basis, competition in the aircraft maintenance, repair and overhaul market and the impact on that market and the Company of the terrorist attacks on September 11, 2001, the Company's ability to attract and retain qualified personnel in its business, utilization rates for its MR&O facilities, the Company's ability to effectively manage its business, competitive pricing for the Company's products and services, economic factors which affect the airline industry, and changes in government regulations. Certain of these risks are described in the Company's filings with the Securities and Exchange Commission (SEC). Copies of the Company's SEC filings are available from the SEC or may be obtained upon request from the Company. The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date.