First Aviation Announces Record Revenues & Profits for 2nd Quarter.

WESTPORT, Conn.--(BUSINESS WIRE)--Sept. 3, 1997--First Aviation Services Inc. (NASDAQ:FAVS), a leading provider of services to aircraft operators worldwide, today announced record revenues and record net income for the second quarter of fiscal 1998.

First Aviation said revenues for the second quarter were $38.6 million, up 38.8 percent compared to $27.8 million for the same period for fiscal year 1997. Revenues from repair and overhaul activities decreased 11.7 percent while revenues from parts sales increased by 275.0 percent. The company noted the increase in parts sales was due to the acquisition of Aircraft Parts International, Inc. (API) on March 5, 1997, as well as strong levels of parts sales at National Airmotive Corporation (NAC). For the six months ended July 31, 1997, revenues increased by $22.0 million or 42 percent to $74.4 million from the $52.4 million recorded during the six months ended July 31, 1996. For the six month period ended July 31, 1997, revenues from repair and overhaul increased 3.8 percent while revenues from parts sales increased 146 percent.

Second quarter net income after preferred dividends was $1.5 million or $0.17 per share compared to a $0.02 per share loss in the second quarter of 1997. The company's average outstanding shares increased 72.3 percent in the second quarter as a result of its initial public offering in February 1997. Net income applicable to common stock for the six months ended July 31, 1997, was $2.6 million or $0.31 per share after a $.02 per share charge for the early extinguishment of certain debt. This represents an increase of $1.6 million from the $1.0 million or $0.19 per share for the six months ended July 31, 1996.

First Aviation reported that second quarter gross profits were $6.1 million, an increase of 64.9 percent, compared to $3.7 million for the same period in fiscal 1997. The gross profit percentage during the second quarter of fiscal 1998 was 15.7 percent, an increase of 16.3 percent from the 13.5 percent reported in the same period in fiscal 1997.

The company also stated that income from operations for the second quarter ending July 31, 1997, was $2.4 million - up 41.2 percent - compared to $1.7 million in the second quarter ending July 31, 1996, and was reflective of the noted increase in sales and gross profit. For the second quarter of fiscal 1998 operating expenses increased $1.7 million due to higher sales levels and the acquisition of API. Michael Culver, President and Chief Executive Officer of First Aviation commented, "First Aviation's sales and profitability continue to grow in a strong orderly fashion. We are continuing to build a quality company by adding strong managers and expanding our business base to take advantage of market opportunities."

First Aviation is a worldwide leader in providing services to aircraft operators of some of the most widely used military and general aviation engines. Its operations include repair and overhaul of gas turbine engines and accessories, remanufacturing of engine components and accessories, and distribution of new and remanufactured parts. First Aviation is also one of the leading suppliers of aircraft parts to the general aviation industry in the United States, and is headquartered in Westport, Connecticut.

The Company from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward looking information are estimates of the Company's management and are subject to the various risks 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 results to differ from management expectations.

The company will host a conference call to discuss second quarter earnings on Thursday, September 4th at 10:00am EST. Interested parties should call 1 [phone] before 9:45am EST on September 4th. -0-

                       First Aviation Services Inc.
            Consolidated Statements of Operations (Unaudited)
                   (in thousands, except share amounts)


                           Periods Ended         Periods Ended
                             July 31               July 31
                           Three Months           Six Months

                           1997       1996      1997      1996

Net sales               $38,575    $27,772    $74,423    $52,354
Cost of Sales            32,521     24,033     63,065     44,608

Gross Profit              6,054      3,739     11,358      7,746
Selling, general and
 administrative expenses  3,691      2,038      6,789      4,125

Income from operations    2,363      1,701      4,569      3,621
Interest expense            286        921        876      1,648

Income before provision
 for income taxes and
 extraordinary item and
 preferred dividends      2,077        780      3,693      1,973
Provision for income
 taxes                      519         --        920        --

Income before
 extraordinary item       1,558        780      2,773      1,973
Extraordinary item:
 Loss on early
  extinguishment of debt
  (net of income tax
  benefit of $--, $0,
  $64 and $0)                --       (864)      (193)      (864)

Net income (loss)         1,558        (84)     2,580      1,109

Preferred stock
 dividends                   11         33         29         66

Net income (loss)
 applicable to common
 stock                  $ 1,547     $ (117)   $ 2,551    $ 1,043

Net income (loss) per
common share:
 Income before
 extraordinary item
 applicable to common
 stock                  $  0.17     $ 0.14    $  0.33    $  0.35

Extraordinary item          --       (0.16)     (0.02)     (0.16)

Net income loss applicable
 to common stock        $  0.17     $(0.02)   $  0.31    $  0.19

Shares used in computation
 of net income (loss)
 applicable to common
 stock                9,064,850  5,261,511  8,386,272  5,395,530

-0-

                       First Aviation Services Inc.
                        Consolidated Balance Sheets
                   (in thousands, except share amounts)


                                            July 31,     January 31,
                                              1997         1997
                                           (Unaudited)
Assets
Current assets:
 Cash and cash equivalents                  $ 1,566      $   --
 Accounts receivable, net of allowance for
 doubtful accounts of $1,729 and $278,
 respectively                                27,937       19,931
Inventories                                  44,662       36,323
Deferred income taxes                           536        1,036
Prepaid expenses and other                    2,095        1,375
Total current assets                         76,796       58,665


Plant and equipment, net                      3,664        2,793
Other assets                                  2,824          914
                                            $62,372      $83,284

Liabilities and stockholders' equity
Current liabilities:
 Accounts payable                           $16,691      $15,104
 Accrued compensation and related
 expenses                                     1,796        1,948
Other accrued liabilities                     1,511        2,850
Income taxes payable                            824          --
Due to shareholders                             155          176
Current portion of long term debt               --         1,100
Total current liabilities                    20,977       21,178

Long term debt, less current portion         15,216       32,794
Other non-current liabilities                 2,817        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
 1,650 at July 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, 8,915,000 issued and
 outstanding at July 31, 1997; 3,556,665
 shares issued and outstanding at January
 31, 1997;                                       89           36
Additional paid in capital                   38,129        2,125
Retained earnings                             5,050        2,470
Total stockholders' equity                   43,268        6,281
                                            $83,284      $62,372

CONTACT: First Aviation Services Inc.

John A. Marsalisi, Chief Financial Officer

[phone]