AVIATION SALES CO, S-3/A, 1999-06-10

AVIATION SALES CO
S-3/A, 1999-06-10
INDUSTRIAL MACHINERY & EQUIPMENT

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1999
REGISTRATION STATEMENT NO. 333-76585
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE

AMENDMENT NO. 2

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AVIATION SALES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 65-0665658
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>

---------------

<TABLE>
<S> <C>
DALE S. BAKER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
6905 N.W. 25TH STREET 6905 N.W. 25TH STREET
MIAMI, FLORIDA 33122 MIAMI, FLORIDA 33122
(305) 592-4055 (305) 592-4055
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>

---------------
COPIES OF ALL COMMUNICATIONS TO:

<TABLE>
<S> <C>
PHILIP B. SCHWARTZ, ESQ. BETH R. NECKMAN, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A. LATHAM & WATKINS
ONE S.E. 3RD AVENUE, 28TH FLOOR 885 THIRD AVENUE, SUITE 1000
MIAMI, FLORIDA 33131-1704 NEW YORK, NEW YORK 10022-4802
(305) 374-5600 (212) 906-1200
</TABLE>

---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this registration statement.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================

<PAGE>

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission
is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 10, 1999

P R O S P E C T U S

2,000,000 Shares

[AVIATION SALES COMPANY LOGO]

Common Stock
$ per share

------------

Aviation Sales Company is selling 2,000,000 shares of its common stock.
The underwriters named in this prospectus may purchase up to 300,000 additional
shares of common stock from Aviation Sales under certain circumstances.

The common stock is listed on the New York Stock Exchange under the symbol
"AVS." The last reported sale price of the common stock on the New York Stock
Exchange on June 9, 1999 was $35 15/16 per share.

------------
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
----------- ---------
<S> <C> <C>
Public Offering Price ................................. $ $
Underwriting Discount ................................. $ $
Proceeds to Aviation Sales (before expenses) .......... $ $
</TABLE>

The underwriters are offering the shares subject to various conditions.
The underwriters expect to deliver the shares to purchasers on or about
, 1999.

------------

Salomon Smith Barney

Deutsche Banc Alex.Brown

Robert W. Baird & Co.
Incorporated

Warburg Dillon Read LLC

, 1999
<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED BY THIS PROSPECTUS, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.

------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary .......................................................... 1
Risk Factors ................................................................ 7
Use of Proceeds ............................................................. 10
Market for Our Common Equity and Related Stockholder Matters ................ 11
Dividend Policy ............................................................. 11
Capitalization .............................................................. 12
Selected Consolidated Financial Data ........................................ 13
Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................................. 15
Business .................................................................... 28
Management .................................................................. 39
Principal Stockholders ...................................................... 47
Description of Capital Stock ................................................ 49
United States Federal Income Tax Consequences for Non-United States Holders . 51
Underwriting ................................................................ 54
Where You Can Find More Information ......................................... 55
Legal Matters ............................................................... 56
Experts ..................................................................... 56
Index to Financial Statements ............................................... F-1
</TABLE>

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus may contain forward-looking
statements. We use words such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar expressions to identify forward-looking
statements. These statements discuss future expectations, contain projections
of results of operations or of financial condition or state other
"forward-looking" information. When considering these forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus. The risk factors noted in this prospectus and
additional risks not presently known or which we presently deem immaterial,
together with other factors we note throughout this prospectus, could cause our
actual results to differ materially from those contained in the forward-looking
statements.

i
<PAGE>

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. IT IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT
YOU SHOULD CONSIDER BEFORE INVESTING IN THE COMMON STOCK. YOU SHOULD READ THE
ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION AND THE
FINANCIAL STATEMENTS AND NOTES TO THOSE STATEMENTS. REFERENCES IN THIS
PROSPECTUS TO "AVIATION SALES," "WE," "OUR" AND "US" REFER TO AVIATION SALES
COMPANY, A DELAWARE CORPORATION, AND ITS SUBSIDIARIES. UNLESS THE CONTEXT
OTHERWISE REQUIRES, ALL INFORMATION CONTAINED IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF THE OPTION GRANTED TO UNDERWRITERS TO PURCHASE ADDITIONAL SHARES.

THE COMPANY

Aviation Sales Company is a leading provider of aviation inventory and
maintenance, repair and overhaul services. We believe that we are one of the
largest redistributors of aircraft spare parts in the world and the largest
independent provider of heavy maintenance services for aircraft in North
America. We sell aircraft spare parts and provide inventory management services
and maintenance, repair and overhaul services to commercial passenger airlines,
air cargo carriers, maintenance and repair facilities and other redistributors
throughout the world. We sell airframe and engine components for commercial
airplanes, including Boeing, McDonnell Douglas, Lockheed and Airbus aircraft
and jet engines manufactured by Pratt & Whitney, General Electric and Rolls
Royce.

We offer maintenance and repair services through our six FAA-licensed
repair stations. These services include maintenance, repair and modification
services for aircraft, and repair and overhaul services on a wide range of
aircraft components. We provide inventory management services including
purchasing services, repair management, warehouse management, aircraft
disassembly services and consignment and leasing of aircraft parts and engines.
We also manufacture various aircraft parts for sale to original equipment
manufacturers, including precision engine parts.

Our strategy is to be the vendor of choice to our customers by providing
total inventory management and total aircraft maintenance solutions to meet our
customers' spare parts and maintenance, repair and overhaul requirements. We
believe our future growth will come from internal growth combined with growth
through additional acquisitions of companies which add to or expand our
existing product and service offerings. We expect to achieve internal growth
through:

/bullet/ increased customer penetration in existing markets;
/bullet/ improved capacity utilization of our maintenance and repair
facilities; and
/bullet/ continued expansion of the number of products and services which
we offer to our customers.

The services we offer allow our customers to reduce their costs by
outsourcing some or all of their inventory management and maintenance, repair
and overhaul functions and to take advantage of opportunities to maximize the
value of their spare parts inventories. As a leading redistributor of aircraft
spare parts we are able to better service our maintenance and repair customers,
due to the timely availability of our extensive parts inventory. Similarly, as
a leading provider of maintenance and repair services, we are able to market
our aircraft spare parts to our airline customers.

INDUSTRY

1
<PAGE>

repair and modification services being provided in North America. We believe
airlines perform approximately 75% of the North American services, outsourcing
the balance to independent providers like Aviation Sales. Due to trends
currently affecting our industry, we believe that the demand for maintenance
and repair services from large independent service providers such as Aviation
Sales will continue to increase in the future.

We believe that the trends currently affecting our industry are:

GROWTH IN MARKET FOR AIRCRAFT SPARE PARTS AND MAINTENANCE AND REPAIR
SERVICES. Boeing's 1998 Current Market Outlook report projects that:

/bullet/ the worldwide fleet of commercial airplanes will more than double
between 1997 and 2017;
/bullet/ the number of cargo jet aircraft will increase significantly
between 1997 and 2017; and
/bullet/ the aircraft fleet will continue to age.

We believe that a combination of these factors will increase the demand
for aircraft spare parts from the redistribution market and for maintenance and
repair services.

INCREASED OUTSOURCING OF INVENTORY MANAGEMENT AND MAINTENANCE AND REPAIR
REQUIREMENTS. We believe that airlines are seeking to reduce their operating
costs by obtaining replacement parts from the redistribution market. In
addition, by outsourcing all or a portion of their inventory management
functions and maintenance and repair requirements, airlines can achieve cost
savings. We believe that we can provide parts and services to our customers
less expensively and more efficiently because of economies of scale which we
can achieve in our business.

REDUCTION IN NUMBER OF APPROVED VENDORS. Airlines have been reducing the
number of their approved vendors. As a result of these reductions, there has
been and we believe there will continue to be a consolidation in the
redistribution and maintenance and repair markets.

CONSIGNMENT. We believe that major airlines and other owners of aircraft
spare parts, in order to concentrate on their core businesses and to more
effectively redistribute their excess parts inventories, are increasingly
entering into long-term consignment agreements with redistributors. By
consigning inventories to a redistributor such as Aviation Sales, customers are
able to distribute their aircraft spare parts to a larger number of prospective
inventory buyers, allowing customers to maximize the value of their inventory
and enabling us to offer for sale a more significant parts inventory at minimal
capital cost to us.

COMPETITIVE STRENGTHS

We believe that the following factors contribute to our strong competitive
position:

DIVERSIFIED PRODUCTS AND SERVICES. We believe that our breadth of product
offerings and services, including a wide range of inventory management,
maintenance and repair services and specialized manufacturing, allows us to be
a vendor of choice to our customers in a highly fragmented industry. We have
over 1,000 customers, including commercial passenger airlines, air cargo
carriers and other maintenance and repair facilities.

LARGE INVENTORY BASE. We believe that we have one of the largest
inventories of aircraft spare parts in the world, with over 555,000 line items
currently in stock.

PROPRIETARY MANAGEMENT INFORMATION SYSTEMS. Our proprietary management
information systems are an integral component of our position as a leader in
our industry. Our computer systems collect and report data regarding inventory
turnover, documentation, pricing, market availability and

2
<PAGE>

customer demographic information on more than 3.7 million line items. Our
technology provides for rapid and accurate retrieval of inventory traceability
documents. The expense and complexity of implementing a system to track this
information acts as a barrier to new entrants into our markets.

EMPHASIS ON QUALITY. Our information systems allow us to provide
documentation that enables the aircraft parts and the maintenance we perform on
them to be traced. As industry, regulatory and public awareness have focused on
safety, our ability to track this information has become important to
customers.

All of our maintenance and repair facilities are licensed by the FAA. We
emphasize quality and on-time delivery to customers at our maintenance and
repair facilities.

WORLDWIDE MARKETING PRESENCE. Our international presence allows us to meet
the demands of our global customer base and to supply parts and services on a
timely basis. We distribute parts to customers in more than 100 countries and
utilize sales representatives in 23 countries.

SIGNIFICANT FINANCIAL AND OTHER RESOURCES. Our financial position, market
presence, industry experience and sophisticated management information systems
allow us to expand our products and services and to quickly analyze and
complete acquisitions of inventory when such opportunities arise.

OPERATIONS

Our core business is the buying and selling of aircraft spare parts, the
maintenance, repair and overhaul of aircraft and aircraft components and the
providing of inventory management services. Additionally, we manufacture
aircraft parts for sale to original equipment manufacturers.

SALES OF AIRCRAFT SPARE PARTS AND INVENTORY MANAGEMENT SERVICES

Our daily operations encompass inventory sales, brokering and exchanging
of aircraft spare parts. We purchase parts on behalf of our customers against
specific orders. We also offer a customer exchange program for aircraft spare
parts. In addition, we provide our customers the following inventory management
services: consignment, repair management, aircraft disassembly, warehouse
management, purchasing services and leasing. These services assist airlines in
streamlining their inventory management operations while utilizing their
capital more efficiently and reducing their costs.

MAINTENANCE AND REPAIR SERVICES

Through our six FAA-licensed repair facilities, we provide maintenance and
repair services for commercial, military and freighter aircraft and for a wide
range of aircraft components.

MANUFACTURING SERVICES

We also manufacture various aircraft parts for sale to original equipment
manufacturers, including precision engine parts.

Aviation Sales was incorporated in 1996, as the successor to a business
organized in 1992. Our principal executive offices are located at 6905 N.W.
25th Street, Miami, Florida 33122. Our telephone number is (305) 592-4055.

3
<PAGE>

THE STOCK OFFERING

<TABLE>
<S> <C>
Total shares offered by this prospectus ................... 2,000,000 shares
Common stock to be outstanding after the offering ......... 14,695,950 shares
Use of proceeds ........................................... We intend to use the net proceeds from the
offering to reduce amounts outstanding under
our credit facility
New York Stock Exchange symbol ............................ "AVS"
</TABLE>

The number of shares that will be outstanding after the offering is based
on the number outstanding as of June 1, 1999. It excludes:

/bullet/ 1,612,875 shares of common stock issuable upon exercise of stock
options outstanding as of June 1, 1999, of which options to purchase
783,053 shares were then exercisable; and
/bullet/ 556,648 shares reserved for issuance under our stock option plan and
our directors' stock option plan as of June 1, 1999.

THE NOTES OFFERING

We have filed a separate registration statement with respect to the public
offering of $85.0 million of our senior subordinated notes due 2008. We intend
to continually assess market conditions and complete the offering of the notes
when we determine market conditions are appropriate. We intend to use the net
proceeds of the notes offering to reduce amounts outstanding under our credit
facility. No assurances can be given as to when or if we will complete the
offering of the notes.

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary historical consolidated financial data for the three
years ended December 31, 1996, 1997 and 1998 has been derived from our
consolidated financial statements, which have been audited by Arthur Andersen
LLP, independent certified public accountants, and which are included elsewhere
in this prospectus. The following summary historical unaudited financial data
as of March 31, 1999 and for the three months ended March 31, 1998 and 1999,
has been derived from the unaudited historical financial statements of Aviation
Sales included elsewhere herein which, in the opinion of management, include
all adjustments (consisting of only normal recurring adjustments) necessary for
a fair and consistent presentation of such data.

The summary consolidated financial data should be read in conjunction with
"Selected Consolidated Financial Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and the audited and
unaudited historical financial statements of Aviation Sales and notes which are
contained elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
PRO FORMA
1996(1) 1997(1) 1998(1) 1998(2)
--------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Operating revenues ................................ $ 231,734 $ 322,538 $ 500,816 $ 614,982
Gross profit ...................................... 61,947 77,780 128,088 147,692
Income from operations ............................ 27,989 24,998 61,369 68,448
Net income ........................................ 19,815(4) 4,844 25,493 27,415
SHARE DATA(5):
Diluted net income per share ...................... $ 1.19(4) $ 0.39 $ 2.01 $ 2.15
Weighted average number of diluted shares ......... 10,769 12,450 12,696 12,729
OTHER DATA:
EBITDA(6) ......................................... $ 31,408 $ 30,231 $ 71,609 $ 81,171
Net cash used in operating activities ............. (12,064) (53,738) (70,954) (56,773)
Depreciation and amortization ..................... 3,419 5,233 10,240 12,723
Capital expenditures .............................. 5,549 8,133 16,618 20,089
Cash interest(7) .................................. 4,795 7,673 20,233 24,070
Ratio of total debt to EBITDA ..................... 5.1x 4.5x
Ratio of EBITDA to cash interest .................. 3.5x 3.4x
Ratio of earnings to fixed charges(8) ............. 2.8x 2.6x

<CAPTION>
THREE MONTHS
ENDED MARCH 31, PRO FORMA
----------------------------------------- TWELVE MONTHS
ENDED
PRO FORMA MARCH 31,
1998(1) 1998(2) 1999 1999(3)
------------- ------------- ------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Operating revenues ................................ $ 102,174 $ 142,724 $ 177,958 $ 650,216
Gross profit ...................................... 25,274 32,927 41,155 155,920
Income from operations ............................ 10,436 12,754 20,919 76,613
Net income ........................................ 3,748 4,238 7,917 31,094
SHARE DATA(5):
Diluted net income per share ...................... $ 0.30 $ 0.33 $ 0.61 $ 2.43
Weighted average number of diluted shares ......... 12,576 12,709 12,983 12,787
OTHER DATA:
EBITDA(6) ......................................... $ 12,412 $ 15,649 $ 24,009 $ 89,531
Net cash used in operating activities ............. (33,500) (34,079) (42,701) (65,395)
Depreciation and amortization ..................... 1,976 2,895 3,090 12,918
Capital expenditures .............................. 4,443 4,507 4,007 19,589
Cash interest(7) .................................. 3,754 5,141 8,040 26,969
Ratio of total debt to EBITDA ..................... 4.5x
Ratio of EBITDA to cash interest .................. 3.3x
Ratio of earnings to fixed charges(8) ............. 2.6x
</TABLE>

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 31, 1999
----------------------------------
PRO FORMA(3) AS ADJUSTED(3)(9)
-------------- ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
AS ADJUSTED DATA:
Cash interest(7) ................................. $ 26,969 $ 21,893
Net income ....................................... 31,094 34,191
Diluted net income per share ..................... 2.43 2.31
Weighted average number of diluted shares ........ 12,787 14,787
Ratio of total debt to EBITDA .................... 4.5x 3.7x
Ratio of EBITDA to cash interest ................. 3.3x 4.1x
Ratio of earnings to fixed charges(8) ............ 2.6x 3.1x
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
----------------------------
ACTUAL AS ADJUSTED(9)
---------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......... $ 1,303 $ 1,303
Working capital .................... 175,875 243,555
Total assets ....................... 656,304 656,304
Total debt ......................... 403,231 335,551
Total stockholders' equity ......... 164,983 232,663
Total capitalization ............... 568,214 568,214
</TABLE>

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<PAGE>

- ----------------
(1) Dixie Bearings, Inc., which was acquired in August 1996, Kratz-Wilde
Machine Company, which was acquired in October 1997, Caribe Aviation,
Inc., which was acquired in March 1998 and Triad International Maintenance
Corporation (TIMCO), which was acquired in September 1998, are accounted
for under the purchase method of accounting and accordingly, their results
of operations have been included in our historical results of operations
from their respective dates of acquisition.

AvEng Trading Partners, which was acquired in December 1996, Aerocell
Structures, Inc., which was acquired in September 1997, Apex Manufacturing,
Inc., which was acquired in December 1997, and Whitehall Corporation, which
was acquired in July 1998, are accounted for under the pooling of interests
method of accounting. Whitehall and AvEng are included in our historical
financial results for all periods presented. Historical operating results
for periods presented prior to 1997 have not been restated to give
retroactive effect to the acquisitions of Aerocell and Apex, due to the
immateriality of the restated amounts.

(2) Reflects the acquisitions of TIMCO and Caribe as if such acquisitions had
occurred on January 1, 1998.

(3) Reflects the acquisition of TIMCO as if such acquisition had occurred on
April 1, 1998.

(4) Includes pro forma adjustments to record income taxes, as we conducted our
business as a partnership prior to June 26, 1996. Before such adjustments
diluted net income per share was $1.84.

(5) See Note 10 to the consolidated financial statements for information
regarding the computation of fully diluted net income per share.

(6) EBITDA represents income before income taxes plus net interest expense and
depreciation and amortization (excluding amortization of deferred
financing costs and original issue discount). While EBITDA should not be
construed as a substitute for income from operations or a better indicator
of liquidity than net cash used in operating activities, which are
determined in accordance with generally accepted accounting principles, it
is included herein to provide additional information with respect to the
ability of Aviation Sales to meet its future debt service, capital
expenditures and working capital requirements. In addition, Aviation Sales
believes that certain investors find EBITDA to be a useful tool for
measuring the ability of Aviation Sales to service its debt. EBITDA as
presented is not necessarily a measure of Aviation Sales' ability to fund
cash needs and may not be comparable to other similarly titled measures of
other companies.

(7) Cash interest is interest expense excluding amortization of deferred
financing costs and original issue discount.

(8) The ratio of earnings to fixed charges is determined by dividing the sum
of earnings before extraordinary items, interest expense, income tax
expense, and a portion of rent expense representative of the interest
component by the sum of interest expense and the portion of rent expense
representative of the interest component.

(9) Reflects the sale of 2,000,000 shares of common stock offered by this
prospectus by Aviation Sales at an assumed public offering price of $36.00
per share and application of the estimated net proceeds of $67.7 million
and as if such transaction had occurred as of April 1, 1998 for As
Adjusted Income Data and as of March 31, 1999 for As Adjusted Balance
Sheet Data.

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RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A
DECISION TO INVEST IN OUR COMMON STOCK. WE URGE YOU TO CAREFULLY CONSIDER THESE
RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS, BEFORE YOU MAKE AN INVESTMENT DECISION. PLEASE NOTE THAT THE RISKS
DESCRIBED BELOW ARE NOT THE ONLY ONES FACING AVIATION SALES.

PROBLEMS IN THE AIRLINE INDUSTRY COULD ADVERSELY AFFECT OUR BUSINESS

Since our customers consist of airlines, maintenance and repair facilities
that service airlines and other aircraft spare parts redistributors, as well as
original equipment manufacturers, economic factors affecting the airline
industry impact our business. When economic factors adversely affect the
airline industry, they tend to reduce the overall demand for aircraft spare
parts and maintenance and repair services, causing downward pressure on pricing
and increasing the credit risks associated with doing business with airlines.
Additionally the price of fuel affects the aircraft spare parts and maintenance
and repair markets, since older aircraft, which consume more fuel and which
account for most of our aircraft spare parts and maintenance and repair
services business, become less viable as the price of fuel increases. We cannot
assure you that economic and other factors which may affect the airline
industry will not adversely impact our business, financial condition or results
of operations.

WE HAVE SUBSTANTIAL DEBT WHICH WE MAY BE UNABLE TO SERVICE

We have and will continue to have a significant amount of debt. As of
March 31, 1999, we had outstanding indebtedness of approximately $403.2 million
(including capitalized leases), of which $215.2 million was senior indebtedness
and $188.0 million was other indebtedness. As of March 31, 1999, we had
approximately $6.7 million available for future borrowing under our credit
facility and our principal and interest payment requirements for 1999 are
approximately $35.2 million. Our credit facility is secured by substantially
all of our assets. Subject to limitations in these debt instruments, we will
likely be able to incur significant additional amounts of secured and unsecured
indebtedness in the future. Our ability to make payments of principal and
interest on, or to refinance, our indebtedness depends on our future operating
performance, which may be subject to economic, financial, competitive and other
factors beyond our control. The level of our indebtedness could have important
consequences to you, including:

/bullet/ our vulnerability to adverse general economic and industry
conditions;
/bullet/ our ability to obtain additional financing for future working
capital expenditures, general corporate or other purposes; and
/bullet/ the dedication of a substantial portion of our future cash flow from
operations to the payment of principal and interest on indebtedness,
thereby reducing the funds available for operations and future
business opportunities.

WE DEPEND ON FINANCING TRANSACTIONS TO SUPPORT OUR GROWTH

During 1996, 1997, 1998 and the first quarter of 1999, we relied primarily
upon significant borrowings under our credit facility, and sales of our
securities, including our previously issued senior subordinated notes, to
satisfy our funding requirements relating to our acquisitions of several
businesses and to finance the growth of our business. We cannot assure you that
financing alternatives will be available to us in the future to support our
continued growth.

OUR LENDERS IMPOSE SIGNIFICANT RESTRICTIONS ON US

Our credit facility, our previously issued notes and future indebtedness
impose and will impose significant operating and financial restrictions on us.
These restrictions may significantly limit our ability and our subsidiaries'
ability to incur additional indebtedness, pay dividends, repay indebtedness
prior to its stated maturity, sell assets or engage in mergers or acquisitions.
In addition, our failure to

7
<PAGE>

comply with these restrictions could result in an event of default which, if
not cured or waived, could materially adversely affect our business, financial
condition or results of operations.

OUR OPERATING RESULTS FLUCTUATE AND COULD DECLINE

Our operating results have fluctuated in the past and may fluctuate
significantly in the future. Many factors affect our operating results,
including:

/bullet/ the timing of orders and the timing of payments from large
customers;
/bullet/ the timing of expenditures to purchase inventory in anticipation of
future sales;
/bullet/ the timing of bulk inventory purchases;
/bullet/ the number of airline customers seeking maintenance and repair
services at any time;
/bullet/ our ability to fully utilize from period to period our hangar space
dedicated to maintenance and repair operations;
/bullet/ the timeliness of customer aircraft in arriving for scheduled
maintenance; and
/bullet/ the mix of available aircraft spare parts contained, at any time, in
our inventory.

A large portion of our operating expenses are relatively fixed. Since we
usually do not obtain long-term purchase orders or commitments from our
customers, we must anticipate the future orders based upon the historic needs
of our customers and upon our discussions with our customers as to their future
needs. Cancellations, reductions or delays in orders by a customer or group of
customers could materially adversely affect our business, financial condition
or results of operations.

OUR BUSINESS IS SUBJECT TO HEAVY GOVERNMENT REGULATION

The aviation industry is highly regulated by the FAA in the United States
and by similar agencies in other countries. We must be certified by the FAA in
order to repair aircraft and aircraft components.

While our redistribution business itself is not regulated, the aircraft
spare parts which we sell to our customers must be accompanied by documentation
which enables our customers to substantiate their compliance with applicable
regulatory requirements.

Before parts may be installed in an aircraft, they must meet standards of
condition established by the FAA and/or the equivalent regulatory agencies in
other countries. Specific regulations vary from country to country, although
regulatory requirements in other countries generally coincide with FAA
requirements. Our parts may not meet applicable standards or standards may
change in the future, requiring parts already in our inventory to be scrapped
or modified. Aircraft manufacturers may also develop new parts to be used in
lieu of parts already in our inventory. To the extent that we have any of these
parts in our inventory, their value may be reduced.

We cannot assure you that new and more stringent government regulations
will not be adopted in the future or that any such new regulations, if enacted,
would not materially adversely affect our business, financial condition or
results of operations.

OUR GROWTH AND FUTURE ACQUISITIONS MAY STRAIN OUR RESOURCES

The key element of our growth strategy involves growth through the
acquisition of additional inventories of aircraft spare parts and the
acquisition of other companies, assets or product lines that complement or
expand our existing business. Our ability to grow through acquisitions depends
upon, and may be limited by, the availability of suitable aircraft parts
inventories, acquisition candidates and capital, and by restrictions imposed
under our credit facility and our senior subordinated notes. In addition,
acquisitions of other companies involve risks that could adversely affect our
business, financial condition or operating results, including:

/bullet/ the integration of the operations and personnel of acquired
companies;
/bullet/ the potential amortization of acquired intangible assets; and
/bullet/ the potential loss of key employees of the acquired companies.

8
<PAGE>

We cannot assure you that we will be able to complete future acquisitions on
satisfactory terms or successfully operate acquired businesses.

WE DEPEND ON OUR EXECUTIVE OFFICERS AND KEY EMPLOYEES

Our continued success depends significantly upon the services of our
executive officers and upon our ability to attract and retain qualified
personnel. We have employment agreements with several of our executive
officers. Some of these employment agreements can be terminated by the
executive officer upon a change of control of our business. The loss of one or
more of our executive officers without capable successors could materially
adversely affect our business, financial condition or results of operations.

OUR BUSINESS IS HIGHLY COMPETITIVE

The airline industry and the markets for our products and services are
extremely competitive, and we face competition from a number of sources. Our
competitors include aircraft manufacturers, aircraft parts manufacturers,
airline and aircraft service companies, other companies providing maintenance,
repair and overhaul services, and other aircraft spare parts redistributors.
Some of our competitors have substantially greater financial and other
resources than us. We cannot assure you that competitive pressures will not
materially adversely affect our business, financial condition or results of
operations.

OUR INFORMATION TECHNOLOGY SYSTEM MAY BE SUBJECT TO YEAR 2000 PROBLEMS

We have determined that the management information system which we
currently use in our redistribution operations is not Year 2000 compliant. We
have commenced remediation to make it Year 2000 compliant so that our existing
system remains available for our use until the new system which we are
implementing for our distribution business becomes operational. The cost of
this Year 2000 remediation is expected to be approximately $1.0 million. We
believe that our existing system will be substantially remediated by the end of
August 1999 and that validation for our system, as remediated, should be
completed by the beginning of the fourth quarter of 1999, although we can not
assure you of this. Our failure to bring the existing system for our
redistribution operations into Year 2000 compliance would likely materially
adversely affect our business, in that it would make it very difficult for us
to operate our business in the ordinary course and would likely cause us to
lose revenue and have business interruptions of a material nature.

OUR BUSINESS IS SUSCEPTIBLE TO PRODUCT LIABILITY CLAIMS

Our business exposes us to possible claims for personal injury or death
which may result if an aircraft spare part which we have sold, manufactured or
repaired fails or if we were negligent in repairing an airplane. We cannot
assure you that claims will not arise in the future or that our insurance
coverage will be adequate to protect us in all circumstances. Additionally, we
cannot assure you that we will be able to maintain adequate insurance coverages
in the future at an acceptable cost. Any product liability claim not covered by
adequate insurance could materially adversely affect our business, financial
condition or results of operations.

OUR SIGNIFICANT STOCKHOLDERS MAY SUBSTANTIALLY INFLUENCE OUR BUSINESS

As of June 1, 1999, two of our stockholders beneficially owned
approximately 18.8% and 8.3%, of our outstanding common stock and will own 16.2%
and 7.2% after the offering. Our directors and executive officers, as a group,
beneficially owned an aggregate of approximately 33.4% (including the 27.1%
referred to above) of our outstanding common stock and will own 28.9% after the
offering. While each of these stockholders is an independent party, if these
parties were to act together as a group, they would have the ability to
exercise substantial influence on the election of all of the members of our
board of directors and, therefore, to exercise substantial influence on our
business, policies and affairs.

9
<PAGE>

WE ARE SUBJECT TO SIGNIFICANT ANTI-TAKEOVER PROVISIONS

Our certificate of incorporation and bylaws contain provisions that may
have the effect of discouraging transactions involving an actual or threatened
change of control. In addition, our board of directors has the authority to
issue up to 1,000,000 shares of preferred stock in one or more series and to
fix the preferences, rights and limitations of any of these series without
stockholder approval. Our ability to issue preferred stock could discourage
unsolicited acquisition proposals or make it more difficult for a third party
to gain control of us, which could adversely affect the market price of our
common stock.

THE MARKET PRICE OF OUR COMMON STOCK COULD BE DEPRESSED BY FUTURE SALES

Future sales of our common stock, or the perception that these sales could
occur, could adversely affect the market price of our common stock. We cannot
assure you as to when, and how many of, the shares of our common stock will be
sold and the effect these sales may have on the market price of our common
stock. In addition, we may issue additional shares of common stock in
connection with possible future acquisitions or other transactions. Although
these securities may be subject to regulatory or contractual resale
restrictions, as these restrictions lapse or if these shares are registered for
sale to the public, they may be sold to the public. In the event we issue a
substantial number of shares of our common stock, which subsequently become
available for unrestricted resale, there could be a material adverse effect on
the prevailing market price of our common stock.

USE OF PROCEEDS

The net proceeds to Aviation Sales from the sale of the 2,000,000 shares
of common stock offered by Aviation Sales under this prospectus are estimated
to be approximately $67.7 million at an assumed public offering price of $36.00
per share and after deducting the estimated underwriting discount and offering
expenses payable by Aviation Sales.

We expect to use the net proceeds from this offering to reduce the amounts
outstanding under our credit facility. Our credit facility consists of a
revolving loan and letter of credit facility of $300.0 million up to $30.0
million of which may be outstanding letters of credit. Interest under the
credit facility is, at our option, (a) prime plus a margin ranging from 0.25% to
1.25%, or (b) LIBOR plus a margin ranging from 1.375% to 2.75%. As of June 1,
1999, the margin was 0.75% for prime rate loans and 2.25% for LIBOR rate loans.
The indebtedness will mature in 2002. We used the proceeds of our revolving
credit facility to acquire TIMCO and Whitehall, as well as for working capital.

10
<PAGE>

MARKET FOR OUR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The following information relates to our common stock, par value $.001 per
share, which currently is listed on the New York Stock Exchange under the
symbol AVS. At June 1, 1999, there were approximately 312 stockholders of
record of our common stock. The foregoing number does not include beneficial
holders of our common stock. The high and low last sales prices of the common
stock for each quarter during our two most recent fiscal years as well as for
the first and second quarters of 1999, as reported by the New York Stock
Exchange, are set forth below:

<TABLE>
<CAPTION>
HIGH LOW
----------- -----------
<S> <C> <C>
1997
First Quarter ........................... $ 26.75 $ 20.50
Second Quarter .......................... $ 25.87 $ 21.25
Third Quarter ........................... $ 31.25 $ 20.87
Fourth Quarter .......................... $ 38.93 $ 30.37
1998
First Quarter ........................... $ 44.75 $ 33.12
Second Quarter .......................... $ 41.00 $ 34.87
Third Quarter ........................... $ 41.37 $ 24.00
Fourth Quarter .......................... $ 40.62 $ 26.25
1999
First Quarter ........................... $ 47.62 $ 37.00
Second Quarter (through June 9) ......... $ 46.13 $ 35.38
</TABLE>

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings to fund the development and growth
of our business.

11
<PAGE>

CAPITALIZATION

The following table summarizes our unaudited capitalization as of March
31, 1999 and as adjusted to give effect to our receipt of the estimated net
proceeds from the sale by Aviation Sales of 2,000,000 shares of common stock
offered by this prospectus at an assumed public offering price of $36.00 per
share. You should read this information in conjunction with our consolidated
financial statements and the related notes that appear in this prospectus
beginning on page F-1.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents .............................................. $ 1,303 $ 1,303
======== ========
Long term debt, including current maturities(1):
Revolving loan(2)(3) .................................................. $215,171 $147,491
Senior subordinated notes ............................................. 164,185 164,185
Other debt ............................................................ 23,875 23,875
-------- --------
Total long term debt ................................................. 403,231 335,551
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding .................................................... -- --
Common stock, $.001 par value, 30,000,000 shares authorized; 12,622,422
shares issued and outstanding; and 14,622,422 shares issued and
outstanding, as adjusted(4) ......................................... 13 15
Additional paid-in capital ............................................ 67,110 134,788
Retained earnings ..................................................... 97,860 97,860
-------- --------
Total stockholders' equity ........................................... 164,983 232,663
-------- --------
Total capitalization ................................................ $568,214 $568,214
======== ========
</TABLE>

- ----------------
(1) For a description of our outstanding long-term debt see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

(2) As of June 1, 1999, $237,376,194 was outstanding under the credit facility.

(3) Although the revolving loan matures in 2002, it is classified as a current
liability because the borrowing base is linked to current assets,
including inventories and receivables.

(4) Excludes (A) 1,612,875 shares subject to options outstanding as of June 1,
1999 and (B) 556,648 additional shares reserved for issuance pursuant to
options available for grant under our stock option plans. See
"Management--Stock Option Plans."

12
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected historical consolidated financial data has been
derived from our consolidated financial statements. Our financial statements as
of December 31, 1997 and 1998, and for the years ended December 31, 1996, 1997
and 1998, have been audited by Arthur Andersen LLP, independent certified
public accountants, as indicated in their report included elsewhere herein. The
Balance Sheet Data as of March 31, 1999 and the Statement of Income and Share
Data for each of the three-month periods ended March 31, 1998 and 1999 have
been derived from the unaudited financial statements of Aviation Sales. In the
opinion of management, the unaudited financial statements include all
adjustments (consisting only of normal and recurring adjustments) necessary for
a fair presentation of its financial position and the results of operations for
such periods. The selected financial data for the three months ended March 31,
1999 are not necessarily indicative of the results to be expected for the year
ending December 31, 1999, or any other future period. The financial data set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the audited and
unaudited historical financial statements of Aviation Sales and notes which are
contained elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,(1)
---------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ------------- ----------- ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Operating revenues ...................................... $ 60,289 $169,771 $231,734 $322,538 $500,816
Gross profit ............................................ 20,686 50,333 61,947 77,780 128,088
Income from operations .................................. 3,061 21,449 27,989 24,998 61,369
Interest and other (income) expense ..................... 3,044 7,262 4,950 12,755 21,147
Income before income taxes, equity (income) losses
of affiliate and extraordinary item .................... 17 14,187 23,039 12,243 40,222
Income tax expense ...................................... -- 914 1,617 7,260 15,486
Equity (income) losses of affiliate, net of
income taxes ........................................... 50 38 (255) 139 (1,356)
Extraordinary item, net of income taxes ................. -- -- 1,862 -- 599
-------- -------- -------- -------- --------
Net income (loss)(2) .................................... $ (33) $13,235 $19,815 $ 4,844 $25,493
======== ======== ======== ======== ========
SHARE DATA(3):
Diluted net income per share(2) ......................... $ -- $ 1.01 $ 1.19 $ 0.39 $ 2.01
======== ======== ======== ======== ========
Weighted average number of diluted shares ............... 8,699 9,161 10,769 12,450 12,696
======== ======== ======== ======== ========
OTHER DATA:
EBITDA(4) ............................................... $ 4,460 $24,011 $31,408 $30,231 $71,609
Net cash provided by (used in) operating activities ..... 14,093 12,680 (12,064) (53,738) (70,954)
Depreciation and amortization ........................... 1,399 2,563 3,419 5,233 10,240
Capital expenditures .................................... 1,002 2,566 5,549 8,133 16,618
Cash interest(5) ........................................ 3,677 7,621 4,795 7,673 20,233
Ratio of earnings to fixed charges(6) ................... 1.0x 2.6x 4.8x 2.4x 2.8x

<CAPTION>
THREE MONTHS
ENDED MARCH 31,(1)
-----------------------
1998 1999
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER
SHARE DATA)
<S> <C> <C>
STATEMENT OF INCOME DATA:
Operating revenues ...................................... $102,174 $177,958
Gross profit ............................................ 25,274 41,155
Income from operations .................................. 10,436 20,919
Interest and other (income) expense ..................... 3,948 8,689
Income before income taxes, equity (income) losses
of affiliate and extraordinary item .................... 6,488 12,230
Income tax expense ...................................... 2,486 4,770
Equity (income) losses of affiliate, net of
income taxes ........................................... (345) (457)
Extraordinary item, net of income taxes ................. 599 --
-------- --------
Net income (loss)(2) .................................... $ 3,748 $ 7,917
======== ========
SHARE DATA(3):
Diluted net income per share(2) ......................... $ 0.30 $ 0.61
======== ========
Weighted average number of diluted shares ............... 12,576 12,983
======== ========
OTHER DATA:
EBITDA(4) ............................................... $12,412 $24,009
Net cash provided by (used in) operating activities ..... (33,500) (42,701)
Depreciation and amortization ........................... 1,976 3,090
Capital expenditures .................................... 4,443 4,007
Cash interest(5) ........................................ 3,754 8,040
Ratio of earnings to fixed charges(6) ................... 2.5x 2.4x
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
-------------------------------------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......... $ 10,938 $ 7,635 $ 3,918 $ 6,237 $ 10,536 $ 1,303
Working capital .................... 69,610 68,039 88,222 89,988 169,742 175,875
Total assets ....................... 121,477 134,660 190,118 341,332 599,377 656,304
Total debt ......................... 69,152 62,042 42,360 165,802 366,176 403,231
Total stockholders' equity ......... 34,068 44,298 115,896 121,279 154,298 164,983
Total capitalization ............... 103,220 106,340 158,256 287,081 520,474 568,214
</TABLE>

13
<PAGE>

- ----------------
(1) Dixie Bearings, which was acquired in August 1996, Kratz-Wilde, which was
acquired in October 1997, Caribe, which was acquired in March 1998 and
TIMCO, which was acquired in September 1998, are accounted for under the
purchase method of accounting and accordingly, their results of operations
have been included in our historical results of operations from their
respective dates of acquisition.

AvEng, which was acquired in December 1996, Aerocell, which was acquired in
September 1997, Apex, which was acquired in December 1997, and Whitehall,
which was acquired in July 1998, are accounted for under the pooling of
interests method of accounting. Whitehall is included in our historical
financial results for all periods presented, AvEng is included for all
periods presented subsequent to 1995 and Aerocell and Apex are included for
all periods presented subsequent to 1996. Historical operating results and
financial position for periods presented prior to 1996 have not been
restated to give retroactive effect to the acquisition of AvEng and prior
to 1997 have not been restated to give retroactive effect to the
acquisitions of Aerocell and Apex, due to the immateriality of the restated
amounts.

(2) Periods presented prior to 1997 include pro forma adjustments to record
income taxes, as we conducted our business as a partnership prior to June
26, 1996.

(3) See Note 10 to the consolidated financial statements for information
regarding the computation of fully diluted net income per share.

(4) EBITDA represents income before income taxes plus net interest expense and
depreciation and amortization (excluding amortization of deferred
financing costs and original issue discount). While EBITDA should not be
construed as a substitute for income from operations or a better indicator
of liquidity than net cash used in operating activities, which are
determined in accordance with generally accepted accounting principles, it
is included herein to provide additional information with respect to the
ability of Aviation Sales to meet its future debt service, capital
expenditures and working capital requirements. In addition, Aviation Sales
believes that certain investors find EBITDA to be a useful tool for
measuring the ability of Aviation Sales to service its debt. EBITDA as
presented is not necessarily a measure of Aviation Sales' ability to fund
cash needs and may not be comparable to other similarly titled measures of
other companies.

(5) Cash interest is interest expense excluding amortization of deferred
financing costs and original issue discount.

(6) The ratio of earnings to fixed charges is determined by dividing the sum of
earnings before extraordinary items, interest expense, income tax expense,
and a portion of rent expense representative of the interest component by
the sum of interest expense and the portion of rent expense representative
of the interest component.

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Operating revenues consist primarily of sales of products and service
revenues, net of allowances for returns. Cost of sales and services consists
primarily of product costs, labor, freight charges, commissions to outside
sales representatives and an inventory provision for damaged and obsolete
products. Product costs consist of the acquisition cost of the products and any
costs associated with repairs, overhaul or certification.

Operating revenues and gross profit depend in large measure on the volume
and timing of sales orders received during the period and the mix of aircraft
spare parts contained in our inventory. Revenues and gross profit can be
impacted by the timing of bulk inventory purchases. In general, bulk inventory
purchases allow us to obtain large inventories of aircraft spare parts at a
lower cost than can ordinarily be obtained by purchasing such parts on an
individual basis.

Many factors affect our operating results, including:

A large portion of our operating expenses are relatively fixed. Since we
typically do not obtain long-term purchase orders or commitments from our
customers, we must anticipate the future volume of orders based upon the
historic purchasing patterns of our customers and upon our discussions with our
customers as to their future requirements. Cancellations, reductions or delays
in orders by a customer or group of customers could materially adversely affect
our business, financial condition and results of operations.

Aviation Sales believes its future growth will come from internal growth
combined with growth through additional acquisitions. Internal growth during
1996, 1997, 1998 and during the first quarter of 1999, was driven by:

/bullet/ increased customer penetration in existing markets;
/bullet/ improved capacity utilization of our maintenance and repair
facilities; and
/bullet/ continued expansion of the array of products and services which we
offer to customers.

15
<PAGE>

We also expect to continue to grow through acquisitions. Our acquisitions
in 1996, 1997 and 1998 were as follows:

<TABLE>
<CAPTION>
DATE OF ACQUISITION COMPANY ACQUIRED BUSINESS LINE
- --------------------- --------------------------- ----------------------------------------
<S> <C> <C>
September 1998 TIMCO Airframe heavy maintenance
July 1998 Whitehall Corporation Airframe heavy maintenance
March 1998 Caribe Aviation, Inc. Aircraft component maintenance and
interior refurbishment
December 1997 Apex Manufacturing, Inc. Specialty manufacture of aircraft parts
October 1997 Kratz-Wilde Machine Co. Specialty manufacture of aircraft parts
September 1997 Aerocell Structures, Inc. FAA-licensed repair station
December 1996 AvEng Trading Partners Redistribution of aircraft engine parts
August 1996 Dixie Bearings, Inc. Provider of aircraft bearings
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1999

The following tables set forth information relating to our operations for
the periods indicated:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
--------------------------------------------------
1998 1999
----------------------- ------------------------
$ % $ %
---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating Revenues:
Sales of products, net .................................. $ 80,281 78.6% $109,319 61.4%
Services and other ...................................... 21,893 21.4 68,639 38.6
-------- ----- -------- -----
102,174 100.0 177,958 100.0
Cost of sales and services .............................. 76,900 75.3 136,803 76.9
-------- ----- -------- -----
Gross profit ............................................ 25,274 24.7 41,155 23.1
Operating expenses ...................................... 14,838 14.5 20,236 11.4
-------- ----- -------- -----
Income from operations .................................. 10,436 10.2 20,919 11.8
Interest expense ........................................ 3,941 3.9 8,431 4.7
Other (income) expense .................................. 7 0.0 258 0.1
-------- ----- -------- -----
Income before income taxes, equity income of affiliate
and extraordinary item ................................. 6,488 6.4 12,230 6.9
Income tax expense ...................................... 2,486 2.4 4,770 2.7
-------- ----- -------- -----
Income before equity income of affiliate and
extraordinary item ..................................... 4,002 3.9 7,460 4.2
Equity income of affiliate, net of income taxes ......... (345) ( 0.3) (457) ( 0.3)
-------- ----- -------- -----
Income before extraordinary item ........................ 4,347 4.3 7,917 4.5
Extraordinary item, net of income taxes ................. 599 0.6 -- --
-------- ----- -------- -----
Net income .............................................. $ 3,748 3.7% $ 7,917 4.5%
======== ===== ======== =====
Historical diluted net income per share ................. $ 0.30 $ 0.61
======== ========
</TABLE>

Operating revenues for the three months ended March 31, 1999 increased
$75.8 million or 74.2% to $178.0 million, from $102.2 million for the same
period in 1998. Incremental revenues attributable to operations acquired in
1998 and accounted for under the purchase method of accounting were $50.8
million for the three months ended March 31, 1999. Product and service revenues
from period to period also increased due to increased customer penetration,
increased sales from investments in additional inventories and improved
capacity utilization of our maintenance and repair facilities.

Gross profit increased $15.9 million or 62.8% to $41.2 million for the
1999 first quarter, compared with $25.3 million for the 1998 first quarter.
Gross profit margin for the three months ended March 31,

16
<PAGE>

1999 decreased to 23.1% from 24.7% for the same period in 1998. Margins were
negatively impacted in 1999 by the sales mix of products sold during the
quarter. Gross profit margin during 1999 was also negatively impacted by the
increase in the proportion of total revenues derived from our maintenance and
repair operations, which generally operate at lower gross profit margins than
our redistribution operations.

Our operating expenses increased $5.4 million, to $20.2 million for the
three months ended March 31, 1999 compared with $14.8 million for the same
period in 1998. Operating expenses as a percentage of operating revenues were
11.4% for 1999, compared to 14.5% for 1998. The improvement in operating
leverage is primarily due to economies of scale and improved operating
efficiencies. Additionally, our maintenance and repair operations, which are an
increased proportion of our total revenues, operate at a lower operating
expense percentage than our redistribution operations. Further, 1998 first
quarter operating expenses of our airframe heavy maintenance facilities
acquired from Whitehall were higher than can be expected in the future, due to
inefficiencies in those operations which have since been corrected.

Interest expense for the three months ended March 31, 1999 increased by
$4.5 million from period to period, due to increased borrowings during 1998 and
during the first quarter of 1999 to finance the acquisitions of Caribe and
TIMCO, inventory acquisitions and equipment held for lease.

Other expense for the three months ended March 31, 1999 primarily consists
of the writedown of various miscellaneous assets.

As a result of the above factors, income before income taxes, equity
income of affiliate and extraordinary item for the three months ended March 31,
1999 was $12.2 million, compared to $6.5 million in 1998.

Equity income of affiliate, net of income taxes, increased from $345,000
to $457,000 in 1999, due to increased sales of aircraft noise reduction kits.

In connection with the repayment of the term and acquisition loan portions
of the credit facility utilizing the proceeds of our senior subordinated notes
due 2008, we wrote off, during the first quarter of 1998, $1.0 million of
deferred financing costs resulting in an extraordinary item, net of income
taxes, of $599,000.

Net income for the three months ended March 31, 1999 was $7.9 million
($0.61 per diluted share), compared to net income of $3.7 million ($0.30 per
diluted share) for the three months ended March 31, 1998. Weighted average
common and common equivalent shares outstanding (diluted) were 13.0 million
during the three months ended March 31, 1999, compared to 12.6 million for the
three months ended March 31, 1998.

17
<PAGE>

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998

The following tables set forth information relating to our operations for
the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1997 1998
-------------------------- ------------------------
$ % $ %
------------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating Revenues:
Sales of products, net ....................................... $ 244,340 75.8% $359,245 71.7%
Services and other ........................................... 78,198 24.2 141,571 28.3
--------- ----- -------- -----
322,538 100.0 500,816 100.0
Cost of sales and services ................................... 244,758 75.9 372,728 74.4
--------- ----- -------- -----
Gross profit ................................................. 77,780 24.1 128,088 25.6
Operating expenses ........................................... 52,782 16.3 66,719 13.3
--------- ----- -------- -----
Income from operations ....................................... 24,998 7.8 61,369 12.3
Interest expense ............................................. 8,059 2.5 21,343 4.3
Other (income) expense ....................................... 4,696 1.5 (196) 0.0
--------- ----- -------- -----
Income before income taxes, equity (income) losses of
affiliate and extraordinary item ............................ 12,243 3.8 40,222 8.0
Income tax expense ........................................... 7,260 2.3 15,486 3.1
--------- ----- -------- -----
Income before equity (income) losses of affiliate and
extraordinary item .......................................... 4,983 1.5 24,736 4.9
Equity (income) losses of affiliate, net of income taxes ..... 139 0.0 (1,356) ( 0.3)
--------- ----- -------- -----
Income before extraordinary item ............................. 4,844 1.5 26,092 5.2
Extraordinary item, net of income taxes ...................... -- 0.0 599 0.1
--------- ----- -------- -----
Net income ................................................... $ 4,844 1.5% $ 25,493 5.1%
========= ===== ======== =====
Historical diluted net income per share ...................... $ 0.39 $ 2.01
========= ========
</TABLE>

Operating revenues for the year ended December 31, 1998 increased $178.3
million or 55.3% to $500.8 million, from $322.5 million for 1997. Operating
revenues from companies acquired in 1997 and 1998 and accounted for under the
purchase method of accounting added $111.4 million to 1998 operating revenues.
Operating revenues also increased due to increased customer penetration,
increased sales from investments made in additional inventories and improved
capacity utilization of our airframe maintenance facilities. Service revenues
for 1997 were adversely impacted as a result of the unanticipated cancellation
of a U.S. Air Force C-130 maintenance contract awarded in April 1997 and
cancelled by the government in June 1997.

Gross profit for the year ended December 31, 1998 increased $50.3 million
or 64.7% to $128.1 million, compared with $77.8 million for the year ended
December 31, 1997. Gross profit margin for the year ended December 31, 1998
increased to 25.6% from 24.1% for the year ended December 31, 1997. The
cancellation of the C-130 contract unfavorably impacted margins in 1997. The
improved utilization of our heavy maintenance and repair facilities favorably
impacted our gross profit margin during 1998, which was partially offset by an
increase in the percentage of our total business derived from our maintenance
and repair operations that generally operate at lower gross profit margin
percentage than our redistribution operations.

Our operating expenses increased $13.9 million to $66.7 million for the
year ended December 31, 1998, compared with $52.8 million for 1997. Included in
the 1998 operating expenses were $1.8 million of merger expenses relating to
the Whitehall merger. Operating expenses as a percentage of operating revenues
for 1998 were 13.3% (13.0% after adjustment for Whitehall merger expenses),
compared to 16.3% for 1997. Reduction in operating expenses as a percentage of
operating revenues is due primarily to improved operating efficiencies and
economies of scale.

18
<PAGE>

Interest expense for the year ended December 31, 1998 increased due to
substantial borrowings utilized to finance the acquisitions of Kratz-Wilde,
Caribe Aviation and TIMCO, and to finance additional inventory acquisitions and
equipment on lease.

Other expense in 1997 includes a $4.5 million writedown of Whitehall's
investment in the preferred stock of the purchaser of its ocean systems
business and a $727,000 gain on the sale by Whitehall of its electronics
business.

As a result of the above factors, income before income taxes, equity
(income) losses of affiliate and extraordinary item for the year ended December
31, 1998 was $40.2 million, compared to $12.2 million in 1997.

Equity (income) losses of affiliate, net of income taxes, increased from a
loss of $140,000 to income of $1.4 million in 1998, due to increased sales of
aircraft noise reduction kits.

During the first quarter of 1998, we repaid all of our outstanding term
and revolving indebtedness with the proceeds from the sale of our senior
subordinated notes. In connection with the repayment of this debt, during the
first quarter of 1998, we wrote off $1.0 million of deferred financing costs.
This resulted in an extraordinary item, net of income taxes, of $599,000.

Net income for the year ended December 31, 1998 was $25.5 million ($2.01
per diluted share) compared to net income of $4.8 million ($0.39 per diluted
share) for 1997. Weighted average common and common equivalent shares
outstanding (diluted) were 12.7 million for the year ended December 31, 1998,
compared with 12.5 million for the year ended December 31, 1997.

19
<PAGE>

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997

The following tables set forth information relating to our operations for
the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1996 1997
------------------------ --------------------------
$ % $ %
----------- ---------- ------------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating Revenues:
Sales of products, net ....................................... $155,857 67.3% $ 244,340 75.8%
Services and other ........................................... 75,877 32.7 78,198 24.2
-------- ----- --------- -----
231,734 100.0 322,538 100.0
Cost of sales and services ................................... 169,787 73.3 244,758 75.9
-------- ----- --------- -----
Gross profit ................................................. 61,947 26.7 77,780 24.1
Operating expenses ........................................... 33,958 14.7 52,782 16.3
-------- ----- --------- -----
Income from operations ....................................... 27,989 12.0 24,998 7.8
Interest expense ............................................. 5,411 2.3 8,059 2.5
Other (income) expense ....................................... (461) ( 0.2) 4,696 1.5
-------- ----- --------- -----
Income before income taxes, equity (income) losses of
affiliate and extraordinary item ........................... 23,039 9.9 12,243 3.8
Income tax expense ........................................... 1,617 0.7 7,260 2.3
-------- ----- --------- -----
Income before equity (income) losses of affiliate and
extraordinary item ......................................... 21,422 9.2 4,983 1.5
Equity (income) losses of affiliate, net of income taxes ..... (255) ( 0.1) 139 0.0
-------- ----- --------- -----
Income before extraordinary item ............................. 21,677 9.4 4,844 1.5
Extraordinary item, net of income taxes ...................... 1,862 0.8 -- 0.0
-------- ----- --------- -----
Net income ................................................... $ 19,815 8.6% $ 4,844 1.5%
======== ===== ========= =====
Historical diluted net income per share ...................... $ 1.84 $ 0.39
======== =========
</TABLE>

Operating revenues for the year ended December 31, 1997 increased 39.2% to
$322.5 million, from $231.7 million for the year ended December 31, 1996. Of
this amount, approximately $44.8 million was derived from operations associated
with companies acquired during 1997. Operating revenues for 1997 were adversely
affected by service revenues lost due to a U.S. Air Force C-130 maintenance
contract, described above, that was awarded but subsequently canceled by the
government. Operating revenues increased due to the inclusion of a full year of
sales from our bearings distribution business, which was acquired in August
1996, increased revenues from leasing activities, increased customer
penetration, increased sales due to our investment in and availability of
increased amounts of inventory and the continued expansion of inventory
management services being offered to and utilized by our customers.

Gross profit increased 25.6%, from $61.9 million to $77.8 million, for the
years ended December 31, 1996 and 1997, respectively. Gross profit margin in
1997 decreased to 24.1% from 26.7% in 1996. The loss of the C-130 contract
contributed to this decrease. In addition to the fixed costs associated with
the idle hangar space, we incurred incremental costs associated with hiring and
training personnel in anticipation of providing services under the C-130
contract. A slight decline in margin on sales of products reflected a declining
contribution from bulk inventories of aircraft parts acquired prior to 1995 and
an increase in revenues from our lower margin bearings distribution business
acquired in August 1996.

Our operating expenses increased $18.8 million from $34.0 million for the
year ended December 31, 1996 to $52.8 million for the year ended December 31,
1997. Of this increase, approximately $9.8 million related to accounts
receivable, inventory and environmental reserves

20
<PAGE>

recorded by Whitehall. Of the remaining increase, approximately $4.9 million
was attributable to the operating expenses of companies acquired in 1997, with
the balance attributable to higher sales levels resulting in higher selling and
operating expenses. Excluding the Whitehall reserves, operating expenses as a
percentage of operating revenues decreased from 14.7% in 1996 to 13.3% in 1997.

Interest expense increased $2.6 million, or 48.9%, from 1996 to 1997,
primarily due to the increase in borrowings utilized to fund our continued
growth.

Other income and expense in 1997 included a $4.5 million writedown by
Whitehall of its investment in the preferred stock of the purchaser of its
ocean systems business. Whitehall wrote off this investment prior to our
acquisition of Whitehall. Other income and expense in 1996 included interest
income of $307,000.

As a result of the above factors, income before income taxes and
extraordinary item decreased $10.8 million, or 46.9%, from 1996 to 1997.

Equity (income) losses of affiliate, net of income taxes, decreased from
income of $255,000 in 1996 to a loss of $139,000 in 1997.

Prior to June 26, 1996, our operations were conducted by a partnership
and, therefore, our results of operations for the period January 1, 1996
through June 26, 1996 do not include a provision for income taxes, as the
income of the partnership passed directly to the partners. Additionally, income
taxes for 1996 were offset by one-time deferred tax benefits of approximately
$4.9 million associated with our organization. No such tax benefit was realized
in 1997.

In connection with our initial public offering, we repaid all outstanding
term and revolving indebtedness. As a result, during 1996 we wrote-off
approximately $3.1 million in deferred financing costs relating to that debt,
which resulted in an extraordinary item, net of taxes, of approximately $1.9
million.

Net income for the year ended December 31, 1997 was $4.8 million ($0.39
per diluted share) compared to net income of $19.8 million ($1.84 per diluted
share) for 1996. Weighted average common and common equivalent shares
outstanding (diluted) were 12.5 million for the year ended December 31, 1997,
compared with 10.8 million for the year ended December 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

Cash used in operations was $12.1 million in 1996, $53.7 million in 1997,
$71.0 million in 1998 and $42.7 million for the three months ended March 31,
1999. Cash used in investing activities was $22.2 million in 1996, $58.4
million in 1997, $114.3 million in 1998 and $6.3 million for the three months
ended March 31, 1999. We continue to invest in spare parts inventories in order
to support increased parts sales and continue to grow through strategic
acquisitions. We financed our operating and investing activities primarily with
our cash flow from financing activities, amounting to $30.6 million in 1996,
$114.4 million in 1997, $189.5 million in 1998 and $39.8 million for the three
months ended March 31, 1999.

CAPITAL EXPENDITURES

We incurred capital expenditures of approximately $5.5 million in 1996,
$8.1 million in 1997, $16.6 million in 1998 and $4.0 million for the three
months ended March 31, 1999, primarily to make enhancements to our management
information systems, telecommunications systems, to renovate one of our
maintenance facilities and for other capital equipment and improvements. We
anticipate that we will incur capital expenditures of approximately $27.4
million in 1999 for new equipment for our

21
<PAGE>

manufacturing operations, fixtures for our new corporate headquarters, new
management information systems and enhancements to the existing management
information systems, as well as ordinary course replacement of existing
equipment. Financing for such expenditures will be provided from operations and
from borrowings under our credit facility.

As part of our growth strategy, we intend to continue to grow through
internal expansion as well as acquisitions of other businesses. Financing for
such activities will be provided by earnings and by borrowings under our credit
facility and potential issuances of additional debt and/or equity securities.
We believe that available capital resources under our credit facility will be
sufficient to satisfy our anticipated working capital requirements over the
next twelve months.

ENVIRONMENTAL

Except as described below, we believe that our properties are in
compliance in all material respects with applicable environmental laws.
Unidentified environmental liabilities could arise, however, and could
materially affect our business, financial condition, or results of operations.
Federal, state and local laws and regulations relating to the protection of the
environment may require a current or previous owner or operator of real estate
to investigate and clean up hazardous or toxic substances or petroleum product
releases on a property. The owner or operator may have to pay a governmental
entity or third parties for property damage and for investigation and clean-up
costs incurred by these parties in connection with the contamination. These
laws typically impose clean-up responsibility and liability without regard to
whether the owner or operator knew of or caused the presence of the
contaminants. Even if more than one person may have been responsible for the
contamination, each person covered by applicable environmental laws may be held
responsible for all of the clean-up costs incurred. In addition, third parties
may sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.

Due to the presence of soil and groundwater contamination at our facility
in Lake City, Florida, we are taking remedial action pursuant to regulations of
the Environmental Protection Agency ("EPA") and Florida Department of
Environmental Protection ("FDEP") and a post-closure permit issued by FDEP. We
are in the process of renewing the FDEP post-closure permit and recently filed
a renewal application. We expect the renewal application to be approved. We do
not expect the FDEP, in connection with its review, to impose additional
remediation obligations on us.

We have substantially completed testing and evaluation for all known sites
on our property in Lake City, and we have commenced a remediation program. We
are conducting ongoing testing and gathering new information to continually
assess the impact and magnitude of the required remediation efforts on us.
Based upon the most recent cost estimates provided by environmental
consultants, we believe that the total remaining testing, remediation and
compliance costs for this facility will be approximately $2.4 million. This
amount is based on current testing, technology, environmental law and clean-up
experience to date. We will continue to monitor the remediation which will
extend into the future. To comply with the financial assurances required by the
FDEP, we have issued a $1.7 million standby letter of credit in favor of the
FDEP. We also have provided to the FDEP evidence of self-insurance in the
amount of $8.0 million for potential third-party liability.

Additionally, there are other areas adjacent to our facility in Lake City
which we do not own that could also require remediation. While we do not
believe that we are responsible for these areas, it may be asserted that TIMCO
and other parties are jointly and severally liable and are responsible for the
remediation of those properties. As explained above, under applicable
environmental laws it is possible that we could be held responsible for all or
part of the damages or clean-up costs associated with the areas adjacent to the
Lake City facility. We have no estimate of any such potential costs at this
time.

22
<PAGE>

also required to remedy all recognized environmental conditions identified in
the assessment to bring the facility into compliance with all applicable
federal, state, and local environmental laws. The buyer of this business,
subject to the terms and conditions set forth in the agreement, recently
exercised its option to require Whitehall to repurchase this property for
$300,000.

We accrued $3.4 million towards potential obligations to remediate the
environmental matters described above. $2.9 million of that reserve presently
remains.

Future information and developments will require us to continually
reassess the expected impact of the environmental matters discussed above.
Other than as described above, we are not aware of any environmental condition
which we believe would have a material adverse effect on our financial
condition or results of operations. Nevertheless, it is possible that there are
environmental liabilities of which we are unaware. Moreover, no assurances can
be given that (i) future laws, ordinances or regulations will not impose any
material environmental liability or (ii) the current environmental condition of
our properties have not been or will not be affected by tenants and occupants
of our properties, by the condition of properties in the vicinity of our
properties or by third parties unrelated to us. As a result, actual costs
incurred in future periods may vary from the estimate, given the inherent
uncertainties in evaluating environmental exposures. These uncertainties
include the extent of required remediation based on testing and evaluation not
yet completed and the varying costs and effectiveness of remediation methods.

CREDIT FACILITY

We have a credit facility with a syndicate of financial institutions. Our
credit facility consists of a revolving loan and letter of credit facility of
$300.0 million, up to $30.0 million of which may be outstanding letters of
credit. Borrowings under the credit facility are secured by a lien on
substantially all of our assets, including substantially all of our receivables
and inventory. Interest under the credit facility is, at our option, (a) prime
plus a margin, or (b) LIBOR plus a margin, where the respective margin
determination is made upon our financial performance over a 12 month period
(ranging from 0.25% to 1.25% in the event prime is utilized, or 1.375% to 2.75%
in the event LIBOR is utilized). At June 1, 1999, the margin was 0.75% for prime
rate loans and 2.25% for LIBOR rate loans.

Our credit facility contains financial covenants regarding our financial
performance and other covenants, including limitations on the amount of our
annual capital expenditures and the ability to incur additional debt, and
provides for the suspension of borrowing and repayment of all debt in the event
of a material adverse change in our business or a change in control. In
addition, the credit facility requires mandatory repayments from the proceeds
of a sale of our assets or an issuance of our equity or debt securities or as a
result of insufficient collateral to meet the borrowing base requirements
thereunder. At December 31, 1998, we were not in compliance with one of our
non-monetary financial covenants and we have obtained a waiver from the lender
relating to that covenant. At June 1, 1999, $10.4 million was available for
borrowing under the credit facility.

After giving effect to our sale of common stock offered by this prospectus
and the application of the estimated net proceeds from this sale, as of June 1,
1999, we would have had $78.1 million available for borrowing under the credit
facility. We expect that our cash flow from operations, along with borrowings
available under our credit facility, will satisfy our anticipated working
capital requirements over the next twelve months.

SENIOR SUBORDINATED NOTES

In February 1998 we sold $165.0 million of senior subordinated notes due
in 2008 with an interest rate of 8.125% at a price of 99.395%. We used the
proceeds of the sale to repay all amounts outstanding under our then
outstanding term, acquisition and revolving credit facilities and to fund the
cash requirements related to the acquisition of Caribe Aviation. The funds
repaid included amounts borrowed during 1997 to repay indebtedness of Aerocell
and Apex in connection with those acquisitions and borrowings incurred to fund
the purchase price in connection with the acquisition of Kratz-Wilde.

23
<PAGE>

The senior subordinated notes mature on February 15, 2008. Interest is
payable on February 15 and August 15 of each year, commencing August 15, 1998.
The senior subordinated notes are general unsecured obligations of ours,
subordinated in right of payment to all of our existing and future senior debt,
including indebtedness outstanding under our credit facility and under
facilities which may replace the credit facility in the future. In addition,
the senior subordinated notes are effectively subordinated to all secured
obligations, including the credit facility.

The indenture governing the senior subordinated notes permits us and our
subsidiaries to incur substantial additional indebtedness, including additional
senior debt. Under the indenture, we may borrow unlimited additional amounts so
long as after incurring such debt we meet a fixed charge coverage ratio for the
most recent four fiscal quarters of 2.0 to 1 until February 15, 2000 and 2.25
to 1 thereafter. At March 31, 1999, our fixed charge coverage ratio for the
last four fiscal quarters was 3.2 to 1. Additionally, the indenture allows us
to borrow and have outstanding additional amounts of indebtedness (even if we
do not meet the required fixed charge coverage ratios), up to enumerated
limits. The senior subordinated notes are also effectively subordinated in
right of payment to all existing and future liabilities of any of our
subsidiaries which do not guarantee the senior subordinated notes.

The senior subordinated notes are fully and unconditionally guaranteed, on
a senior subordinated basis, by substantially all of our existing subsidiaries
and each subsidiary that we will organize in the future, unless the subsidiary
is designated as an unrestricted subsidiary. Subsidiary guarantees are joint
and several, full and unconditional, general unsecured obligations of the
subsidiary guarantors. Subsidiary guarantees are subordinated in right of
payment to all existing and future senior debt of subsidiary guarantors,
including the credit facility, and are also effectively subordinated to all
secured obligations of subsidiary guarantors to the extent of the assets
securing their obligations, including the credit facility. Furthermore, the
indenture permits subsidiary guarantors to incur additional indebtedness,
including senior debt, subject to certain limitations.

The senior subordinated notes are redeemable, at our option, in whole or
in part, at any time after February 15, 2003, at the following redemption
prices, plus accrued and unpaid interest and liquidated damages, if any, to the
redemption date:

<TABLE>
<S> <C>
2003 ........................ 104.063%
2004 ........................ 102.708%
2005 ........................ 101.354%
2006 and thereafter ......... 100.000%
</TABLE>

In addition, on or prior to February 15, 2001, we may redeem up to 35% of
the aggregate principal amount of the senior subordinated notes at a redemption
price of 108.125% of the principal amount of the notes, plus accrued and unpaid
interest to the redemption date with the net proceeds of a public offering of
our common stock; PROVIDED, that at least 65% of the aggregate principal amount
of the senior subordinated notes originally issued remains outstanding
immediately after this redemption.

Upon a change in control, we will be required to make an offer to
repurchase each holder's senior subordinated notes at a price equal to 101% of
the principal amount thereof, plus interest.

The indenture contains covenants that, among other things, limit our
ability to incur additional indebtedness and issue preferred stock, pay
dividends or make other distributions, make investments, dispose of assets,
issue capital stock of subsidiaries, create liens securing indebtedness, enter
into transactions with affiliates, sell assets or enter into mergers and
consolidations or sell all or substantially all of our assets.

OTHER NOTES

We have entered into several term loan agreements to finance equipment and
parts which we lease to customers. These term loans, in the original aggregate
principal amount of $17.7 million, bear

24
<PAGE>

interest ranging from 7.40% to 8.21% and are payable monthly through August
2003. These term loans contain financial and other covenants and mandatory
prepayment events. At March 31, 1999, we were in compliance with all covenants
of these term loans.

In connection with our acquisition of Kratz-Wilde, we delivered to the
sellers a non-interest bearing promissory note in the original principal amount
of $2.2 million. As of March 31, 1999, we were in compliance with the terms of
this promissory note.

In connection with our acquisition of Caribe Aviation, on March 6, 1998 we
delivered to the sellers a promissory note in the original principal amount of
$5.0 million. The note is payable with interest at the rate of 8% per annum,
and as of March 31, 1999, $2.5 million in principal was outstanding.

LEASE FOR NEW FACILITY

In 1998, we decided to move to a new corporate headquarters and warehouse
facility. On December 17, 1998, we entered into an operating lease for our new
corporate headquarters and warehouse facility with First Security Bank,
National Association, as trustee of a newly created trust, as lessor. The lease
has an initial term of five years and is a triple net lease. The lease contains
financial covenants regarding our financial performance and other affirmative
and negative covenants. Substantially all of our subsidiaries have guaranteed
our obligations under the lease. Additionally, we have an option to acquire the
new facility at the end of the lease. If we do not purchase the new facility at
the end of the lease, we will be obligated to pay a fee.

The lessor has financed the development of the new facility through a
$35.5 million loan from a syndicate of financial institutions. We are obligated
to develop the new facility on behalf of the lessor and are responsible for the
timely completion within an established construction budget. We and
substantially all of our subsidiaries have guaranteed the repayment of $31.2
million of the lessor's obligations under the agreements. The lessor's
obligations under these agreements are secured by a lien on the real property
and on the new facility. Further, we have posted an irrevocable letter of
credit in favor of the lessor in the amount of approximately $8.0 million to
secure both our obligations under the lease and the lessor's obligations under
these agreements.

IMPACT OF THE YEAR 2000

Since the fourth quarter of 1997, we have been implementing new management
information systems ("MIS") in order to both allow our computer systems to meet
our needs into the foreseeable future and to mitigate the Year 2000 issues
inherent in our existing systems.

The Year 2000 issue is the potential for system and processing failures of
date-related data and the result of computer-controlled systems using two
digits rather than four to define the applicable year. We may be affected by
Year 2000 issues in our own non-compliant information technology ("IT") systems
or non-IT systems, as well as by Year 2000 issues related to non-compliant IT
and non-IT systems operated by third parties.

STATE OF READINESS

We have substantially completed an assessment of our internal and external
(third-party) IT systems and non-IT systems. At this point in our assessment,
which we believe is approximately 90% complete (in the aggregate), other than
as described in this prospectus, we are not currently aware of any Year 2000
problems relating to our systems or the systems operated by third parties which
would materially adversely affect our business, results of operations or
financial condition, without taking into account our efforts to avoid such
problems, although we cannot assure you of this fact. In addition, we believe
that we are approximately 50% complete (in the aggregate) with our Year 2000
remediation and 30% complete (in the aggregate) with our Year 2000 validation.

25
<PAGE>

Our IT systems consist of software licensed from third parties and
hardware purchased or leased from third parties. We are currently implementing
new systems, which are primarily designed to service our redistribution
operations and manufacturing operations, including new software and hardware,
which we believe, once fully implemented, will be Year 2000 compliant and will
meet the requirements of these operations into the foreseeable future.

We have determined that the MIS system which we currently use in our
redistribution operations is not Year 2000 compliant. In order to give us the
time to implement our new system for these operations in an orderly fashion, we
have engaged a vendor to remediate our existing system to make it Year 2000
compliant. We believe that the remediation to our existing system will be
completed by the end of August 1999 at an estimated cost of $1.0 million, and
that we can validate the remediated system, as modified, for Year 2000
compliance by the beginning of the fourth quarter of 1999. While we have been
informed by our vendor that our existing system can be brought into Year 2000
compliance on a timely basis, there can be no assurance of this fact.

We have substantially remediated the MIS systems used by our manufacturing
operations for Year 2000 compliance. We have also substantially remediated the
MIS systems used by our maintenance and repair operations for Year 2000
compliance.

We have substantially completed an assessment of the Year 2000 issues of
our non-IT systems which we have identified as containing embedded chip
systems. We are not currently aware of any Year 2000 problems relating to these
systems which would materially adversely affect our business, results of
operations, or financial condition, without taking into account our efforts to
avoid these problems.

We are reviewing the efforts of our vendors and customers to become Year
2000 compliant. Letters and questionnaires have been or are in the process of
being sent to all critical entities with which we do business to assess their
Year 2000 readiness. To date, we have received responses from approximately 40%
of these third parties, and approximately 60% of the companies that have
responded have assured us that they have already addressed, or that they will
address on a timely basis, all of their known significant Year 2000 issues.
Although this review is continuing, we are not currently aware of any vendor or
customer circumstances that may materially adversely impact us. We will seek
alternative suppliers if circumstances warrant. We cannot assure you that Year
2000 compliance plans of our vendors and customers will be completed on a
timely manner.

A substantial majority of the aircraft spare parts in our inventory do not
have date-sensitive technologies and, as a result, do not pose Year 2000
compliance issues. For the small part of our aircraft spare parts inventory
that may pose Year 2000 compliance issues, we have contacted our vendors to
assess the Year 2000 compliance of those parts. We believe that issues relating
to the Year 2000 compliance of aircraft spare parts in our inventory, if any,
will ultimately be the responsibility of the manufacturers of such parts,
although we cannot assure you of this fact. Further, it is unclear whether our
product liability insurance would ultimately cover a claim based upon a Year
2000 problem in a part sold by us.

COSTS

We believe that the cost of the new MIS system (1) for our redistribution
operations will be approximately $13.5 million, of which approximately $4.8
million has been spent to date and approximately $8.7 million of which we
believe will be expended during 1999 and (2) for our manufacturing operations
will be approximately $2.1 million of which approximately $1.0 million has been
spent to date and approximately $1.1 million will be expended during 1999. The
costs incurred to date in connection with the remediation of our maintenance
and repair operations for Year 2000 compliance have not been material. We are
funding the costs of our new systems from our existing credit facility. The
$5.8 million spent to date has related substantially to the cost of the new
systems and not to bringing our existing MIS systems into Year 2000 compliance.
We intended to replace these

26
<PAGE>

systems to meet our future needs and to incur the costs regardless of the Year
2000 compliance issue. However, the replacement of these systems have assisted
our Year 2000 compliance efforts. Such cost estimates include both hardware and
software costs, as well as the anticipated costs of the use of consultant
services, but do not include our internal costs associated with such efforts,
which are not separately tracked for Year 2000 compliance efforts. Such
internal costs principally consist of the payroll costs for our employees
working on such compliance efforts.

We have decided to update the MIS system currently used in our
redistribution operations to make it Year 2000 compliant, so that such system
remains available for use in our operations until the new system for these
operations becomes fully operational. We expect the cost of such update to be
approximately $1.0 million. We can not recover this cost in connection with the
development and implementation of our new system.

RISKS RELATING TO OUR FAILURE TO BECOME YEAR 2000 COMPLIANT

Our failure to bring our existing systems into Year 2000 compliance by the
end of 1999 would likely materially adversely affect us, in that it would make
it very difficult for us to operate our business in the ordinary course and
would likely cause us to lose revenues, have increased operating costs and have
business interruptions of a material nature (which would likely not be covered
by our existing business interruption insurance) until we fixed our systems. In
addition, we can not assure you that the Year 2000 issues of other entities
will not materially adversely impact our systems or results of operations.

CONTINGENCY PLANS

We are currently considering what our contingency plans will be in the
event that we are not able to bring our IT and non-IT systems into Year 2000
compliance by the end of 1999. We plan to complete such contingency plans by
the end of July 1999.

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BUSINESS

Aviation Sales is a leading provider of aviation inventory and
maintenance, repair and overhaul services. We believe that we are one of the
largest redistributors of aircraft spare parts in the world and the largest
independent provider of heavy maintenance services for aircraft in North
America. We sell aircraft spare parts and provide inventory management services
and aircraft maintenance, repair and overhaul services to commercial passenger
airlines, air cargo carriers, maintenance and repair facilities and other
redistributors throughout the world. We sell airframe and engine components for
commercial airplanes, including Boeing, McDonnell Douglas, Lockheed and Airbus
aircraft and jet engines manufactured by Pratt & Whitney, General Electric and
Rolls Royce.

We offer maintenance and repair services through our six FAA-licensed
repair stations. These services include maintenance, repair and modification
services for aircraft, and repair and overhaul services on a wide range of
aircraft components. We provide inventory management services including
purchasing services, repair management, warehouse management, aircraft
disassembly services and consignment and leasing of inventories of aircraft
parts and engines. We also manufacture various aircraft parts for sale to
original equipment manufacturers, including precision engine parts.

Our strategy is to be the vendor of choice to our customers, providing
total inventory management solutions and total aircraft maintenance solutions
to meet our customers' spare parts and maintenance, repair and overhaul
requirements. We believe our future growth will come from internal growth
combined with growth through additional acquisitions of companies which add to
or expand our existing product and service offerings. We expect to achieve
internal growth through:

The services we offer allow our customers to reduce their costs by
outsourcing some or all of their inventory management and maintenance, repair
and overhaul functions and to take advantage of opportunities to maximize the
value of their spare parts inventories. As a leading redistributor of aircraft
spare parts, we are able to better service our maintenance and repair
customers, due to the timely availability of our extensive parts inventory.
Similarly, as a leading provider of maintenance and repair services, we are
able to market our aircraft spare parts to our airline customers.

INDUSTRY

We believe that the annual worldwide market for aircraft spare parts is
approximately $11.0 billion, of which approximately $1.3 billion reflects
annual sales of aircraft spare parts in the redistribution market. We believe
that the total worldwide market for maintenance and repair services is
approximately $27.0 billion annually and that $5.3 billion of that amount
represents maintenance, repair and modification services being provided in
North America. We believe airlines perform approximately 75% of the North
American services, outsourcing the balance to independent providers like
Aviation Sales.

Due to the trends currently affecting our industry, we believe that the
demand for maintenance and repair services from large, fully integrated
independent service providers such as Aviation Sales will continue to increase
in the future.

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<PAGE>

We believe that the trends currently affecting our industry are:

GROWTH IN MARKET FOR AIRCRAFT SPARE PARTS AND MAINTENANCE AND REPAIR
SERVICES.

The Boeing 1998 Current Market Outlook report projects that:

/bullet/ the worldwide fleet of commercial airplanes will more than double
from 1997 to 2017;
/bullet/ the number of cargo jet aircraft will increase significantly between
1997 and 2017; and
/bullet/ the aircraft fleet will continue to age.

We believe that a combination of these factors will increase the demand
for aircraft spare parts from the redistribution market and for maintenance and
repair services.

INCREASED OUTSOURCING OF INVENTORY MANAGEMENT AND MAINTENANCE AND REPAIR
REQUIREMENTS

Airlines incur substantial expenditures in connection with fuel, labor and
aircraft ownership. Airlines have come under increasing pressure during the
last decade to reduce the costs associated with providing air transportation
services. While several of the expenditures required to operate an airline are
beyond the direct control of airline operators, such as the price of fuel and
labor costs, we believe that obtaining replacement parts from the
redistribution market and outsourcing inventory management and maintenance and
repair functions are areas in which airlines can reduce their operating costs.
Outsourcing of inventory management and maintenance and repair functions by
airlines allows an operator such as Aviation Sales to achieve economies of
scale unavailable to individual airlines and to handle these functions less
expensively and more efficiently on its customers' behalf.

REDUCTION IN NUMBER OF APPROVED VENDORS

In order to reduce costs and streamline decisions, airlines have been
reducing the number of their approved vendors. During the last few years,
several major airlines have reduced their supplier lists from as many as 50 to
a core group of five to ten suppliers. As a result of reductions in the
supplier base by airlines, there has been and we believe there will continue to
be a consolidation in the redistribution and maintenance and repair market.

CONSIGNMENT

Some of our customers adjust inventory levels periodically by disposing of
excess aircraft parts. Traditionally, larger airlines have used internal
purchasing agents to manage these dispositions. We believe that major airlines
and other owners of aircraft spare parts, in order to concentrate on their core
businesses and to more effectively redistribute their excess parts inventories,
are increasingly entering into long-term consignment agreements with
redistributors. Consigning inventories to a redistributor like Aviation Sales
allows customers to distribute their aircraft spare parts to a larger number of
prospective inventory buyers, and allows the customers to maximize the value of
their inventory. Consignment also enables us to offer for sale a significant
parts inventory at minimal capital cost to us. Consignment agreements are
generally entered into on a long-term basis for a large group of parts or
entire airplanes which are disassembled for sale of the individual parts. The
Boeing 1998 Current Market Outlook report notes that the operators and owners
will remove approximately 3,730 aircraft from active commercial service between
1997 and 2017. Many of these aircraft will be disassembled in order to sell
their parts.

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<PAGE>

COMPETITIVE STRENGTHS

We believe that our strong competitive position is based on our diverse
product and service offerings, sophisticated inventory management information
systems and a consistent record of meeting rigorous customer requirements.

DIVERSIFIED PRODUCTS AND SERVICES

We believe that the breadth of our product offerings and services,
including a wide range of inventory management, maintenance and repair services
and specialized manufacturing, allows us to be a vendor of choice to our
customers in a highly fragmented industry. Aviation Sales has over 1,000
customers, including commercial passenger airlines, air cargo carriers and
maintenance and repair facilities.

LARGE INVENTORY BASE

We believe that we have one of the largest inventories of aircraft spare
parts in the world, with over 555,000 line items currently in stock. Our
inventory supports a wide range of aircraft in the worldwide commercial fleet
including Airbus A300, A31x, A32x and A340 series aircraft, Boeing 707, 727,
737, 747, 757, 767 and 777 series aircraft, McDonnell Douglas DC-8, DC-9,
DC-10, MD-8x and MD-11 series aircraft, and the Lockheed L-1011 aircraft. In
addition, we have parts available for a broad range of General Electric, Pratt
& Whitney and Rolls Royce engines.

PROPRIETARY MANAGEMENT INFORMATION SYSTEMS

Our proprietary management information systems are an integral component
of our position as a leader in our industry. Documentation and traceability of
aircraft parts have become key factors in determining which companies will be
able to effectively compete in the redistribution business because industry,
regulatory and public awareness have focused on safety. The requirement to be
able to provide documentation about each part sold has also made it more
expensive for new entrants to become involved in the redistribution market, and
therefore acts as a barrier to new entrants into our market. Our MIS systems
collect and report data regarding inventory turnover, documentation, pricing,
market availability and customer demographic information on more than 3.7
million line items. Access to such information enables us to be aware of and to
capitalize on the changing trends in the marketplace. We utilize electronic
data scanning and document image storage technology for rapid and accurate
retrieval of inventory traceability documents. We continue to invest in
technology in order to allow us to maintain our strength in this area.

EMPHASIS ON QUALITY

Our information system allows us to provide documentation that enables the
aircraft parts we distribute and the maintenance we perform on them to be
traced. As industry, regulatory and public awareness have focused on safety,
our ability to track this information has become important to customers.

All of our maintenance and repair facilities are licensed by the FAA. We
emphasize quality and on-time delivery to customers at our maintenance and
repair facilities.

WORLDWIDE MARKETING PRESENCE

Our international presence allows us to meet the demands of our global
customer base and to supply parts and services on a timely basis. We distribute
aircraft spare parts in more than 100 countries and utilize sales
representatives in 23 countries. During the years ended December 31, 1996, 1997
and 1998, 29%, 24% and 18% of our revenues were derived from sales to
international customers and 71%, 76% and 82% were derived from sales to
domestic customers.

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<PAGE>

SIGNIFICANT FINANCIAL AND OTHER RESOURCES

Our financial position allows us to take advantage of opportunities which
arise in the market from time to time to expand our products and services, make
selected acquisitions and evaluate bulk purchases of inventory. Our market
presence, industry experience, sophisticated management information systems and
capital strength enable us to quickly analyze and complete acquisitions of
inventory, giving us a competitive advantage in the market.

AIRCRAFT SPARE PARTS

AIRCRAFT SPARE PARTS CATEGORIES

Aircraft spare parts can be categorized by their ongoing ability to be
repaired and returned to service. The general categories are as follows:

/bullet/ rotable;
/bullet/ repairable; and
/bullet/ expendable.

A rotable is a part which is removed periodically as dictated by an
operator's maintenance procedures or on an as needed basis and is typically
repaired or overhauled and re-used an indefinite number of times. An important
subset of rotables is life limited parts. A life limited rotable has a
designated number of allowable flight hours and/or cycles (one take-off and
landing generally constitutes one cycle) after which it is rendered unusable. A
repairable is similar to a rotable except that it can only be repaired a
limited number of times before it must be discarded. An expendable is generally
a part which is used and not thereafter repaired for further use. Our inventory
consists in large part of rotable and repairable parts which are regularly
required by our customers. We also maintain an inventory of expendable parts.

AIRCRAFT SPARE PARTS CONDITIONS

Aircraft spare parts conditions are classified within the industry as:

/bullet/ factory new;
/bullet/ new surplus;
/bullet/ overhauled;
/bullet/ serviceable; and
/bullet/ as removed.

A factory new or new surplus part is one that has never been installed or
used. Factory new parts are purchased from manufacturers or their authorized
distributors. New surplus parts are purchased from excess stock of airlines,
repair facilities or other redistributors. An overhauled part has been
completely disassembled, inspected, repaired, reassembled and tested by a
licensed repair facility. An aircraft spare part is classified serviceable if
(1) it is repaired by a licensed repair facility rather than completely
disassembled as in an overhaul or (2) if it is removed by the operator from an
aircraft or engine while operating under an approved maintenance program and is
functional and meets any manufacturer or time and cycle restrictions applicable
to the part. A factory new, new surplus, overhauled or serviceable part
designation indicates that the part is eligible for immediate use on an
aircraft. A part in an as removed condition requires functional testing, repair
or overhaul by a licensed facility prior to being returned to service in an
aircraft.

OUR INVENTORY

Our inventory consists principally of new, overhauled, serviceable and
repairable aircraft parts that we purchase from many sources. Before we may
install parts in an aircraft, they must meet

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<PAGE>

enumerated standards of condition established by the FAA and/or the equivalent
regulatory agencies in other countries. Specific regulations vary from country
to country, although regulatory requirements in other countries generally
coincide with FAA requirements. Parts must also be traceable to sources deemed
acceptable by these agencies.

OPERATIONS

Our core business is the buying and selling of aircraft spare parts and
the providing of maintenance, repair and overhaul of aircraft and aircraft
components and the provision of inventory management services. Additionally, we
manufacture aircraft parts for sale to original equipment manufacturers.

SALES OF AIRCRAFT SPARE PARTS

Our daily operations encompass inventory sales, brokering and exchanging
aircraft spare parts. We advertise our available inventories held for sale or
exchange on the Inventory Locator Service and the Airline Inventory
Redistribution System electronic databases. Buyers of aircraft spare parts can
access these databases and determine which companies have the desired inventory
available. We estimate that 70% of our daily sales activity results from an
electronic database inquiry. All major airlines and repair agencies subscribe
to one or both of these databases and, accordingly, we maintain continual
on-line direct access with them. We also maintain direct electronic data
interchanges with significant customers.

We currently have over 555,000 line items in stock with market
availability, pricing and historical data available on more than 3.7 million
line items. We sell parts from our inventory. Additionally, we will purchase
parts on behalf of our customers against specific orders. We also offer a
customer exchange program for rotables. In an exchange transaction, we exchange
a new surplus, overhauled or serviceable component taken from stock with a
customer's as-removed unit which has failed. We receive an exchange fee for
completing the transaction, plus reimbursement from the customer for the cost
to overhaul or repair the as-removed unit. If the as-removed part cannot be
repaired, it is returned to the customer and the exchange transaction is
converted to an outright sale at a sales price agreed upon at the time the
exchange transaction was negotiated.

INVENTORY MANAGEMENT SERVICES

OUTSOURCING

We are meeting the outsourcing requirements of our customers by providing
a number of inventory management services. These services assist airlines in
streamlining their inventory management operations while utilizing their
capital more efficiently and reducing their costs. Through the offering of
various services, we believe we can provide an inventory management program
geared to a customer's particular requirements. These services include
consignment, repair management, aircraft disassembly, warehouse management,
purchasing services and leasing.

CONSIGNMENT AND OTHER SERVICES

By consigning inventories to Aviation Sales, customers are able to
distribute their aircraft spare parts to a larger number of prospective
inventory buyers, allowing the customers to maximize the value of their
inventory. Consignment also enables us to offer for sale significant parts
inventory at minimal capital cost to us. We also provide repair management
services to several of our customers, whereby we receive a fee for managing a
customer's spare parts repair requirements. We provide "teardown" services at
our Ardmore, Oklahoma facility where we tear down aircraft which we purchase to
disassemble and sell the parts in our redistribution business. We also
disassemble aircraft in connection with consignment arrangements and to return
disassembled aircraft spare parts directly to a customer. We provide warehouse
management services which allow a customer to maintain an

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<PAGE>

inventory at our warehouse facility to avoid the costs associated with the
operation of its own inventory warehouse facility. We also will manage a
customer's inventory at the customer's own facility.

LEASING

We provide long-term leasing of inventories of aircraft spare parts and
aircraft engines to airline customers. An increasing number of smaller and
start-up airlines have chosen to lease aircraft spare parts in order to
preserve capital while maintaining adequate spare parts support. We believe
that we have a competitive advantage in aircraft engines and aircraft spare
parts leasing due to our ability to maximize the residual value of the parts
after termination of the lease through sales of the parts in the ordinary
course of our business. As of December 31, 1997 and 1998 and as of March 31,
1999, we had $22.8 million, $28.4 million and $22.7 million of inventories on
long-term lease.

MAINTENANCE AND REPAIR SERVICES

In 1997, we made a strategic decision to expand our service offerings to
include the maintenance, repair and overhaul of aircraft and aircraft
components. Our recent acquisitions allow us to provide maintenance and repair
services for commercial, military and freighter aircraft, including the
maintenance and repair of airframe components, hydraulic, pneumatic, electrical
and electromagnetic aircraft components, and interior cabin components.

REPAIR AND OVERHAUL SERVICES

We provide repair and overhaul services at our FAA-licensed repair
stations. Aerocell specializes in the maintenance, repair and overhaul of
airframe components, including flight controls, doors, fairing panels, nacelle
systems and exhaust systems. Caribe Aviation specializes in the maintenance,
repair and overhaul of hydraulic, pneumatic, electrical and electromagnetic
aircraft components, as well as avionics and instruments on Airbus and Boeing
aircraft. Aircraft Interior Design refurbishes aircraft interior components,
including passenger and crew seats.

AIRCRAFT HEAVY MAINTENANCE

We perform maintenance, repair and modification services of aircraft at
TIMCO's three repair stations. These services principally consist of scheduled
"C" and "D" level maintenance checks and the modification of passenger
airplanes to freighter configurations. "C" and "D" checks each involve a
different degree of inspection, and the services performed at each level vary
depending upon the individual aircraft operator's FAA-certified maintenance
program. "C" and "D" level checks are comprehensive checks and usually take
several weeks to complete, depending upon the scope of the work to be
performed.

The "C" level check is an intermediate level service inspection that
typically includes a cleaning of the aircraft's exterior, testing and
lubrication of its operational systems, filter servicing and limited cleaning
and servicing of the interior. Trained mechanics visually inspect the external
structure and internal structure through access panels, repair all defects and
remove all corrosion found. The "D" level check includes all of the work
accomplished in the "C" level check but places a more detailed emphasis on the
integrity of the systems and structural functions. In the "D" level check, the
aircraft is disassembled to the point where the entire structure can be
inspected and evaluated and a more thorough review of the operational systems
of the aircraft can be made. Once we have completed the evaluation and repairs,
we reassemble the aircraft and its systems to the detailed tolerances demanded
in each system's specifications. Depending upon the type of aircraft and the
FAA-certified maintenance program being followed, intervals between "C" level
checks can range from 1,000 to 5,000 flight hours and intervals between "D"
level checks can range from 10,000 to 25,000 flight hours. Structural
inspections performed during "C" level and "D" level checks provide personnel
with detailed information about the condition of the aircraft and the need to
perform additional work or

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<PAGE>

repairs not provided for in the original work scope. Project coordinators and
customer support personnel work closely with the aircraft's customer service
representative in evaluating the scope of any additional work required and in
the preparation of a detailed cost estimate for the labor and materials
required to complete the job.

Each aircraft certified by the FAA is constructed under a "Type
Certificate." Anything which is done subsequently to overhaul or modify the
aircraft from its original specifications requires the review, flight-testing
and approval of the FAA. This is evidenced by the issuance of a Supplemental
Type Certificate for that particular change. Typical modification services
include refurbishing and reconfiguring passenger seating, installing passenger
amenities such as telephones and video screens and converting traditional
passenger cabins into amenity filled "VIP" quarters. We also convert passenger
aircraft to freighter configuration.

When we convert a passenger plane to freighter configuration we:

/bullet/ completely strip the interior;
/bullet/ strengthen the load-bearing capacity of the flooring;
/bullet/ install the bulkhead or cargo net;
/bullet/ cut into the fuselage for the installation of a cargo door;
/bullet/ reinforce the surrounding structures for the new door;
/bullet/ replace windows with metal plugs; and
/bullet/ fabricate and install a cargo door or cargo doors.

We may also need to line the aircraft interior to protect cabin walls from
pallet damage and we may have to modify the air conditioning system. Conversion
contracts also typically require "C" or "D" level maintenance checks as these
converted aircraft have often been out of service for some time and maintenance
is required for the aircraft to comply with current FAA standards. Additional
overhaul and modification services performed include cockpit reconfiguration
and the integration of Traffic Control and Avoidance Systems, windshear
detection systems and navigational aids.

MANUFACTURING SERVICES

The Boeing 1998 Current Market Outlook report projects that:

/bullet/ global air travel will increase by an average of 5% per year
through the year 2007;
/bullet/ average passenger fleet miles flown will increase significantly
over the next few years, requiring current operators to increase
the size of their fleets; and
/bullet/ many new airlines will commence operations in the United States and
abroad.

These increases in passenger travel and the number of aircraft in service
increase the demand for manufacturing services. Consequently, we foresee the
manufacture of aircraft parts as a significant growth opportunity for us, and
as an integral component of our expansion strategy.

We currently own two companies which manufacture various aircraft parts
for sale to original equipment manufacturers:

Kratz-Wilde specializes in the manufacture of machined components
primarily for jet engines, and also produces automotive and faucet
components. Kratz-Wilde is a leading supplier of CFM56 and CF6 engine
components to General Electric's Aircraft Engine business. Kratz-Wilde's
operations are housed in three manufacturing facilities in the greater
Cincinnati area. Kratz-Wilde provides us with precision manufacturing
capabilities which we believe will allow us to expand our relationship with
our current and future original equipment manufacturers.

Apex, located in Phoenix, Arizona, manufactures precision aerospace parts
and specializes in the machining of metal parts, including precision
shafts, fuel shrouds, housings and couplings for aerospace actuating
systems, fuel controls and engines.

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<PAGE>

SALES AND MARKETING; CUSTOMERS

We utilize inside salespersons, regional field salespersons, independent
contract representatives and overseas sales offices in our sales and marketing
efforts. Our outside sales force is responsible for obtaining new customers and
maintaining relationships with existing customers. Our inside sales force
accomplishes the majority of our day-to-day sales.

We staff our South Florida parts distribution facility to provide sales
and delivery services seven days a week, 24 hours a day. This service is
critical to provide support to airline customers which, at any time, may have
an aircraft grounded in need of a particular part. Our South Florida location,
with easy access to Miami International Airport and Fort Lauderdale
International Airport, assists us in providing reliable and timely delivery of
purchased products.

We have over 1,000 customers, which include commercial passenger airlines,
air cargo carriers, maintenance and repair facilities and other aircraft parts
redistribution companies. Our top ten customers combined accounted for
approximately 26%, 29% and 38% of operating revenues, for the three years ended
December 31, 1996, 1997 and 1998. No single customer accounted for more than
10% of operating revenues for the year ended December 31, 1998.

MANAGEMENT INFORMATION SYSTEMS

We have developed a proprietary management information system which is an
important component of our business and a significant factor in our leading
position in the redistribution market. Our management information system
collects and reports data regarding inventory turnover and traceability,
pricing, market availability, customer demographics and other important data.
We currently maintain marketing data on and are able to estimate the value of
more than 35 million line items. We also maintain databases on recommended
upgrades or replacements, including airworthiness directives. Access to such
information gives us the best possible opportunity to avoid purchases of
aircraft spare parts which might be deemed unusable. In addition, we maintain
data that allows us to provide our customers with information with respect to
obsolescence and interchangeability of parts. We utilize electronic data
scanning and document image storage technology for accurate and rapid retrieval
of inventory traceability documents that must accompany all sales. Our
customers require these in order for them to comply with applicable regulatory
guidelines. We believe that our continued investment in the development of
information systems is a key factor in maintaining our competitive advantage.

We believe that to maintain our competitive advantages, accommodate growth
and keep pace with the rapid changes in technology we must continue to acquire
state of the art management information systems to ensure the capability to
meet our needs. We are currently implementing a new management information
system for our redistribution operations. We have also commenced the
remediation of our existing system for these operations to make it Year 2000
compliant so that such system remains available for use in our operations until
the new system becomes operational. We are also addressing the Year 2000 issues
relating to our other management information systems.

COMPETITION

There are numerous suppliers of aircraft parts in the aviation market
worldwide and, through inventory listing services, customers have access to a
broad array of suppliers. These include major aircraft manufacturers, airline
and aircraft service companies and aircraft spare parts redistributors.
Competition in the redistribution market is generally based on price,
availability of product and quality, including traceability. Our major
competitors in the redistribution market include AAR Corp., The Ages Group and
The Memphis Group. There is also substantial competition, both domestically and
overseas, from smaller, independent dealers who generally participate in niche
markets.

In the maintenance and repair market, our major competitors are B.F.
Goodrich, Dee Howard Company and Mobile Aerospace Inc. We also compete for
military maintenance and repair contracts.

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<PAGE>

Our principal competitors for military maintenance and repair contracts include
Boeing Military Aircraft, Lockheed-Martin Aeromod and Raytheon-E Systems.

GOVERNMENT REGULATION AND TRACEABILITY

The aviation industry is highly regulated. While our spare parts business
is not regulated, the aircraft spare parts which we sell to our customers must
be accompanied by documentation which enables the customer to comply with
applicable regulatory requirements. Additionally, Aviation Sales must be
certified by the FAA and, in some cases, by original equipment manufacturers in
order to manufacture or repair aircraft components and to perform maintenance
and repair services on aircraft.

The FAA regulates the manufacture, repair and operation of all aircraft
and aircraft parts operated in the United States. Its regulations are designed
to ensure that all aircraft and aircraft equipment are continuously maintained
in proper condition to ensure safe operation of the aircraft. Similar rules
apply in other countries. All aircraft must be maintained under a continuous
condition monitoring program and must periodically undergo thorough inspection
and maintenance. The inspection, maintenance and repair procedures for the
various types of aircraft and aircraft equipment are prescribed by regulatory
authorities and can be performed only by certified repair facilities utilizing
certified technicians. Certification and conformance is required prior to
installation of a part on an aircraft. Presently, we utilize FAA and/or Joint
Aviation Authority certified repair stations (including our six FAA-licensed
repair facilities) to repair and certify parts to ensure worldwide
marketability. We closely monitor the FAA and industry trade groups in an
attempt to understand how possible future regulations might impact us.

An important factor in the aircraft spare parts redistribution market
relates to the documentation or traceability that is supplied with an aircraft
spare part. We require all of our suppliers to provide adequate documentation
as dictated by the appropriate regulatory authority. We utilize electronic data
scanning and storage techniques to maintain complete copies of all
documentation. Documentation required includes, where applicable:

/bullet/ a maintenance release from a certified airline or repair facility
signed and dated by a licensed airframe and/or power plant mechanic
who repaired the aircraft spare part and an inspector certifying
that the proper methods, materials and workmanship were used;
/bullet/ a "teardown" report detailing the discrepancies and corrective
actions taken during the last shop repair; and
/bullet/ an invoice or purchase order from an approved source.

Further, our operations are also subject to a variety of worker and
community safety laws. The Occupational Safety and Health Act mandates general
requirements for safe workplaces for all employees. Specific safety standards
have been promulgated for workplaces engaged in the treatment, disposal or
storage of hazardous waste. We believe that our operations are in material
compliance with health and safety requirements of the Occupational Safety and
Health Act.

PRODUCT LIABILITY

Our business exposes us to possible claims for personal injury or death
which may result from the failure of an aircraft spare part sold, manufactured
or repaired by us or from our negligence in the repair or maintenance of an
aircraft or an aircraft part. We may also have exposure to product liability
claims if the use of our leased aircraft, aircraft engines or aircraft spare
parts inventory is alleged to have resulted in bodily injury or property
damage. While we maintain what we believe to be adequate liability insurance to
protect us from claims of this type, based on our review of the insurance
coverages maintained by similar companies in our industry, we cannot assure you
that claims will not arise in the future or that our insurance coverage will be
adequate. Additionally, there can be no assurance that insurance coverages can
be maintained in the future at an acceptable cost. Any liability of this type
not covered by insurance could materially adversely affect our financial
condition.

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<PAGE>

EMPLOYEES

As of December 31, 1998, Aviation Sales employed approximately 3,800
persons. None of our employees are covered by collective bargaining agreements.
We believe that our relations with our employees are good.

PROPERTIES

Our executive offices are located in Miami, Florida. The construction of
our new corporate headquarters and warehouse facility recently commenced. Our
new facility, which will be located on a 41 acre parcel in the City of Miramar,
Florida, will contain approximately 630,000 square feet of space and consist of
two buildings. One building, which will contain approximately 545,000 square
feet, will consolidate our redistribution operations, as well as serve as the
corporate headquarters of our redistribution, maintenance and repair, leasing
and manufacturing operations. We will use the second building, which will
contain approximately 85,000 square feet of office and warehouse space, for
maintenance and repair operations.

The following table identifies, as of June 1, 1999, the principal
properties utilized by us. See Notes 6 and 8 of the notes to consolidated
financial statements.

<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED OR
FACILITY DESCRIPTION LOCATIONS FOOTAGE LEASED
- ---------------------------------------------- ------------------ ------------ ---------
<S> <C> <C> <C>
Corporate Headquarters and Central Warehouse Miami, FL 166,000 Leased
Office and Repair Facility Hot Springs, AK 260,000 Owned
Aircraft Disassembly and Storage Ardmore, OK 130,000 Leased
Warehouse Pearland, TX 100,000 Owned
Office and Manufacturing Facility Dallas, TX 80,000 Owned
Office and Manufacturing Facility Miami, FL 55,000 Leased
Office and Manufacturing Facility Westchester, OH 47,400 Owned
Warehouse Miami, FL 40,000 Leased
Office and Manufacturing Facility Covington, KY 38,200 Owned
Manufacturing Facility Fairfield, OH 30,500 Owned
Office and Manufacturing Facility Miami, FL 30,000 Leased
Office and Manufacturing Facility Phoenix, AZ 25,000 Leased
Warehouse Miami, FL 11,200 Leased
Warehouse Miami, FL 10,000 Leased
Regional Purchasing Office Van Nuys, CA 6,300 Leased
Office and Warehouse College Park, GA 6,000 Leased
Warehouse Claremore, OK 1,000 Leased
Office and Aircraft Maintenance Facility Lake City, FL 650,000 Leased
Office and Aircraft Maintenance Facility Macon, GA 140,000 Leased
Office and Aircraft Maintenance Facility Greensboro, NC 610,000 Leased
</TABLE>

In March 1999, we agreed to enter into a lease for a facility in
Winston-Salem, North Carolina containing approximately 250,000 square feet of
hangar space. In April 1999, we entered into an agreement to lease an
additional facility in Greensboro, North Carolina containing approximately
300,000 square feet of hangar space. We intend to utilize these facilities to
expand our TIMCO aircraft maintenance and repair operations.

Our ownership interests and leasehold interests in such properties are
pledged as collateral for amounts borrowed.

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<PAGE>

LEGAL PROCEEDINGS

On January 8, 1999, PaineWebber Incorporated filed a complaint against us
and our subsidiary, Whitehall Corporation in the Supreme Court of the State of
New York. This complaint alleges breach of contract claims and related claims
against us and Whitehall and a tortious interference with a contract claim
against us. PaineWebber alleges that it is owed a fee in connection with our
acquisition of TIMCO in September 1998 based upon a 1997 agreement between
Whitehall and PaineWebber relating to a then proposed acquisition of TIMCO by
Whitehall which did not occur. PaineWebber is seeking damages of approximately
$1.0 million, plus costs and an unstated amount of punitive damages.
PaineWebber is also seeking payment of approximately $250,000 allegedly due
relating to the failure of Whitehall to honor an alleged right of first refusal
in the 1997 agreement.

We believe that our acquisition of TIMCO was not within the scope of the
1997 PaineWebber/
Whitehall agreement and that claims brought under this agreement against us and
Whitehall are without merit. We are vigorously defending these claims. Although
we can give no assurance, we believe that the ultimate outcome of this matter
will not materially adversely affect our financial condition.

On June 24, 1998, Zantop International Airlines, Inc. filed a complaint
against Aero Corp.-Macon, Inc., one of our subsidiaries, which is now part of
TIMCO, in the Superior Court of Bibb County, Georgia. The suit seeks an
unspecified amount of damages and equitable relief arising out of the July 1997
sale to Aero Corp.-Macon, then a subsidiary of Whitehall, of certain assets
used in connection with the operation of Aero Corp.-Macon. The action involves
a contractual dispute relative to certain purchase price adjustments and
inventory purchases. We are vigorously defending this action. Although we can
give no assurance, based upon the available facts, we believe that the ultimate
disposition will not materially adversely affect our financial condition.

For information regarding certain environmental proceedings, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--
Environmental."

Except as described above, we are not presently involved in any material
legal proceedings outside the ordinary course of business. We believe that the
ultimate resolution of these claims and lawsuits will not materially adversely
affect our financial condition.

From time to time others may sue us in lawsuits for product defects,
breach of warranty, breach of implied warranty of merchantability or other
actions relating to products manufactured by others which we distribute or
relating to repair and maintenance and repair services which we provide on
aircraft and aircraft parts. We believe that we maintain adequate insurance to
cover these risks, although we can not assure you of this fact.

38
<PAGE>

MANAGEMENT

BOARD OF DIRECTORS

Our certificate of incorporation and bylaws provide for a board of
directors divided into three classes, as equal in size as possible, with
staggered terms of three years. At the date of this prospectus, the members of
our board of directors and the expiration of their terms as directors are as
follows:

<TABLE>
<CAPTION>
TERM
NAME AGE POSITIONS EXPIRES
- -------------------------------- ----- --------------------------------------- --------
<S> <C> <C> <C>
Dale S. Baker ................. 41 Chairman of the Board, President and 1999
Chief Executive Officer
Harold M. Woody ............... 53 Director and Executive Vice President 1999
and President of our leasing
operations
Robert Alpert ................. 49 Director 2001
Sam Humphreys ................. 38 Director 2000
Philip B. Schwartz ............ 45 Director 1999
George F. Baker, III .......... 50 Director 2001
Jeffrey N. Greenblatt ......... 40 Director 2000
</TABLE>

BUSINESS EXPERIENCE

DALE S. BAKER has been the President and Chief Executive Officer of
Aviation Sales since February 1992. Prior to joining Aviation Sales, Mr. Baker
was Senior Vice President and Manager of GE Capital's Corporate Investment
Finance Group.

HAROLD M. WOODY has been the Executive Vice President of Aviation Sales
since February 1992 and the President of our leasing operations since early
1997.

ROBERT ALPERT is a private investor. In addition to his investment in
Aviation Sales, Mr. Alpert has invested significantly in business ventures in
the steel, environmental, waste and oil service industries.

SAM HUMPHREYS is a Managing Director of Main Street Merchant Partners, a
merchant banking firm, and has been a partner in that firm and its predecessor
since January 1996. Since March 1997, Mr. Humphreys has also been the Chairman
of PalEx, Inc., the largest manufacturer of pallets in the United States. From
April 1993 until March 1997, Mr. Humphreys held various executive positions
with U.S. Delivery Systems, Inc., a provider of same-day local delivery
services, and Envirofil, Inc., an environmental services company.

PHILIP B. SCHWARTZ is a shareholder in the Florida law firm of Akerman,
Senterfitt & Eidson, P.A., practicing in the firm's Miami office. Prior to
joining Akerman Senterfitt in September 1995, Mr. Schwartz was a partner with
Broad and Cassel, Miami, Florida, for five years. Mr. Schwartz is a member of
The Florida Bar and the American Bar Association and a former Chair of the
Business Law Section of The Florida Bar. Akerman Senterfitt performs legal
services for us.

GEORGE F. BAKER, III has been a director of Aviation Sales since July
1998. Mr. Baker served as a director of Whitehall from March 1991 until July
1998, as Chairman of the Board of Directors and Chief Executive Officer of
Whitehall from April 1991 until July 1998 and as President of Whitehall from
October 1991 until April 1995. Mr. Baker is a managing partner of Cambridge
Capital Fund, L.P., an investment partnership, and Baker Nye, L.P., an
investment partnership.

JEFFREY N. GREENBLATT has been a director of Aviation Sales since July
1998. Presently, Mr. Greenblatt serves as managing director and a management
committee member of Cambridge

39
<PAGE>

Capital Management, L.L.C., an investment manager. Mr. Greenblatt also serves
as a shareholder/ officer of Monarch Management Group, Ltd., a portfolio
manager. Further, Mr. Greenblatt serves as a managing member of Monarch GP,
LLC, a general partner of an investment partnership. Since January 1989, Mr.
Greenblatt has been a general partner of Cambridge Capital Fund, L.P., an
investment partnership, and since January 1988, Mr. Greenblatt has been a
general partner of Baker Nye, L.P., an investment partnership.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board of directors is responsible for establishing broad corporate
policies and for our overall performance. Our board has several committees.
Standing committees of the board are the executive committee, the audit
committee and the compensation committee.

The executive committee is authorized to act between meetings of our board
and to exercise in full the powers of the board, subject to such limitations
imposed by law. The members of the executive committee are Dale S. Baker,
Harold M. Woody, Robert Alpert, Sam Humphreys and George F. Baker, III.

The audit committee maintains communications between our board and our
independent auditors, monitors performance of the independent auditors, reviews
audit scope and results, reviews the organization and performance of our
internal systems of audit and financial controls, and recommends the retention
or, where appropriate, the replacement of independent auditors. The members of
the audit committee are Philip B. Schwartz and Jeffrey N. Greenblatt.

The compensation committee reviews and approves compensation policies and
practices for all elected corporate executive officers and fixes the total
compensation of the Chief Executive Officer. The compensation committee also
administers our 1996 stock option plan and our 1996 director stock option plan.
The members of the compensation committee are Robert Alpert, Sam Humphreys and
George F. Baker, III.

COMPENSATION OF DIRECTORS

Each director who is not an employee of Aviation Sales receives an annual
retainer fee of $12,000 per year for serving as a director. In addition, each
director who is not an employee of Aviation Sales receives $1,000 for each
meeting of the board attended and $1,000 for each committee meeting attended.

All directors receive on an annual basis a mandatory stock option grant
under the 1996 director stock option plan for serving on our board. Five-year
options to purchase 5,000 shares of common stock are automatically granted to
each director on July 1 of each year, at an option exercise price equal to the
closing price of common stock on July 1. All such options are immediately
exercisable on the date of grant. Upon the organization of Aviation Sales, we
granted existing directors five-year options to purchase 10,000 shares of
common stock, all of which were immediately exercisable, at an option exercise
price equal to the initial public offering price. Additionally, directors
appointed to our board are and will in the future be granted options to
purchase 10,000 shares of common stock at the time they are appointed to the
board, at an option exercise price equal to the closing price of common stock
on the date of their appointment to the board.

40
<PAGE>

EXECUTIVE OFFICERS

The following list reflects our executive officers, as of the date of this
prospectus, the capacity in which they serve Aviation Sales, and when they
assumed office:

<TABLE>
<CAPTION>
EXECUTIVE
NAME AGE POSITIONS OFFICER SINCE
- ------------------------------ ----- ------------------------------------------------ ---------------
<S> <C> <C> <C>
Dale S. Baker ............... 41 President and Chief Executive Officer February 1992
Harold M. Woody ............. 53 Executive Vice President of Aviation Sales and February 1992
President of our leasing operations
William H. Alderman ......... 37 Senior Vice President, Corporate Development September 1996
James D. Innella ............ 40 Senior Vice President of Aviation Sales and December 1994
President of our redistribution operations
Benito Quevedo .............. 45 Senior Vice President of Aviation Sales and July 1998
President of our maintenance and
repair operations
Garlan Braithwaite .......... 64 Vice President, Finance and Treasurer February 1999
Gary Eakins ................. 45 Vice President and Chief Legal Officer July 1998
Richard Hutchinson .......... 41 Chief Information Officer July 1998
Michael A. Saso ............. 42 Senior Vice President, Purchasing of our December 1994
redistribution operations
Laura DeCespedes ............ 42 Vice President, Human Resources January 1999
Philip B. Schwartz .......... 45 Corporate Secretary March 1999
</TABLE>

BUSINESS EXPERIENCE

DALE S. BAKER. See the biographical information contained in "Board of
Directors" above.

HAROLD M. WOODY. See the biographical information contained in "Board of
Directors" above.

WILLIAM H. ALDERMAN has been our Senior Vice President of Corporate
Development since September 1996. Prior to joining us, from May 1995 to
September 1996, Mr. Alderman was a Managing Director and principal of the
financial advisory firm of International Aviation Management Group. Prior to
joining International Aviation Management Group, Mr. Alderman was Vice
President of Structured Finance of GE Capital Aviation Services.

JAMES D. INNELLA was our Vice President and Chief Operating Officer from
December 1994 until July 1998, when he became our Senior Vice President and
President of our redistribution operations. Prior thereto, for more than five
years, Mr. Innella served in various capacities with the Aviation Sales
business unit of Aviall, Inc. and with Ryder Airlines Services.

BENITO QUEVEDO has been our Senior Vice President and President of our
maintenance and repair operations since July 1998. Prior to joining Aviation
Sales, Mr. Quevedo was the principal shareholder and President of Caribe
Aviation and Aircraft Interior Design.

GARLAN BRAITHWAITE has been the Vice President, Finance of Aviation Sales
since February 1999. From July 1998 to February 1999, Mr. Braithwaite was a
consultant to Aviation Sales, and from August 1997 to July 1998, Mr.
Braithwaite was the Senior Vice President and Chief Financial Officer of
Whitehall. From 1990 through 1997, Mr. Braithwaite was the President of Dragon
Investment Corp., which made investments in small service businesses.

GARY EAKINS has been our Vice President and Chief Legal Officer since July
1998. Prior thereto, for more than five years, Mr. Eakins served as Vice
President, Secretary and General Counsel of Southern Air Transport. Southern
Air Transport filed for bankruptcy on October 1, 1998.

41
<PAGE>

RICHARD HUTCHINSON has been with Aviation Sales since January 1997 and has
been our Chief Information Officer since July 1998. From March 1995 to December
1996, Mr. Hutchinson was Senior Business Analyst, IT Manager, Project Leader
and Technical Consultant for Racal Data Group, an international source of
computer networking systems and services. From September 1994 to March 1995,
Mr. Hutchinson served as a consultant on various projects. From January 1991 to
September 1994, Mr. Hutchinson served as Director of Information Services for
Burt Hill Kosar Rittelmann Associates.

MICHAEL A. SASO has been the Senior Vice President, Purchasing of our
redistribution operations since December 1994. From 1986 until December 1994,
Mr. Saso served as Vice President, Purchasing for the Aviation Sales business
unit of Aviall, Inc.

LAURA DECESPEDES has been our Vice President, Human Resources since
January 1999. Prior to joining us, from September 1997 to December 1998, Ms.
DeCespedes was the Vice President of Human Resources for Productivity Point
International. From June 1995 to September 1997, Ms. DeCespedes was Director of
Field Human Resources for Sensormatic Electronics Corp.

PHILIP B. SCHWARTZ. See the biographical information contained in "Board
of Directors" above.

FAMILY RELATIONSHIPS

There are no family relationships between or among any of our directors
and executive officers, and there is no family relationship between Dale S.
Baker and George F. Baker, III.

EXECUTIVE COMPENSATION

The following table sets forth information about the compensation paid or
accrued during 1998, 1997 and 1996 to our Chief Executive Officer and to each
of the four other most highly compensated executive officers of Aviation Sales
whose aggregate direct compensation exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
SALARY BONUS OTHER ANNUAL ALL OTHER
NAME YEAR ($) ($) COMPENSATION COMPENSATION
- ----------------------------- ------ --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Dale S. Baker ............... 1998 263,797 197,848 (1) --
1997 258,670 212,627 (1) --
1996 248,416 124,208 (1) --
Harold M. Woody ............. 1998 236,029 177,021 --
1997 231,442 116,385 -- --
1996 222,267 111,134 -- --
Michael A. Saso ............. 1998 186,888 140,166 -- --
1997 186,889 153,613 -- --
1996 135,975 67,988 -- --
Joseph E. Civiletto ......... 1998 175,000 131,250 -- --
1997 141,588 116,385 -- --
1996 135,975 67,988 -- --
James D. Innella ............ 1998 225,000 168,750 -- --
1997 153,735 126,370 -- --
1996 141,977 70,959 -- --
</TABLE>

- ----------------
(1) Mr. Baker also receives $5,000 per year for life insurance premiums. See
"Employment Agreements" below.

No long-term compensation awards were made to management during the three
years ended December 31, 1998.

42
<PAGE>

OPTION GRANTS DURING LAST FISCAL YEAR

The following table sets forth information concerning options to purchase
shares of common stock granted during the fiscal year ended December 31, 1998
to those persons named in the Summary Compensation Table.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION
NUMBER OF OPTIONS GRANTED FOR OPTION TERM(1)
SHARES UNDERLYING TO EMPLOYEES EXERCISE PRICE EXPIRATION ----------------------
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ------------------------- ------------------- ---------------- ---------------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dale S. Baker ........... 25,000 5.6 24.50 09/15/08 385,250 976,167
5,000 1.1 37.00 07/01/08 116,346 294,842
Harold M. Woody ......... 15,000 3.4 24.50 09/15/08 231,150 585,700
5,000 1.1 37.00 07/01/08 116,346 294,842
Michael A. Saso ......... 15,000 3.4 24.50 09/15/08 231,150 585,700
Joseph E. Civiletto ..... 15,000 3.4 31.05 05/06/99 35,513 72,191
15,000 3.4 24.50 09/15/99 28,022 56,963
James D. Innella ........ 25,000 5.6 35.25 06/12/08 554,213 1,404,485
15,000 3.4 24.50 09/15/08 231,150 585,700
</TABLE>

- ----------------
(1) These amounts represent assumed rates of appreciation in the price of
common stock during the term of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of common
stock and overall stock market conditions. There is no representation that
the rates of appreciation reflected in the table will be achieved.

AGGREGATED OPTIONS EXERCISED DURING LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

The following table sets forth information concerning the exercise of
stock options to purchase common stock during the 1998 fiscal year and the
value of unexercised stock options to purchase common stock at the end of the
1998 fiscal year for the persons named in the Summary Compensation Table.

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NUMBER OF AT FISCAL YEAR END AT FISCAL YEAR-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
- ----------------------------- ----------------- ------------ --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Dale S. Baker ............... -- -- 38,250/16,750 602,381/270,094
Harold M. Woody ............. -- -- 34,950/10,050 549,169/162,056
Michael A. Saso ............. -- -- 14,999/10,001 234,359/161,266
Joseph E. Civiletto ......... -- -- 31,666/18,334 495,115/260,385
James D. Innella ............ -- -- 38,332/26,668 541,024/250,851
</TABLE>

- ----------------
* Computed based upon the difference between the closing price of common stock
at December 31, 1998 and the exercise price. No value has been assigned to
options which are not in-the-money.

EMPLOYMENT AGREEMENTS

On January 1, 1999, we entered into an employment agreement with Dale S.
Baker. The employment agreement provides for an annual base salary of $550,000
(to be increased annually by a cost of living adjustment). In addition, we
agreed to provide Mr. Baker with all employee benefits available under benefit
plans established by Aviation Sales, and to pay Mr. Baker an additional sum of
$5,000 per year for insurance premiums to maintain a whole life insurance
policy. The employment agreement requires Mr. Baker to use his best efforts to
perform the duties of President and Chief Executive Officer. The agreement
provides for a term expiring on January 1, 2002.

43
<PAGE>

The employment agreement further provides for an option grant to purchase
350,000 shares of common stock (granted outside of any plan) at $40.625 per
share, with one-third of the options granted vesting on January 1, 2000,
one-third of the options granted vesting on January 1, 2001, and one-third of
the options granted vesting on January 1, 2002. The employment agreement also
provides for Mr. Baker's participation in the Aviation Sales Company 1999
EBITDA Plan which allows him to earn an incentive bonus of between 50% and 125%
of his base salary.

Mr. Woody has an employment agreement with us under which he is entitled
to an annual base salary of $212,500 (to be increased annually by a cost of
living adjustment), and all employee benefits available under benefit plans we
establish. This employment agreement provides for an initial term expiring on
December 31, 1999. Thereafter, the respective agreement shall run for
successive one-year periods unless we terminate the agreement upon six months'
prior written notice, or Mr. Woody terminates the agreement upon three months'
prior written notice.

On January 1, 1999, we entered into employment agreements with James D.
Innella and Benito Quevedo to serve as Senior Vice Presidents and as President
of our redistribution operations and our maintenance and repair operations,
under which they are each entitled to an annual base salary of $350,000 (to be
increased annually by a cost of living adjustment), and all employee benefits
available under benefit plans we establish. Mr. Innella's and Mr. Quevedo's
agreements provide for a term expiring on January 1, 2003 and January 1, 2002,
respectively.

The employment agreements with Messrs. Innella and Quevedo further provide
for option grants to each to purchase 175,000 shares of common stock (granted
outside of any plan) at $40.625 per share, with one-third of the options
granted vesting on January 1, 2000, one-third of the options granted vesting on
January 1, 2001, and one-third of the options granted vesting on January 1,
2002. The employment agreements also provide for Messrs. Innella's and
Quevedo's participation in the Aviation Sales Company 1999 EBITDA Plan, which
provides each with the opportunity to earn an incentive bonus of between 50%
and 125% of his base salary.

Mr. Saso has an employment agreement with us under which he serves as
Senior Vice President, Purchasing of our redistribution operations and is
entitled to an annual base salary of $185,000 (to be increased annually by a
cost of living adjustment), and all employee benefits available under benefit
plans we establish. The agreement provides for an initial term expiring on May
31, 2001, running for successive one-year terms thereafter, unless we terminate
the agreement upon six months' prior written notice, or Mr. Saso terminates the
agreement upon three months' prior written notice.

The employment agreements with Messrs. Woody and Saso also provide for
their participation in our 1997 EBITDA Incentive Compensation Plan, which
provides that each of them has the opportunity to earn an incentive bonus of
between 20% and 250% of their base salary.

Further, each of our employment agreements provides for certain benefits
in the event of a change of control.

Section 162(m) of the Internal Revenue Code generally disallows an income
tax deduction to public companies for compensation over $1.0 million paid in a
year to any one of the chief executive officer or the four most highly
compensated other executive officers, to the extent that this compensation is
not "performance based" within the meaning of Section 162(m). As a result of
this limitation, we cannot assure you that all of the compensation paid to our
executive officers in the future will be deductible.

STOCK OPTION PLANS

Our board and stockholders have adopted two stock option plans. Pursuant
to our 1996 director stock option plan, options to acquire a maximum of the
greater of 150,000 shares or 2% of the number of shares of common stock then
outstanding may be granted to our directors. Pursuant to our 1996

44
<PAGE>

stock option plan, options to acquire a maximum of the greater of 650,000
shares common stock or 8% of the number of shares of common stock then
outstanding may be granted to our executive officers, employees (including
employees who are directors), independent contractors and consultants. As of
June 1, 1999, options to purchase 655,725 shares at exercise prices ranging
from $11.31 per share to $37.44 per share are currently outstanding under both
plans, 525,903 of which are immediately exercisable.

The compensation committee administers both stock option plans. The
compensation committee determines which persons will receive options and the
number of options to be granted to such persons. The 1996 director stock option
plan also provides for annual mandatory grants of options to directors. The
compensation committee will also interpret the provisions of both plans and
make all other determinations that it may deem necessary or advisable for the
administration of both plans.

Pursuant to both of our stock option plans, we may grant incentive stock
options as defined in Section 422(b) of the Internal Revenue Code and
non-qualified stock options, not intended to qualify under Section 422(b). The
price at which our common stock may be purchased upon the exercise of options
granted under our stock option plans will be required to be at least equal to
the per share fair market value of common stock on the date the particular
options are granted. Options granted under either plan may have maximum terms
of not more than ten years and are not transferable, except by will or the laws
of descent and distribution. None of the incentive stock options under our
stock option plans may be granted to an individual owning more than 10% of the
total combined voting power of all classes of stock issued by our company
unless the purchase price of common stock under such option is at least 110% of
the fair market value of the shares issuable on exercise of the option
determined as of the date the option is granted, and such option is not
exercisable more than five years after the grant date.

Generally, options granted under our two stock option plans may remain
outstanding and may be exercised at any time up to three months after the
person to whom such options were granted is no longer employed or retained by
us or serving on our board.

Pursuant to our two stock option plans, unless otherwise determined by the
compensation committee, one-third of the options granted to an individual are
exercisable upon grant, one-third are exercisable on the first anniversary of
such grant and the final one-third are exercisable on the second anniversary of
such grant. However, options granted under our stock option plans shall become
immediately exercisable if we terminate the holder of such options or if the
holder is no longer our director, as the case may be, subsequent to certain
events which are deemed to be a "change in control" of Aviation Sales. A
"change in control" of our company generally is deemed to occur when:

/bullet/ any person becomes the beneficial owner of or acquires voting
control with respect to more than 20% of common stock (or 35% if
such person was a holder of common stock on July 2, 1996, the date
of our initial public offering);

/bullet/ a change occurs in the composition of a majority of our board during
a two-year period, provided that a change with respect to a member
of our board shall be deemed not to have occurred if the appointment
of a member of our board is approved by a vote of at least 75% of
the individuals who constitute the then existing board; or

/bullet/ our stockholders approve the sale of all or substantially all of our
assets.

Incentive stock options granted under our two stock option plans are
subject to the restriction that the aggregate fair market value (determined as
of the date of grant) of options which first become exercisable in any calendar
year cannot exceed $100,000.

Our two stock option plans provide for appropriate adjustments in the
number and type of shares covered by the plans and options granted under our
plans in the event of any reorganization, merger, recapitalization or certain
other transactions involving Aviation Sales.

45
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the past fiscal year, none of our directors or executive officers
served as a member of the compensation committee or similar committee of
another entity, one of whose executive officers served on our board or served
as a director of another entity, one of whose executive officers served on our
board, or served as a member of the compensation committee or similar committee
of any other entity, one of whose executive officers served as our director.

46
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table provides information regarding the beneficial
ownership of our common stock as of June 1, 1999 and as adjusted to reflect the
sale of the common stock offered by this prospectus by: (1) each person who
owns more than 5% of the outstanding common stock, (2) each named executive
officer of Aviation Sales, (3) each director of Aviation Sales and (4) all
directors and executive officers as a group.

Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power and/or
investment power with respect to securities. Shares of common stock subject to
options currently exercisable or exercisable within 60 days of June 1, 1999 are
deemed outstanding for purposes of computing the percentage beneficially owned
by the person holding the options but are not deemed outstanding for purposes
of computing the percentage beneficially owned by any other person. Unless
otherwise specified, the address for each beneficial owner is c/o Aviation
Sales Company, 6905 N.W. 25th Street, Miami, Florida 33122. There is no family
relationship between Dale S. Baker and George F. Baker, III.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING(2)
--------------------------- --------------------------
APPROXIMATE APPROXIMATE
PERCENT PERCENT
NAME NUMBER OF CLASS NUMBER OF CLASS
- ----------------------------------------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Robert Alpert(2)(3) ........................... 2,372,000 18.8% 2,372,000 16.2%
George F. Baker, III(4) ....................... 1,055,776 8.3 1,055,776 7.2
Richard B. Nye(5) ............................. 973,774 7.7 973,774 6.6
Cambridge Capital Fund, L.P.(6) ............... 675,995 5.4 675,995 4.6
Dale S. Baker(7) .............................. 343,250 2.7 343,250 2.3
Baker Nye, L.P.(8) ............................ 297,779 2.4 297,779 2.0
Harold M. Woody(9) ............................ 234,950 1.9 234,950 1.6
Sam Humphreys(10) ............................. 20,000 * 20,000 *
Philip B. Schwartz(11) ........................ 16,400 * 16,400 *
Jeffrey N. Greenblatt(12) ..................... 30,572 * 30,572 *
Michael A. Saso(13) ........................... 49,999 * 49,999 *
James D. Innella(14) .......................... 48,684 * 48,684 *
William H. Alderman(15) ....................... 41,132 * 41,132 *
All directors and executive officers as a group
(15 persons)(16) ............................. 4,343,963 33.4% 4,343,963 28.9%
</TABLE>

- ----------------
* Less than one percent
(a) Assumes no exercise of options granted to the Underwriters to purchase
additional shares of common stock.

(1) Unless otherwise indicated, each person named in the table has the sole
voting and investment power with respect to the shares beneficially owned.

(2) Shares are primarily owned of record by two corporate entities controlled
by Mr. Alpert.
(3) Includes vested options to purchase 20,000 shares at prices ranging from
$19.00 to $37.00 per share.
(4) George F. Baker, III may be deemed to beneficially own 675,995 shares of
common stock directly owned by Cambridge Capital Fund, L.P. ("Cambridge
Capital"), of which Mr. Baker is a managing general partner and 297,779
shares of common stock directly owned by Baker Nye, L.P. ("Baker Nye"), of
which Mr. Baker is a managing general partner. Includes vested options to
purchase 82,002 shares at prices ranging from $12.52 to $37.97 per share.
(5) Richard B. Nye may be deemed to beneficially own 675,995 shares of common
stock directly owned by Cambridge Capital of which Mr. Nye is a managing
general partner and 297,779 shares of common stock directly owned by Baker
Nye of which Mr. Nye is a managing general partner.
(6) Cambridge Capital is an investment limited partnership. George F. Baker,
III, one of its managing general partners, and Jeffrey N. Greenblatt, a
non-managing general partner of Cambridge Capital, are also directors of
Aviation Sales.

47
<PAGE>

(7) Includes vested options to purchase 38,250 shares at prices ranging from
$19.00 to $37.00 per share.
(8) Baker Nye is an investment limited partnership. George F. Baker, III, one
of its managing general partners, and Jeffrey N. Greenblatt, a
non-managing general partner of Baker Nye, are directors of Aviation
Sales.
(9) Includes vested options to purchase 34,950 shares at prices ranging from
$19.00 to $37.00 per share.
(10) Vested options to purchase 20,000 shares at prices ranging from $19.00 to
$37.00 per share.
(11) Includes vested options to purchase 15,000 shares at prices ranging from
$37.00 to $37.06 per share.
(12) Vested options to purchase 30,572 shares at prices ranging from $11.31 to
$34.63 per share.
(13) Includes vested options to purchase 14,999 shares at prices ranging from
$24.50 to $25.25 per share.
(14) Includes vested options to purchase 38,332 shares at prices ranging from
$19.00 to $35.25 per share.
(15) Vested options to purchase 40,832 shares at prices ranging from $19.00 to
$35.25 per share.
(16) Includes vested options to purchase 374,498 shares at prices ranging from
$11.31 to $37.00 per share.

48
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Our authorized capital consists of 30,000,000 shares of common stock, par
value $.001 per share, and 1,000,000 shares of preferred stock, par value $.01
per share. None of the preferred stock is outstanding.

COMMON STOCK

Each holder of common stock is entitled to one vote for each share held of
record on all matters presented to stockholders, including the election of
directors. In the event of a liquidation, dissolution or winding up of Aviation
Sales, the holders of common stock are entitled to share equally and ratably in
the assets of Aviation Sales, if any, remaining after paying all debts and
liabilities of Aviation Sales and the liquidation preferences of any
outstanding preferred stock. The common stock has no preemptive rights or
cumulative voting rights and no redemption, sinking fund or conversion
provisions.

Holders of common stock are entitled to receive dividends if, as and when,
declared by the board of directors out of funds legally available therefore,
subject to the dividend and liquidation rights of any preferred stock that may
be issued and outstanding and subject to any dividend restrictions in our
credit facilities. No dividend or other distribution (including redemptions and
repurchases of shares of capital stock) may be made, if after giving effect to
such distribution, we would not be able to pay our debts as they become due in
the usual course of business, or if our total assets would be less than the sum
of our total liabilities plus the amount that would be needed at the time of a
liquidation to satisfy the preferential rights of any holders of preferred
stock.

PREFERRED STOCK

Our board of directors is authorized, without further stockholder action,
to divide any or all shares of the authorized preferred stock into series and
fix and determine the designations, preferences and relative rights and
qualifications, limitations or restrictions thereon of any series so
established, including voting powers, dividend rights, liquidation preferences,
redemption rights and conversion privileges. As of the date of this prospectus,
our board of directors has not authorized any series of preferred stock, and
there are no plans, agreements or understandings for the authorization or
issuance of any shares of preferred stock. The issuance of preferred stock with
voting rights or conversion rights may adversely affect the voting power of
common stock, including the loss of voting control to others. The issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change in control of Aviation Sales.

PROVISIONS OF THE CERTIFICATE AND BYLAWS

A number of provisions of our certificate of incorporation and bylaws
concern matters of corporate governance and the rights of stockholders. Certain
of these provisions, as well as the ability of our board of directors to issue
shares of preferred stock and to set the voting rights, preferences and other
terms thereof, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by the board of directors (including
takeovers which certain stockholders may deem to be in their best interests).
To the extent takeover attempts are discouraged, temporary fluctuations in the
market price of the common stock, which may result from actual or rumored
takeover attempts, may be inhibited. These provisions, together with the
classified board of directors and the ability of the board to issue preferred
stock without further stockholder action, also could delay or frustrate the
removal of incumbent directors or the assumption of control by stockholders,
even if such removal or assumption would be beneficial to stockholders of
Aviation Sales. These provisions also could discourage or make more difficult a
merger, tender offer or proxy contests, even if they could be favorable to the
interests of stockholders, and could potentially depress the market price of
the common stock. The board of directors believes that these provisions are
appropriate to protect the interest of Aviation Sales and all of its
stockholders.

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<PAGE>

ISSUANCE OF RIGHTS. The certificate authorized the board of directors to
create and issue rights (the "Rights") entitling the holders thereof to
purchase from Aviation Sales shares of capital stock or other securities. The
times at which, and the terms upon which, the Rights are to be issued may be
determined by the board of directors and set forth in the contracts or
instruments that evidence the Rights. The authority of the board of directors
with respect to the Rights includes, but is not limited to, the determination
of (1) the initial purchase price per share of the capital stock or other
securities of Aviation Sales to be purchased upon exercise of the Rights, (2)
provisions relating to the times at which and the circumstances under which the
Rights may be exercised or sold or otherwise transferred, either together with
or separately from, any other securities of Aviation Sales, (3) antidilutive
provisions which adjust the number or exercise price of the Rights or amount or
nature of the securities or other property receivable upon exercise of the
Rights, (4) provisions which deny the holder of a specified percentage of the
outstanding securities of Aviation Sales the right to exercise the Rights
and/or cause the Rights held by such holder to become void, (5) provisions
which permit Aviation Sales to redeem the Rights and (6) the appointment of a
rights agent with respect to the Rights.

MEETINGS OF STOCKHOLDERS. The bylaws provide that a special meeting of
stockholders may be called only by the board of directors unless otherwise
required by law. The bylaws provide that only those matters set forth in the
notice of the special meeting may be considered or acted upon at that special
meeting, unless otherwise provided by law. In addition, the bylaws set forth
certain advance notice and informational requirements and time limitations on
any director nomination or any new business which a stockholder wishes to
propose for consideration at an annual meeting of stockholders.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT. The certificate provides that
any action required or permitted to be taken by our stockholders at an annual
or special meeting of stockholders must be effected at a duly called meeting
and may not be taken or effected by a written consent of stockholders in lieu
thereof.

AMENDMENT OF THE CERTIFICATE. The certificate provides that an amendment
thereof must first be approved by a majority of the board of directors and
(with certain exceptions) thereafter approved by the holders of a majority of
the total votes eligible to be cast by holders of voting stock with respect to
such amendment or repeal; provided, however, that the affirmative vote of 80%
of the total votes eligible to be cast by holders of voting stock, voting
together as a single class, is required to amend provisions relating to the
establishment of the board of directors and amendments to the certificate.

AMENDMENTS OF BYLAWS. The certificate provides that the board of directors
or the stockholders may amend or repeal the bylaws. Such action by the board of
directors requires the affirmative vote of a majority of the directors then in
office. Such action by the stockholders requires the affirmative vote of the
holders of at least two-thirds of the total votes eligible to be cast by
holders of voting stock with respect to such amendment or repeal at an annual
meeting of stockholders or a special meeting called for such purposes, unless
the board of directors recommends that the stockholders approve such amendment
or repeal at such meeting, in which case such amendment or repeal shall only
require the affirmative vote of a majority of the total votes eligible to be
cast by holders of voting stock with respect to such amendment or repeal.

NEW YORK STOCK EXCHANGE

The common stock is traded on the NYSE under the symbol "AVS."

TRANSFER AGENT

The transfer agent for the common stock is Continental Stock Transfer &
Trust Company, 2 Broadway, New York, New York 10004.

50
<PAGE>

UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS

We discuss below the material United States federal income and estate tax
consequences of the ownership and disposition of the common stock applicable to
non-U.S. holders. In general, a "non-U.S. holder" is any holder of common stock
other than:

(1) a citizen or resident of the United States;

(2) a corporation or partnership created or organized in the United States
or under the laws of the United States or of any state, other than any
partnership treated as foreign under U.S. Treasury regulations;

(3) an estate, whose income the Federal government may include in gross
income for United States federal income tax purposes regardless of its
source; or

(4) in general, a trust, if a court within the United States may exercise
primary supervision over the administration of the trust, and one or
more United States persons have authority to control all substantial
decisions of the trust.

We provide this discussion based on current law and for general
information only. This discussion does not address aspects of United States
federal taxation other than income and estate taxation, and does not address
all aspects of income and estate taxation. This discussion also does not
consider any specific facts or circumstances that may apply to a particular
non-U.S. holder, including certain U.S. expatriates and individuals present in
the United States for 183 days or more during a taxable year (generally, a
calendar year) but who are not considered residents of the United States
because of exceptions to the rules discussed below. ACCORDINGLY, WE URGE
NON-U.S. OFFEREES OF OUR COMMON STOCK TO CONSULT WITH THEIR TAX ADVISERS
REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME
AND OTHER TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF OUR COMMON
STOCK.

The United States may consider an individual, subject to exceptions, a
resident alien, as opposed to a non-resident alien for federal income tax
purposes, by virtue of the individual's presence in the United States for at
least 31 days in the calendar year and for an aggregate of at least 183 days
during a three-year period ending in the current calendar year. The days
counted for this purpose are all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year. In addition to the
"substantial presence test" described in the immediately preceding sentence,
the United States will treat an alien as a resident alien if he or she meets a
lawful permanent residence test, referred to as a "green card" test, or elects
treatment as a U.S. resident and meets the substantial presence test in the
immediately following year. Resident aliens are subject to U.S. federal income
tax as if they were U.S. citizens.

DIVIDENDS

In general, dividends paid to a non-U.S. holder will be subject to United
States withholding tax at a 30% rate, or a lower rate prescribed by an
applicable tax treaty, unless:

/bullet/ the dividends are effectively connected with a trade or business
carried on by the non-U.S. holder within the United States; or

/bullet/ if an income tax treaty applies, the dividends are attributable to a
permanent establishment of the non-U.S. holder, or, in the case of
an individual, a "fixed base" in the United States maintained by the
non-U.S. holder.

United States withholding tax will generally not apply to dividends so
connected with such a United States trade or business or attributable to such a
United States permanent establishment or

51
<PAGE>

fixed base if the non-U.S. holder files the appropriate IRS form with the payor
of the dividend. The form, under U.S. Treasury regulations generally effective
for payments made after December 31, 2000 (subject to certain transitional
rules), requires the non-U.S. holder to provide a U.S. taxpayer identification
number.

United States federal income tax, on a net income basis, will generally
apply to these dividends in the same manner as if the non-U.S. holder were a
resident of the United States or a corporation organized in the United States.
An additional branch profits tax may apply to a non-U.S. holder that is a
corporation. If so, it will apply at a rate of 30%, or such lower rate as may
be specified by an applicable treaty. To determine the applicability of a tax
treaty providing for a lower rate of withholding, dividends paid to an address
in a foreign country are presumed, under United States Treasury regulations
that are currently effective, to be paid to a resident of that country absent
knowledge to the contrary.

Under regulations generally effective for dividend payments after December
31, 2000, however, a non-U.S. holder of common stock who wishes to claim the
benefit of an applicable treaty rate generally must satisfy applicable
certification and other requirements and must provide a U.S. taxpayer
identification number unless an exception applies. In addition under these new
regulations, in the case of common stock held by a foreign partnership, (1) the
certification requirement will generally apply to the partners of the
partnership and (2) the partnership must provide certain information, including
a United States taxpayer identification number. These new regulations also
provide look-through rules for tiered partnerships. Lastly, the new regulations
generally would require non-U.S. holders to file an IRS Form W-8 to obtain the
benefit of any applicable tax treaty providing for a lower rate of U.S.
withholding tax on dividends. A non-U.S. holder that is eligible for a reduced
rate of U.S. withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts withheld by filing an appropriate claim for a refund with
the IRS.

SALE OF COMMON STOCK

In general, United States federal income tax will not apply to a non-U.S.
holder on any gain the stockholder realizes upon his disposition of shares of
common stock unless:

(a) the gain is effectively connected with a trade or business carried on
by the non-U.S. holder within the United States or, alternatively, if
tax treaties apply, is attributable to a permanent establishment in the
United States maintained by the non-U.S. holder, and in either case, the
branch profits tax discussed above may also apply if the non-U.S. holder
is a corporation; or

(b) we are or have been a "U.S. real property holding corporation" for U.S.
federal income tax purposes at any time during the shorter of the
five-year period ending on the date of disposition and the non-U.S.
holders holding period for the common stock. We would be considered such
a corporation if at least one-half of the fair market value of our
worldwide real property interests and other assets used or held for use
in our business was attributable to the fair market value of our U.S.
real property interests. We are not, and do not anticipate becoming, a
"U.S. real property holding corporation."

ESTATE TAX

Unless an applicable estate tax treaty provides otherwise, U.S. federal
estate tax law may require an individual, who is not a citizen or resident of
the United States at the time of death, to include any common stock he owns, or
the federal estate tax law deems him to own, in his gross estate for U.S.
federal estate tax purposes.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

We must report annually to the IRS and to each non-U.S. holder the amount
of dividends paid and the tax withheld with respect to each non-U.S. holder.
These reporting requirements apply

52
<PAGE>

regardless of whether an applicable tax treaty reduced or eliminated the
withholding. Copies of this information also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the non-U.S. holder resides or is established.

Under the U.S. Treasury regulations currently effective, United States
backup withholding tax, which generally applies at the rate of 31% on certain
payments (including dividends) to persons that fail to furnish the information
required under the United States information reporting requirements, generally
will not apply to dividends paid on common stock to a non-U.S. holder at an
address outside of United States. Backup withholding and information reporting
generally will apply to dividends paid on shares of common stock to a non-U.S.
holder at an address in the United Sates, if such holder fails to establish an
exemption or to provide certain other information to the payor. Under the
regulations generally effective for dividend payments after December 31, 2000,
however, a non-U.S. holder of common stock that fails to certify its non-U.S.
holder status according to the requirements of those regulations may be subject
to United States backup withholding on payments of dividends.

Information reporting and backup withholding requirements will apply to
the payment of proceeds from the disposition of common stock to or through a
United States office of a broker unless the owner, under penalties of perjury,
certifies, among other things, such owner's status as a non-U.S. holder or
otherwise establishes an exemption. These requirements generally will not apply
to the payment of proceeds from the disposition of common stock to or through a
non-U.S. office of a non-U.S. broker, except as noted below. Unless the broker
receives a statement from the owner, signed under penalty of perjury,
certifying its non-U.S. status, or the broker has documentary evidence in its
files that the owner is a non-U.S. holder and the broker has no actual
knowledge to the contrary, information reporting, but, currently, not backup
withholding, will apply in the case of proceeds from a disposition of common
stock paid to or through a non-U.S. office of a broker that is:

/bullet/ a United States person;
/bullet/ a "controlled foreign corporation" for U.S. federal income tax
purposes;
/bullet/ a foreign person with 50% or more gross income derived from U.S.
trade or business over a particular time period; or
/bullet/ for payments made after December 31, 2000, a partnership with some
connections to the United States.

Non-U.S. holders should consult their own tax advisors regarding the
application of information reporting or back-up withholding in their particular
situation, including the availability of an exemption from such requirements
and the procedures for obtaining an exemption and the effect of the regulations
generally effective for payments after December 31, 2000. Backup withholding is
not an additional tax. The IRS will refund or credit against the non-U.S.
holder's U.S. federal income tax liability any amounts withheld under the
backup withholding rules from a payment to a non-U.S. holder if the non-U.S.
holder furnishes the required information to the IRS.

53
<PAGE>

UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and Aviation Sales has agreed to sell to such underwriter, the number
of shares set forth opposite the name of such underwriter.

<TABLE>
<CAPTION>
NUMBER
OF SHARES
NAME ----------
<S> <C>
Salomon Smith Barney Inc. ..................
BT Alex.Brown Incorporated .................
Robert W. Baird & Co. Incorporated .........
Warburg Dillon Read LLC ....................
Total .................................... 2,000,000
---------
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the shares (other than those
covered by the over-allotment option described below) if they purchase any of
the shares.

The underwriters, for whom Salomon Smith Barney Inc., BT Alex. Brown
Incorporated, Robert W. Baird & Co. Incorporated and Warburg Dillon Read LLC
are acting as representatives, propose to offer some of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to certain dealers at the public offering
price less a concession not in excess of $ per share. The underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share on sales to certain other dealers. If all of the shares are not sold at
the initial offering price, the representatives may change the public offering
price and the other selling terms.

Aviation Sales has granted to the underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to 300,000 additional
shares of common stock at the public offering price less the underwriting
discount. The underwriters may exercise such option solely for the purpose of
covering over-allotments, if any, in connection with this offering. To the
extent such option is exercised, each underwriter will be obligated, subject to
certain conditions, to purchase a number of additional shares approximately
proportionate to such underwriter's initial purchase commitment.

Aviation Sales, its officers, and directors and its principal stockholders
have agreed that, for a period of 90 days from the date of this prospectus, or,
with respect to 350,000 shares of common stock, 45 days, they will not, without
the prior written consent of Salomon Smith Barney Inc., dispose of or hedge any
shares of common stock of Aviation Sales or any securities convertible into or
exchangeable for common stock, subject to certain exceptions. Salomon Smith
Barney Inc. in its sole discretion may release any of the securities subject to
these lock-up agreements at any time without notice.

The common stock is listed on the New York Stock Exchange under the symbol
"AVS."

The following table shows the underwriting discounts and commissions to be
paid to the underwriters by Aviation Sales in connection with this offering.
These amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase additional shares of common stock.

<TABLE>
<CAPTION>
PAID BY AVIATION SALES
------------------------------
NO EXERCISE FULL EXERCISE
------------- --------------
<S> <C> <C>
Per share ......... $ $
Total ............. $ $
</TABLE>

54
<PAGE>

In connection with the offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stablizing transactions consist of certain bids or
purchases of common stock made for the purpose of preventing or retarding a
decline in the market price of the common stock while the offering is in
progress.

The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases shares originally sold by that syndicate
member.

Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected on the New
York Stock Exchange or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.

Aviation Sales estimates that its total expenses of this offering will be
$1,080,000.

Aviation Sales has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the underwriters may be required to make in respect of
any of those liabilities.

The representatives have performed investment banking and advisory
services for Aviation Sales from time to time for which they have received
customary fees and expenses. The representatives may, from time to time, engage
in transactions and perform services for Aviation Sales in the ordinary course
of their business.

Citibank, N.A., an affiliate of Salomon Smith Barney Inc., is the agent
and a lender under our credit facility. Aviation Sales intends to use the
proceeds from the sale of the common stock to repay indebtedness owed to the
lenders under the credit facility, including Citibank, N.A. The common stock
meets the requirements of Rules 2710(c)(8) and 2720(c)(3)(B) of the NASD
Conduct Rules.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.

The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is complete:

<TABLE>
<S> <C>
(a) Our Annual Report on Form 10-K, as amended, for the year ended December 31, 1998;
(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
(c) Our Current Report on Form 8-K dated February 7, 1999;
</TABLE>

55
<PAGE>

<TABLE>
<S> <C>
(d) Our Current Report on Form 8-K dated May 20, 1999; and
(e) The description of our common stock contained in our registration statement on
Form 8-A12B dated May 23, 1996.
</TABLE>

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and telephone number:

Aviation Sales Company
6905 N.W. 25th Street
Miami, Florida 33122
(305) 592-4055
Attention: Vice President--Finance

You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date
on the front of this prospectus.

LEGAL MATTERS

Akerman, Senterfitt & Eidson, P.A., a law firm in Miami, Florida, will
opine as to the validity of the shares of common stock offered under this
prospectus on behalf of Aviation Sales. Philip B. Schwartz, a shareholder of
Akerman Senterfitt, is a director of Aviation Sales and some of the attorneys
that work for Akerman Senterfitt own shares of Aviation Sales common stock on
the date of this prospectus. Certain legal matters in connection with the
offering will be passed upon for the underwriters by Latham & Watkins, a law
firm in New York, New York.

EXPERTS

Aviation Sales' consolidated financial statements and schedule included in
this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent certified public accountants, as indicated
in their report with respect thereto, and are included in this prospectus in
reliance upon the authority of said firm as experts in giving said report.

56
<PAGE>
AVIATION SALES COMPANY AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Certified Public Accountants ...................................... F-2

Consolidated Balance Sheets at December 31, 1997 and 1998 and March 31, 1999 (unaudited) F-3

Consolidated Statements of Income for the three years ended December 31, 1998 and the
three months ended March 31, 1998 and 1999 (unaudited) ................................. F-4

Consolidated Statements of Stockholders' Equity for the three years ended
December 31, 1998 and the three months ended March 31, 1999 (unaudited) ................ F-5

Consolidated Statements of Cash Flows for the three years ended December 31, 1998 and the
three months ended March 31, 1998 and 1999 (unaudited) ................................. F-6

Notes to Consolidated Financial Statements .............................................. F-7

Financial Statement Schedule:

Schedule II--Valuation and Qualifying Accounts for the three years ended
December 31, 1998 .................................................................... F-33
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Aviation Sales Company:

We have audited the accompanying consolidated balance sheets of Aviation
Sales Company (a Delaware corporation) and subsidiaries as of December 31, 1997
and 1998, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aviation Sales Company and
subsidiaries as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Miami, Florida,
February 9, 1999.

F-2
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1997 1998 1999
ASSETS ----------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................... $ 6,237 $ 10,536 $ 1,303
Accounts receivable, net of allowance for doubtful accounts of $7,322,
$12,489 and $10,213 (unaudited) at December 31, 1997, 1998 and
March 31, 1999, respectively .......................................... 82,779 115,974 150,947
Inventories ............................................................. 145,343 277,131 306,392
Deferred income taxes ................................................... 3,057 5,932 5,717
Other current assets .................................................... 14,142 16,416 18,265
--------- -------- --------
Total current assets .................................................. 251,558 425,989 482,624
--------- -------- --------
EQUIPMENT ON LEASE, net of accumulated amortization of $3,627,
$3,014 and $2,674 (unaudited) at December 31, 1997, 1998 and
March 31, 1999, respectively .......................................... 22,758 28,354 22,681
--------- -------- --------
FIXED ASSETS, net ....................................................... 38,061 69,744 71,596
--------- -------- --------
AMOUNTS DUE FROM RELATED PARTIES ........................................ 2,891 2,204 2,180
--------- -------- --------
OTHER ASSETS:
Goodwill, net .......................................................... 17,712 56,936 56,197
Deferred income taxes .................................................. 1,485 -- --
Deferred financing costs, net .......................................... 2,676 8,104 7,734
Other assets ........................................................... 4,191 8,046 13,292
--------- -------- --------
Total other assets .................................................... 26,064 73,086 77,223
--------- -------- --------
Total assets .......................................................... $ 341,332 $599,377 $656,304
========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................................ $ 31,500 $ 50,931 $ 58,682
Accrued expenses ........................................................ 21,318 26,317 27,914
Current portion of notes payable ........................................ 12,541 4,908 4,898
Current portion of capital lease obligations ............................ 84 84 84
Revolving loan .......................................................... 96,127 174,007 215,171
--------- -------- --------
Total current liabilities ............................................. 161,570 256,247 306,749
--------- -------- --------
LONG-TERM LIABILITIES:
Senior subordinated notes ............................................... -- 164,163 164,185
Notes payable, net of current portion ................................... 52,876 18,881 14,799
Capital lease obligations, net of current portion ....................... 4,174 4,133 4,094
Deferred income ......................................................... 962 1,371 1,203
Other long-term liabilities ............................................. 471 284 291
--------- -------- --------
Total long-term liabilities ........................................... 58,483 188,832 184,572
--------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding ...................................................... -- -- --
Common stock, $.001 par value, 30,000,000 shares authorized, 13,362,568
shares issued at December 31, 1997, 12,515,809 shares issued and
outstanding at December 31, 1998 and 12,622,422 (unaudited) issued
and outstanding at March 31, 1999 ..................................... 13 12 13
Additional paid-in capital .............................................. 72,962 64,344 67,110
Retained earnings ....................................................... 64,449 89,942 97,860
--------- -------- --------
137,424 154,298 164,983
Less treasury stock (1,111,562 shares at December 31, 1997), at cost .... (16,145) -- --
--------- -------- --------
Total stockholders' equity ............................................ 121,279 154,298 164,983
--------- -------- --------
Total liabilities and stockholders' equity ............................ $ 341,332 $599,377 $656,304
========= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated
balance sheets.

F-3
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------- --------------------------
1996 1997 1998 1998 1999
----------- ------------- ----------- ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating revenues:
Sales of products, net ............................. $155,857 $ 244,340 $359,245 $ 80,281 $109,319
Services and other ................................. 75,877 78,198 141,571 21,893 68,639
-------- --------- -------- -------- --------
231,734 322,538 500,816 102,174 177,958
Cost of sales and services .......................... 169,787 244,758 372,728 76,900 136,803
-------- --------- -------- -------- --------
Gross profit ........................................ 61,947 77,780 128,088 25,274 41,155
Operating expenses .................................. 33,958 52,782 66,719 14,838 20,236
-------- --------- -------- -------- --------
Income from operations .............................. 27,989 24,998 61,369 10,436 20,919
Interest expense .................................... 5,411 8,059 21,343 3,941 8,431
Other (income) expense .............................. (461) 4,696 (196) 7 258
-------- --------- -------- -------- --------
Income before income taxes, equity (income)
losses of affiliate and extraordinary item ......... 23,039 12,243 40,222 6,488 12,230
Income tax expense .................................. 1,617 7,260 15,486 2,486 4,770
-------- --------- -------- -------- --------
Income before equity (income) losses of affiliate
and extraordinary item ............................. 21,422 4,983 24,736 4,002 7,460
Equity (income) losses of affiliate, net of
income taxes ....................................... (255) 139 (1,356) (345) (457)
-------- --------- -------- -------- --------
Income before extraordinary item .................... 21,677 4,844 26,092 4,347 7,917
Extraordinary item, net of income taxes ............. 1,862 -- 599 599 --
-------- --------- -------- -------- --------
Net income ........................................ $ 19,815 $ 4,844 $ 25,493 $ 3,748 $ 7,917
======== ========= ======== ======== ========
BASIC EARNINGS PER SHARE:
Income before extraordinary item ................... $ 2.04 $ 0.40 $ 2.13 $ 0.35 $ 0.63
Extraordinary item, net of income taxes ............ 0.18 -- 0.05 0.05 --
-------- --------- -------- -------- --------
Net income ......................................... $ 1.86 $ 0.40 $ 2.08 $ 0.30 $ 0.63
======== ========= ======== ======== ========
DILUTED EARNINGS PER SHARE:
Income before extraordinary item ................... $ 2.01 $ 0.39 $ 2.06 $ 0.35 $ 0.61
Extraordinary item, net of income taxes ............ 0.17 -- 0.05 0.05 --
-------- --------- -------- -------- --------
Net income ......................................... $ 1.84 $ 0.39 $ 2.01 $ 0.30 $ 0.61
======== ========= ======== ======== ========
PRO FORMA BASIC EARNINGS PER
SHARE (See Note 10):
Pro forma income before extraordinary item ......... $ 1.38
Extraordinary item, net of income taxes ............ 0.18
--------
Pro forma net income ............................... $ 1.20
========
PRO FORMA DILUTED EARNINGS PER
SHARE (See Note 10):
Pro forma income before extraordinary item ......... $ 1.36
Extraordinary item, net of income taxes ............ 0.17
--------
Pro forma net income ............................... $ 1.19
========
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-4
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
----------------------- ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL
-------------- -------- ------------
<S> <C> <C> <C>
BALANCE AS OF
DECEMBER 31, 1995 ...................... 10,175,788 $ 10 $ 12,732
Net income ............................. -- -- --
Stock options exercised ................ 33,738 -- 413
Distribution to partners prior to
public offering ...................... -- -- --
Payments to J/T Aviation Partners
(Note 1) ............................. (575,000) (1) (4,262)
Net proceeds from sale of common
stock ................................ 3,737,500 4 64,572
---------- ---- ----------
BALANCE AS OF
DECEMBER 31, 1996 ...................... 13,372,026 13 73,455
Impact of immaterial poolings
(Note 2) ............................. -- -- 583
Net income ............................. -- -- --
Stock options exercised ................ 47,542 -- 872
Gain on litigation settlement with
former employee (Note 7) ............. (75,000) -- (2,625)
Issuance of common stock to
employees (Note 6) ................... 18,000 -- 677
---------- ---- ----------
BALANCE AS OF
DECEMBER 31, 1997 ...................... 13,362,568 13 72,962
Net income ............................. -- -- --
Stock issued in Caribe acquisition
(Note 2) ............................. 182,143 -- 5,720
Rescinded stock grant (Note 6) ......... (18,000) -- --
Stock options exercised ................ 100,660 -- 1,806
Retirement of treasury stock ........... (1,111,562) (1) (16,144)
---------- ----- ----------
BALANCE AS OF
DECEMBER 31, 1998 ...................... 12,515,809 12 64,344
Net income (unaudited) ................. -- -- --
Stock options exercised
(unaudited) .......................... 106,613 1 2,766
---------- ---- ----------
BALANCE AS OF
MARCH 31, 1999 (unaudited) ............. 12,622,422 $ 13 $ 67,110
========== ==== ==========

<CAPTION>
TREASURY STOCK TOTAL
RETAINED ----------------------------- STOCKHOLDERS'
EARNINGS SHARES AMOUNT EQUITY
---------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
BALANCE AS OF
DECEMBER 31, 1995 ...................... $ 47,697 (1,111,562) $ (16,145) $ 44,294
Net income ............................. 19,815 -- -- 19,815
Stock options exercised ................ -- -- -- 413
Distribution to partners prior to
public offering ...................... (3,042) -- -- (3,042)
Payments to J/T Aviation Partners
(Note 1) ............................. (5,898) -- -- (10,161)
Net proceeds from sale of common
stock ................................ -- -- -- 64,576
-------- ---------- --------- ---------
BALANCE AS OF
DECEMBER 31, 1996 ...................... 58,572 (1,111,562) (16,145) 115,895
Impact of immaterial poolings
(Note 2) ............................. 1,033 -- -- 1,616
Net income ............................. 4,844 -- -- 4,844
Stock options exercised ................ -- -- -- 872
Gain on litigation settlement with
former employee (Note 7) ............. -- -- -- (2,625)
Issuance of common stock to
employees (Note 6) ................... -- -- -- 677
-------- ---------- --------- ---------
BALANCE AS OF
DECEMBER 31, 1997 ...................... 64,449 (1,111,562) (16,145) 121,279
Net income ............................. 25,493 -- -- 25,493
Stock issued in Caribe acquisition
(Note 2) ............................. -- -- -- 5,720
Rescinded stock grant (Note 6) ......... -- -- -- --
Stock options exercised ................ -- -- -- 1,806
Retirement of treasury stock ........... -- 1,111,562 16,145 --
-------- ---------- --------- ---------
BALANCE AS OF
DECEMBER 31, 1998 ...................... 89,942 -- -- 154,298
Net income (unaudited) ................. 7,918 -- -- 7,917
Stock options exercised
(unaudited) .......................... -- -- -- 2,768
-------- ---------- --------- ---------
BALANCE AS OF
MARCH 31, 1999 (unaudited) ............. $ 97,860 -- $ -- $ 164,983
======== ========== ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-5
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1996 1997 1998
----------- ------------ -------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 19,815 $ 4,844 $ 25,493
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization ................................... 4,035 5,619 11,350
Proceeds from sale of equipment on lease, net of gain ........... -- 3,797 1,289
Gain on sale of fixed assets .................................... (11) -- (72)
Equity (income) losses of affilliate, net of income taxes ....... (255) 139 (1,356)
Write-off of preferred stock .................................... -- 4,500 --
Provision for doubtful accounts ................................. 1,954 8,157 1,692
Deferred income taxes ........................................... (5,379) 279 (1,106)
Extraordinary item, net of income taxes ......................... 1,862 -- 599
Issuance of common stock to employees ........................... -- 677 --
Gain on litigation settlement with former employee .............. -- (2,625) --
Increase in accounts receivable, net ............................. (13,430) (28,782) (3,012)
Increase in inventories .......................................... (21,264) (58,523) (102,224)
Increase in other current assets ................................. (4,398) (8,458) (1,147)
(Increase) decrease in other assets .............................. 318 (882) (1,562)
Increase (decrease) in accounts payable .......................... 2,434 8,322 10,589
Increase (decrease) in accrued expenses .......................... 2,539 8,804 (11,824)
Increase (decrease) in deferred income ........................... 13 72 409
Increase (decrease) in other liabilities ......................... (297) 322 (72)
--------- --------- -----------
Net cash used in operating activities ......................... (12,064) (53,738) (70,954)
--------- --------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Cash used in acquisitions, net of cash acquired .................. (8,954) (41,447) (75,703)
Purchases of fixed assets ........................................ (5,549) (8,133) (16,618)
Purchases of equipment on lease .................................. (7,830) (10,528) (23,410)
Proceeds from sale of electronics business ....................... -- 1,720 --
Proceeds from sale of fixed assets ............................... 11 -- 751
Payments from related parties .................................... 117 23 687
--------- --------- -----------
Net cash used in investing activities ......................... (22,205) (58,365) (114,293)
--------- --------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings of amounts under senior debt facility ................. $ 41,013 $ 113,433 $ 77,880
Proceeds from sale of common stock ............................... 64,576 -- --
Proceeds from issuance of senior subordinated notes .............. -- -- 164,002
Repayment of amounts outstanding under senior debt facility ...... (61,521) (6,643) (56,190)
Payments to J/T Aviation Partners ................................ (10,161) -- --
Distribution to partners--prior to public offering ............... (3,042) -- --
Proceeds from note to prior owners of Kratz-Wilde ................ -- 2,200 --
Proceeds from equipment loans .................................... 822 7,200 10,488
Payments on equipment loans ...................................... -- (452) (921)
Payments on capital leases ....................................... -- -- (41)
Stock options exercised .......................................... 413 872 1,806
Payment of deferred financing costs .............................. (1,548) (2,188) (7,478)
--------- --------- -----------
Net cash provided by financing activities ..................... 30,552 114,422 189,546
--------- --------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................................. (3,717) 2,319 4,299
--------- --------- -----------
CASH AND CASH EQUIVALENTS, beginning of period .................... 7,635 3,918 6,237
--------- --------- -----------
CASH AND CASH EQUIVALENTS, end of period .......................... $ 3,918 $ 6,237 $ 10,536
========= ========= ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Promissory notes received for sales of electronics business ..... $ -- $ 864 $ --
Disposition of ocean systems business' assets in exchange for
preferred stock:
Inventory ...................................................... 3,943 -- --
Fixed assets, net .............................................. 557 -- --
Investment in preferred stock .................................. (4,500) -- --
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid .................................................... $ 4,946 $ 6,655 $ 15,684
========= ========= ===========
Income taxes paid ................................................ $ 6,722 $ 6,661 $ 18,669
========= ========= ===========

<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------
1998 1999
------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ....................................................... $ 3,748 $ 7,917
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization ................................... 2,163 3,481
Proceeds from sale of equipment on lease, net of gain ........... -- 2,339
Gain on sale of fixed assets .................................... -- --
Equity (income) losses of affilliate, net of income taxes ....... (345) (457)
Write-off of preferred stock .................................... -- --
Provision for doubtful accounts ................................. 390 530
Deferred income taxes ........................................... (208) 222
Extraordinary item, net of income taxes ......................... 599 --
Issuance of common stock to employees ........................... -- --
Gain on litigation settlement with former employee .............. -- --
Increase in accounts receivable, net ............................. (6,737) (35,502)
Increase in inventories .......................................... (31,725) (24,154)
Increase in other current assets ................................. (247) (1,849)
(Increase) decrease in other assets .............................. (517) (4,408)
Increase (decrease) in accounts payable .......................... (664) 7,751
Increase (decrease) in accrued expenses .......................... (205) 1,596
Increase (decrease) in deferred income ........................... 278 (167)
Increase (decrease) in other liabilities ......................... (30) --
----------- ---------
Net cash used in operating activities ......................... (33,500) (42,701)
----------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Cash used in acquisitions, net of cash acquired .................. (12,564) --
Purchases of fixed assets ........................................ (4,443) (4,007)
Purchases of equipment on lease .................................. (2,020) (2,348)
Proceeds from sale of electronics business ....................... -- --
Proceeds from sale of fixed assets ............................... -- --
Payments from related parties .................................... 537 24
----------- ---------
Net cash used in investing activities ......................... (18,490) (6,331)
----------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings of amounts under senior debt facility ................. $ 76,772 $ 125,421
Proceeds from sale of common stock ............................... -- --
Proceeds from issuance of senior subordinated notes .............. 164,002 --
Repayment of amounts outstanding under senior debt facility ...... (191,774) (87,987)
Payments to J/T Aviation Partners ................................ -- --
Distribution to partners--prior to public offering ............... -- --
Proceeds from note to prior owners of Kratz-Wilde ................ -- --
Proceeds from equipment loans .................................... 7,375 --
Payments on equipment loans ...................................... -- (343)
Payments on capital leases ....................................... -- (60)
Stock options exercised .......................................... 256 2,768
Payment of deferred financing costs .............................. (4,661) --
----------- ---------
Net cash provided by financing activities ..................... 51,970 39,799
----------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................................. (20) (9,233)
----------- ---------
CASH AND CASH EQUIVALENTS, beginning of period .................... 6,237 10,536
----------- ---------
CASH AND CASH EQUIVALENTS, end of period .......................... $ 6,217 $ 1,303
=========== =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Promissory notes received for sales of electronics business ..... $ -- $ --
Disposition of ocean systems business' assets in exchange for
preferred stock:
Inventory ...................................................... -- --
Fixed assets, net .............................................. -- --
Investment in preferred stock .................................. -- --
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid .................................................... $ 2,961 $ 10,773
=========== =========
Income taxes paid ................................................ $ 4,799 $ 4,884
=========== =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND OPERATIONS

Aviation Sales Company ("ASC") is a Delaware corporation. The operations
of ASC were initially conducted by two predecessor partnerships, AJT Capital
Partners, which was formed in February of 1992 to acquire certain aircraft and
spare parts owned by Eastern Air Lines, Inc., and ASC Acquisition Partners,
L.P. (the "Partnership"), which was formed in November of 1994 to acquire the
Aviation Sales Company business unit from Aviall Services, Inc.

ASC was organized on June 26, 1996, when: (i) all but one of the parties
holding interests in the Partnership contributed their interests in the
Partnership to ASC in exchange for 2,924 shares of ASC's common stock, and (ii)
one of the parties holding an interest in the Partnership, J/T Aviation
Partners ("J/T"), contributed its interest in the Partnership to ASC in
exchange for 1,501 shares of ASC's common stock and an amount equal to the
proceeds to be received by ASC for 575 shares of common stock sold in ASC's
initial public offering (the "IPO"), as more completely described below. For
periods prior to the closing of the IPO, the 4,425 shares issued to the
partners and the 575 shares of common stock, the net proceeds in respect of
which were paid to J/T, are presented as outstanding.

In July 1996, ASC completed its IPO of 3,738 shares of its common stock at
$19 per share raising net proceeds, after expenses, of $64,576. Of such
proceeds, $10,161 was used to pay indebtedness due to J/T in connection with
the formation of the Company and the balance of which was used to repay senior
and subordinated indebtedness. See Note 5.

On July 31, 1998, ASC acquired Whitehall Corporation ("Whitehall") for
consideration of 2,844 shares of ASC common stock. Under the terms of the
acquisition agreement, each share of Whitehall common stock was exchanged for
.5143 shares of ASC common stock. The acquisition of Whitehall has been
accounted for under the pooling of interests method of accounting. The
accompanying consolidated financial statements give retroactive effect to the
acquisition of Whitehall. All share amounts have been restated to include the
conversion of the Whitehall common stock to ASC common stock in the merger and
a two for one stock split effected by Whitehall in March 1997. The operations
of ASC and Whitehall retroactively consolidated are referred to herein as the
operations of the Company.

INTERIM FINANCIAL DATA

In the opinion of the management of ASC, the accompanying unaudited
condensed consolidated financial statements of ASC and subsidiaries contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position of ASC as of March 31, 1999, and the
results of its operations for the three months ended March 31, 1998 and 1999.
The results of operations and cash flows for the three months ended March 31,
1999 are not necessarily indicative of the results of operations or cash flows
which may be reported for the remainder of 1999, or for any subsequent period.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts

F-7
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ from
those estimates.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.

RECLASSIFICATIONS

Certain 1996 and 1997 account balances have been reclassified to be
consistent with the 1998 financial statement presentation.

CASH AND CASH EQUIVALENTS

The Company considers all deposits with an original maturity of three
months or less to be cash equivalents. Cash and cash equivalents at December
31, 1997 and 1998, include cash held by the Company in demand deposit accounts.

REVENUE RECOGNITION

Sales of aircraft parts and repairs are recognized as product sales when a
unit is shipped and title has passed to the customer or when a repaired unit is
returned to the customer. The Company records reserves for estimated sales
returns in the period sales are made. Reserves for returns as of December 31,
1997 and 1998 were $1,741 and $1,399, respectively. The Company also warehouses
and sells inventories on behalf of others under consignment arrangements. The
Company records sales of aircraft parts from consignment inventories as product
sales upon shipment of the unit. The Company exchanges rotable parts in need of
service or overhaul for new, overhauled or serviceable parts in its inventory
for a fee. Fees on exchanges are recorded as product sales at the time the unit
is shipped.

Aircraft maintenance service revenues are recognized when services are
performed and unbilled receivables are recorded. Unbilled receivables are
billed on the basis of contract terms (which are generally on completion of an
aircraft) and deliveries. The Company also performs inventory repair management
and warehouse management services to customers on a contractual basis. These
service fees are recorded in revenue over the course of the contract as the
services are rendered. Gain on sale of equipment on lease is included in
services and other revenue.

INVENTORIES

Inventories, which consist primarily of aircraft parts, are stated at the
lower of cost or market on primarily a specific identification basis. In
instances where bulk purchases of inventory items are made, cost is determined
based upon an allocation by management of the bulk purchase price to the

F-8
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

individual components. Expenditures required for the recertification of parts
are capitalized as inventory and are expensed as the parts associated with the
recertification are sold. The Company enters into consignment arrangements for
bulk quantities of inventory items. Costs to disassemble and warehouse bulk
items are carried as inventory and expensed as the consigned items are sold.
The Company maintains raw materials and work in progress inventories in support
of its manufacturing and maintenance, repair and overhaul activities. At
December 31, 1997 and 1998, inventories consisted of the following:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Finished goods including aircraft parts .......... $131,582 $248,430
Work in progress ................................. 2,115 7,626
Raw materials .................................... 11,646 21,075
-------- --------
$145,343 $277,131
======== ========
</TABLE>

EQUIPMENT ON LEASE

The Company leases engines and spare parts inventories to the airline
industry on a worldwide basis through operating leases. Operating lease income
is recognized on a straight-line basis over the term of the underlying leases.
The cost of equipment on lease is amortized, principally on a straight-line
basis, to the estimated remaining net realizable value over the lease term or
the economic life of the equipment.

FIXED ASSETS, NET

At December 31, 1997 and 1998, fixed assets, net consisted of the
following:

<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
Land ................................ $ 1,307 $ 1,397
Buildings ........................... 8,770 12,889
Machinery and equipment ............. 28,171 48,782
Furniture and fixtures .............. 6,763 4,817
Leasehold improvements .............. 10,259 25,440
--------- ---------
55,270 93,325
Accumulated depreciation .......... (17,209) (23,581)
--------- ---------
$ 38,061 $ 69,744
========= =========
</TABLE>

For financial reporting purposes, the Company provides for depreciation of
fixed assets using the straight-line method at annual rates sufficient to
amortize the cost of the assets less estimated salvage values over their
estimated useful lives. Estimated useful lives range from 3 to 20 years for the
Company's fixed assets.

Maintenance and repair expenditures are charged to expense as incurred,
and expenditures for improvements and major renewals are capitalized. The
carrying amounts of assets which are sold or retired and the related
accumulated depreciation are removed from the accounts in the year of disposal,
and any resulting gain or loss is reflected in income.

F-9
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Depreciation expense amounted to $1,843, $3,120 and $6,501 for the years
ended December 31, 1996, 1997 and 1998, respectively.

INVESTMENTS

In November 1996, Whitehall sold substantially all of the assets related
to its ocean systems business in exchange for 818 shares of the buyer's
preferred stock, which carries a liquidation preference of $5.50 per share. The
preferred stock is convertible at the Company's election after December 31,
1997 into shares of the buyer's common stock at a 45% conversion rate. In 1996,
Whitehall considered this investment as one that would be held to maturity and
that its carrying value of $4,500 approximated its fair market value. The
carrying value was the net cost of the assets exchanged for the stock. However,
although the buyer of the ocean systems business provided additional capital
and new management, the continuing decline in defense spending and other
concerns caused Whitehall's management in 1997 to reevaluate the value of this
preferred stock. As a result, other (income) expense in the accompanying 1997
statement of income contains a $4,500 write-off of the value of the preferred
stock.

In March 1997, Whitehall sold its electronics business for approximately
$2,764, consisting of approximately $1,900 in cash and $864 in 10% promissory
notes.

During 1994, Whitehall obtained a 40% ownership interest in a joint
venture involved in the development of aircraft-related technology for an
initial investment of $1. The Company accounts for its investment in the joint
venture under the equity method. In 1994, Whitehall loaned $2,000 to the joint
venture, which is evidenced by a promissory note which accrues interest at a
maximum rate of 5% per annum. Principal and accrued interest became due on
January 5, 1999. Management is evaluating the possibility of extending the note
or converting the note and accrued interest into a capital contribution. The
note is secured by certain assets of the joint venture.

Summarized balance sheet information for the joint venture as of December
31, 1997 and 1998 is as follows:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Current assets .................. $ 14,358 $ 18,294
Noncurrent assets ............... 2,782 1,351
Current liabilities ............. 12,489 8,150
Noncurrent liabilities .......... 2,000 2,000
</TABLE>

Summarized results of operations for the joint venture for the years ended
December 31, 1996, 1997 and 1998 is as follows:

<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net sales .................. $ 11,520 $ 17,810 $ 45,483
Gross profit ............... 4,104 3,578 7,754
Net income (loss) .......... 1,044 (569) 5,557
</TABLE>

F-10
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

INTANGIBLE ASSETS

The costs associated with obtaining financing are included in the
accompanying consolidated balance sheets as deferred financing costs and are
being amortized over the initial terms of the loans to which such costs relate.
Amortization expense for the years ended December 31, 1996, 1997 and 1998 was
$616, $386 and $949, respectively. In February 1998, the Company completed the
offering and sale of $165,000 of its senior subordinated notes and used a
portion of the proceeds to retire existing term and revolving indebtedness. In
connection with these transactions, the Company wrote off the deferred
financing costs related to the term loans. See Note 5.

The cost and accumulated amortization of deferred financing costs as of
December 31, 1997 and 1998 is as follows:

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Deferred financing costs:
Original basis ................... $ 3,244 $ 9,378
Accumulated amortization ......... (568) (1,274)
------- --------
$ 2,676 $ 8,104
======= ========
</TABLE>

The excess of the purchase price over the fair values of the net assets
acquired from Kratz-Wilde Machine Company, Inc., Caribe Aviation, Inc. and
Triad International Maintenance Corporation were approximately $17,902, $9,703
and $31,200, respectively. These amounts have been recorded as goodwill, which
are being amortized on a straight-line basis over 20 years. Amortization
expense for the years ended December 31, 1997 and 1998 was $190 and $1,679,
respectively.

Goodwill and accumulated amortization as of December 31, 1997 and 1998 is
as follows:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Goodwill:
Original basis ................... $ 17,902 $ 58,805
Accumulated amortization ......... (190) (1,869)
-------- --------
$ 17,712 $ 56,936
======== ========
</TABLE>

The Company continually evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be
evaluated for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets in
measuring their recoverability.

DEFERRED INCOME

Advance payments and deposits received on operating leases are initially
deferred and subsequently recognized as the Company's obligations under the
lease agreements are fulfilled.

F-11
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

ENVIRONMENTAL COSTS

Environmental expenditures that relate to current operations are expensed.
Remediation costs that relate to existing conditions caused by past operations
are accrued when it is probable that these costs will be incurred and can be
reasonably estimated. Environmental costs are included in operating expenses in
the accompanying consolidated statements of income.

STOCK COMPENSATION PLANS

The Company accounts for the fair value of its grants under its stock
option plans in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"). The Company adopted
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") on January 1, 1996.

INCOME TAXES

Prior to June 26, 1996, the business of ASC was conducted by the
Partnership and therefore was not subject to income taxes. ASC, as a result of
its organization and the transfer of the net assets of the Partnership to it,
became subject to federal and state income taxes. At that time, ASC adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). Deferred income taxes, which arose primarily as a result
of temporary differences between the Partnership's book and tax basis of
certain assets and liabilities, were recorded, resulting in an adjustment to
the Company's reported earnings in the period of adoption. A deferred income
tax benefit of $914 was credited to operations at the time of adoption. The
transfer of J/T's interest in the Partnership to ASC described in Note 1
resulted in a step-up in basis in ASC's net assets for tax purposes. As a
result, during 1996, a deferred tax benefit of $3,962 was recorded. See Note
11.

Prior to the merger, Whitehall filed a consolidated federal income tax
return with its subsidiaries. Deferred federal income taxes have been provided
for temporary differences between tax and financial reporting resulting
primarily from depreciation provisions, allowances and expense accruals.

Under SFAS 109, deferred tax assets or liabilities are computed based upon
the difference between the financial statement and income tax bases of assets
and liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability from
period to period. If available evidence suggests that it is more likely than
not that some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the amount
that is more likely than not to be realized. Future changes in such valuation
allowance would be included in the provision for deferred income taxes in the
period of change.

FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the short maturity of the
instruments and the provision for what

F-12
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1--GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

management believes to be adequate reserves for potential losses. Management
believes the fair value of long-term debt approximates the carrying amount of
long-term debt in the accompanying consolidated balance sheets as the Company's
variable rate long-term debt reprices to market and its fixed rate long-term
debt is at what management believes to be fair market interest rates.

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"), was issued by the Financial Accounting
Standards Board in June 1997. This statement establishes standards for the
reporting and display of comprehensive income and its components in a full set
of financial statements. The objective of SFAS 130 is to report a measure
(comprehensive income) of all changes in equity of an enterprise that result
from transactions and other economic events in a period other than transactions
with owners. The Company adopted SFAS 130 effective January 1, 1998. The
adoption of SFAS 130 did not have a material impact on the Company's
consolidated financial statements. No additional disclosure is required as net
income is the same as comprehensive income for all periods presented.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 establishes standards for
the way that public companies report selected information about operating
segments in annual and interim financial reports to shareholders. It also
establishes standards for related disclosures about an enterprise's business
segments, products, services, geographic areas and major customers. SFAS No.
131, which supersedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise", but retains the requirement to report information about
major customers, requires that a public company report financial and
descriptive information about its reportable operating segments. Generally,
financial information is required to be reported on the basis that it is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. SFAS No. 131 requires that a public company report a
measure of segment profit or loss, certain specific revenue and expense items
and segment assets. The Company adopted SFAS No. 131 effective December 31,
1998. Management operates the business of the Company as a single operating
segment. As a result, no additional disclosure was required.

In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants ("ACSEC") issued Statement
of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 establishes criteria for
determining which costs of developing or obtaining internal-use computer
software should be charged to expense and which should be capitalized. The
Company adopted SOP 98-1 prospectively on January 1, 1999. Management does not
believe that the adoption of SOP 98-1 will have a material effect on the
Company's financial position or results of operations.

In April 1998, the ACSEC issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities." SOP 98-5 establishes standards for the reporting and
disclosure of start-up costs, including organization costs. The Company adopted
SOP 98-5 effective on January 1, 1999. Management does not believe that the
adoption of SOP 98-5 will have a material effect on the Company's financial
position or results of operations.

F-13
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 2--BUSINESS COMBINATIONS

ACQUISITIONS ACCOUNTED FOR UNDER THE PURCHASE METHOD OF ACCOUNTING

In August 1996, the Company completed the acquisition of certain assets of
the business of Dixie Bearings, Incorporated ("Dixie") for approximately $9,000
in cash. The historical operations of Dixie, when compared to the historical
operations of the Company, are not significant.

In July 1997, Whitehall completed the acquisition of an aircraft
maintenance facility for approximately $6,700 in cash and assumed liabilities.
This acquisition involved the purchase of inventories, equipment, and certain
intangible assets.

In October 1997, the Company completed the acquisition of substantially
all of the assets of the business of Kratz-Wilde Machine Company, a Kentucky
corporation ("Kratz-Wilde") for $39,600 in cash and notes and the assumption of
certain liabilities of Kratz-Wilde in the approximate amount of $2,200. (See
Note 5).

In March 1998, the Company completed the acquisition of Caribe Aviation,
Inc. ("Caribe") and Caribe's wholly owned subsidiary Aircraft Interior Design,
Inc. ("AIDI") for $23,300, consisting of $5,000 in cash, and $5,000 in
promissory notes payable over two years; the issuance of 182 shares of the
Company's common stock; and the repayment of approximately $7,600 of
indebtedness owed by Caribe and AIDI to a financial institution.

In September 1998, the Company completed the acquisition of Triad
International Maintenance Corporation ("TIMCO") for $63,300 in cash. (See Note
5). Additionally, as a part of the transaction, the Company agreed to guarantee
certain industrial revenue bond financing incurred in connection with the
development of TIMCO's Greensboro operating facilities, in the approximate
amount of $11,700 and the Company has posted an irrevocable letter of credit to
secure its obligations thereunder.

The Company's acquisitions of Dixie, Aero Corp-Macon, Kratz-Wilde, Caribe,
AIDI and TIMCO have been accounted for under the purchase method of accounting
and accordingly, the purchase price has been allocated to the assets purchased
and liabilities assumed based upon the fair values at the date of acquisition,
and their results of operations have been included in the accompanying
consolidated financial statements from the date of acquisition.

F-14
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 2--BUSINESS COMBINATIONS--(CONTINUED)

Unaudited pro forma consolidated results of operations assuming the Aero
Corp-Macon, Kratz-Wilde, Caribe, AIDI and TIMCO acquisitions had occurred at
the beginning of the periods presented are as follows:

<TABLE>
<CAPTION>
FOR THE
DECEMBER 31, THREE MONTHS
----------------------------- ENDED MARCH 31,
1997 1998 1998
------------- ------------- ----------------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
(UNAUDITED)
<S> <C> <C> <C>
Revenue .................................................. $ 503,100 $ 614,900 $ 142,724
Income before extraordinary item ......................... 3,700 28,000 4,836
Net income ............................................... 3,700 27,415 4,238
Diluted earnings per share before extraordinary item ..... $ 0.29 $ 2.15 $ 0.33
</TABLE>

The unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated these businesses as of January 1, 1997.

ACQUISITIONS ACCOUNTED FOR UNDER THE POOLING OF INTERESTS METHOD OF ACCOUNTING

Shares issued to consummate acquisitions accounted for under the pooling
of interests method of accounting are reflected as outstanding for all periods
presented in the accompanying financial statements.

In December 1996, the Company acquired AvEng Trading Partners, Inc.
("AvEng"), a company that was formed in 1995, for consideration of 400 shares
of the Company's common stock. The acquisition was accounted for using the
pooling of interests method of accounting.

In September 1997, the Company acquired Aerocell Structures, Inc.
("Aerocell") for consideration of 621 shares of the Company's common stock.
Although the acquisition was accounted for using the pooling of interests
method of accounting, the accompanying consolidated financial statements prior
to 1997 have not been restated to give retroactive effect to the acquisition
due to the immateriality of the restated amounts.

In December 1997, the Company acquired Apex Manufacturing, Inc. ("Apex")
for consideration of 239 shares of the Company's common stock. Although the
acquisition was accounted for using the pooling of interests method of
accounting, the accompanying consolidated financial statements prior to 1997
have not been restated to give retroactive effect for the acquisition due to
the immateriality of the restated amounts.

In July 1998, the Company acquired Whitehall for consideration of 2,844
shares of the Company's common stock. The acquisition was accounted for using
the pooling of interests method of accounting and thus, the accompanying
consolidated financial statements have been restated to give retroactive effect
for the acquisition for all periods presented.

F-15
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 2--BUSINESS COMBINATIONS--(CONTINUED)

Details of the results of operations of ASC and the pooled entities for
the periods before the pooling of interest combinations were consummated are as
follows:

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS
ENDED MARCH 31,
1996 1997 1998 1998
------------ ------------ ------------ ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:
ASC .............................. $ 152,271 $ 230,181 $ 414,318 $ 82,408
AvEng, Aerocell and Apex ......... 9,293 26,566 -- --
Whitehall ........................ 70,170 65,791 86,498 19,766
--------- --------- --------- --------
$ 231,734 $ 322,538 $ 500,816 $102,174
========= ========= ========= ========
Income before extraordinary item:
ASC .............................. $ 16,553 $ 13,653 $ 19,977 $ 4,350
AvEng, Aerocell and Apex ......... 807 3,128 -- --
Whitehall ........................ 4,317 (11,937) 6,115 (3)
--------- --------- --------- ---------
$ 21,677 $ 4,844 $ 26,092 $ 4,347
========= ========= ========= ========
</TABLE>

PURCHASE PRICE ALLOCATIONS

The purchase price allocations for business combinations accounted for
under the purchase method of accounting (including historical accounts of
immaterial acquisitions accounted for under the pooling of interests method of
accounting) were as follows:

<TABLE>
<CAPTION>
FOR THE
YEAR ENDED DECEMBER 31, THREE MONTHS
--------------------------------------- ENDED MARCH 31,
1996 1997 1998 1998
---------- ------------ ----------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Accounts receivable ............... $ 2,898 $ 7,011 $ 31,874 $ 4,140
Inventories ....................... 6,000 8,803 15,057 9,124
Prepaid expenses .................. -- 19 1,127 --
Deposits and other assets ......... -- 619 483 116
Fixed assets ...................... 100 21,962 22,245 3,667
Goodwill .......................... -- 17,902 40,903 9,588
Accounts payable .................. (44) (2,328) (8,842) (3,351)
Accrued expenses .................. -- (2,632) (16,424) --
Deferred income taxes ............. -- (557) -- --
Notes payable ..................... -- (3,446) (5,000) (5,000)
Capital lease obligations ......... -- (4,290) -- --
Common stock issued ............... -- (1,616) (5,720) (5,720)
------- -------- --------- --------
Cash used in acquisitions, net of
cash acquired .................. $ 8,954 $ 41,447 $ 75,703 $ 12,564
======= ======== ========= ========
</TABLE>

F-16
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 3--ACCOUNTS RECEIVABLE

The Company distributes products to commercial airlines, air cargo
carriers, distributors, maintenance facilities, corporate aircraft operators
and other related companies. The Company performs periodic credit evaluations
of its customers' financial conditions and provides allowances for doubtful
accounts as required. No customer represented greater than 10 percent of
revenues or accounts receivable for the years ended December 31, 1996, 1997 or
1998. Accrued sales not billed for aircraft maintenance services are billed on
the basis of contract terms (which are generally on completion of an aircraft)
and deliveries. Accrued sales not billed amounted to $6,578 and $23,862 at
December 31, 1997 and 1998, respectively, and are included in accounts
receivable in the accompanying consolidated balance sheets. All accrued amounts
at December 31, 1998 are expected to be billed and collected in 1999.

In April 1997, the Company was awarded the United States Air Force C-130
maintenance contract, which was subsequently canceled in June 1997 at the
convenience of the government. The C-130 contract provides for reimbursement by
the United States Air Force of costs incurred during its operation. At December
31, 1997, the Company recorded a $2,800 net receivable from the government for
these costs, which was the Company's best estimate of the amount it will
collect for the claim it has made. During 1998, the Company collected
approximately $750 from the government related to this claim. The Company is
currently negotiating a termination settlement with the government.

NOTE 4--EQUIPMENT ON LEASE

In the normal course of business, the Company leases engines and spare
parts to third parties pursuant to noncancelable operating leases ranging from
one to ten years. The cost and accumulated amortization of equipment on lease
are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Equipment on lease, at cost ......... $ 26,385 $ 31,368
Accumulated amortization ............ (3,627) (3,014)
-------- --------
$ 22,758 $ 28,354
======== ========
</TABLE>

Deposits of $962 and $799, respectively, received on outstanding leases
are recorded as deferred income in the accompanying consolidated balance sheets
and will be applied in connection with the final settlement of these leases.

Amortization expense on equipment on lease amounted to $1,576, $1,923, and
$2,018 for the years ended December 31, 1996, 1997 and 1998, respectively.

F-17
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 4--EQUIPMENT ON LEASE--(CONTINUED)

Future minimum lease receivables under outstanding leases are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- ---------------------------
<S> <C>
1999 ................ $ 5,762
2000 ................ 4,894
2001 ................ 4,442
2002 ................ 3,429
2003 ................ 2,772
Thereafter .......... 10,010
--------
$ 31,309
========
</TABLE>

NOTE 5--NOTES PAYABLE AND REVOLVING LOAN

At December 31, 1997 and 1998, notes payable and revolving loan consisted
of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- MARCH 31,
1997 1998 1999
------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving loan ...................................... $ 96,127 $ 174,007 $ 215,171
Amended term loans .................................. 55,643 -- --
Senior subordinated notes, net of discount .......... -- 164,163 164,185
Term loan--purchased assets ......................... 546 -- --
Term loan--leased assets ............................ 7,028 16,589 14,799
Note payable to prior owners of Kratz-Wilde ......... 2,200 2,200 950
Note payable to prior owner of Caribe ............... -- 5,000 2,500
---------- ---------- ----------
161,544 361,959 399,053
Less--current maturities ............................ (108,668) (178,915) (220,069)
---------- ---------- ----------
Net long-term notes payable ......................... $ 52,876 $ 183,044 $ 178,984
========== ========== ==========
</TABLE>

Future maturities of notes payable and revolving loan at December 31, 1998
are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- ---------------------------
<S> <C>
1999 ................. $ 178,915
2000 ................. 5,247
2001 ................. 1,659
2002 ................. 5,595
2003 ................. 6,380
Thereafter ........... 164,163
---------
$ 361,959
=========
</TABLE>

SENIOR CREDIT FACILITY

Prior to July 2, 1996, the Company financed its working capital needs
primarily through, (a) a series of term loans (with $55,000 in principal
outstanding at December 31, 1995) payable periodically

F-18
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 5--NOTES PAYABLE AND REVOLVING LOAN--(CONTINUED)

through November 30, 2000, and (b) a $20,000 revolving credit facility expiring
November 30, 1999. On July 2, 1996, the Company used the net proceeds of its
IPO to repay all of this indebtedness. In connection with this repayment and
restructuring of the previous bank lending agreement, the Company wrote-off
$3,053 of deferred financing costs (resulting in an extraordinary item, net of
income taxes of $1,862). At the same date, the Company entered into a new
credit facility with a group of financial institutions. The Credit Facility
(the "Credit Facility") consisted of (a) a term loan facility in an original
principal amount of $20,000 and (b) a $50,000 revolving loan, letter of credit
and acquisition loan facility.

In October 1997, in connection with the acquisition of Kratz-Wilde, the
Company further amended its Credit Facility. The Amended Credit Facility (the
"Amended Credit Facility") consisted of: (a) term loans of $55,600, and (b) a
revolving loan and letter of credit facility of $91,400. The term loan portion
of the Amended Credit Facility was repayable in quarterly installments through
July 31, 2002 and the revolving loan portion of the Amended Credit Facility was
due and payable on July 31, 2002.

In February 1998, the Company repaid all amounts then outstanding under
the Amended Credit Facility with the net proceeds from the Company's sale of
$165,000 of its senior subordinated notes (See Senior Subordinated Notes
below). The Company wrote off deferred financing costs of $981 in connection
with the repayment of the term loan portion of the Amended Credit Facility,
resulting in an extraordinary item, net of taxes, of $599.

In September 1998, in connection with the acquisition of TIMCO, the
Company further amended its Amended Credit Facility to increase the revolving
loan and letter of credit facility to $200,000, up to $30,000 of which may be
outstanding letters of credit.

In November 1998, the Amended Credit Facility was further amended to
increase the revolving loan and letter of credit facility to $250,000. See Note
14.

Borrowings under the Amended Credit Facility are secured by a lien on
substantially all of the Company's assets and the borrowing base consists of
substantially all of the Company's receivables and inventory. Interest under
the Amended Credit Facility is, at the option of the Company, (a) prime plus a
margin, or (b) LIBOR plus a margin, where the respective margin determination
is made upon the Company's financial performance over a 12 month period
(ranging from 0.0% to 1.0% in the event prime is utilized, or 1.125% to 2.5% in
the event LIBOR is utilized). At December 31, 1998 and March 31, 1999
(unaudited), the margin was 0.5% for prime rate loans and 2.0% for LIBOR rate
loans.

The Amended Credit Facility contains certain financial covenants regarding
the Company's financial performance and certain other covenants, including
limitations on the amount of annual capital expenditures and the incurrence of
additional debt, and provides for the suspension of borrowing and repayment of
all debt in the event of a material adverse change in the business of the
Company or a change in control. In addition, the Amended Credit Facility
requires mandatory repayments from the proceeds of a sale of assets or an
issuance of equity or debt securities or as a result of insufficient collateral
to meet the borrowing base requirements thereunder. At December 31,

F-19
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 5--NOTES PAYABLE AND REVOLVING LOAN--(CONTINUED)

1998 the Company was not in compliance with one of its financial covenants and
the Company has obtained a waiver from the lender relating to such
non-compliance. At March 31, 1999 (unaudited), the Company was in compliance
with its financial covenants. At December 31, 1998 and March 31, 1999
(unaudited), $12,478 and $6,701, respectively, was available for borrowing
under the Amended Credit Facility and outstanding letters of credit aggregated
$22,600.

SENIOR SUBORDINATED NOTES

In February 1998, the Company sold $165,000 of senior subordinated notes
due in 2008 with a coupon rate of 8.125% at a price of 99.395%. The proceeds of
the sale were used to repay all amounts then outstanding under the Company's
Amended Credit Facility and to fund the cash requirements related to the
acquisition of Caribe and AIDI.

The senior subordinated notes mature on February 15, 2008. Interest is
payable on February 15 and August 15 of each year, commencing August 15, 1998.
The senior subordinated notes are general unsecured obligations of the Company,
subordinated in right of payment to all existing and future senior debt,
including indebtedness outstanding under the credit facility and under
facilities which may replace the credit facility in the future. In addition,
the senior subordinated notes are effectively subordinated to all secured
obligations to the extent of the assets securing such obligations, including
the credit facility.

The indenture pursuant to which the senior subordinated notes have been
issued permits the Company and its subsidiaries to incur substantial additional
indebtedness, including additional senior debt. Under the indenture, the
Company may borrow unlimited additional amounts so long as after incurring such
debt it meets a fixed charge coverage ratio for the most recent four fiscal
quarters of 2.0 to 1 until February 15, 2000 and 2.25 to 1 thereafter. At
December 31, 1998 and March 31, 1999 (unaudited), the Company's fixed charge
coverage ratio for the last four fiscal quarters was 3.1 to 1 and 3.2 to 1,
respectively. Additionally, the indenture allows the Company to borrow and have
outstanding additional amounts of indebtedness (even if it does not meet the
required fixed charge coverage ratios), up to enumerated limits. The senior
subordinated notes are also effectively subordinated in right of payment to all
existing and future liabilities of any of its subsidiaries which do not
guarantee the senior subordinated notes.

The senior subordinated notes are fully and unconditionally guaranteed, on
a senior subordinated basis, by substantially all of the Company's existing
subsidiaries and each subsidiary that will be organized in the future by the
Company unless such subsidiary is designated as an unrestricted subsidiary.
Subsidiary guarantees are joint and several, full and unconditional, general
unsecured obligations of the subsidiary guarantors. Subsidiary guarantees are
subordinated in right of payment to all existing and future senior debt of
subsidiary guarantors, including the credit facility, and are also effectively
subordinated to all secured obligations of subsidiary guarantors to the extent
of the assets securing their obligations, including the credit facility.
Furthermore, the indenture permits subsidiary guarantors to incur additional
indebtedness, including senior debt, subject to certain limitations. The
Company has not presented separate financial statements and other disclosures
concerning each of the subsidiary guarantors because management has determined
that such information is not material to investors.

F-20
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 5--NOTES PAYABLE AND REVOLVING LOAN--(CONTINUED)

The senior subordinated notes are redeemable, at the Company's option, in
whole or in part, at any time after February 15, 2003, at the following
redemption prices, plus accrued and unpaid interest and liquidated damages, if
any, to the redemption date: (i) 2003--104.063%; (ii) 2004--102.708%; (iii)
2005--101.354%; and (iv) 2006 and thereafter--100%. In addition, on or prior to
February 15, 2001, the Company may redeem up to 35% of the aggregate principal
amount of the senior subordinated notes at a redemption price of 108.125% of
the principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, thereon to the redemption date with the net proceeds of a
public offering of common stock of the Company; provided, that at least 65% of
the aggregate principal amount of the senior subordinated notes originally
issued remains outstanding immediately after the occurrence of this redemption.

Upon the occurrence of a change of control, the Company will be required
to make an offer to repurchase all or any part of each holder's senior
subordinated notes at a repurchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages, if any,
thereon to the repurchase date. There can be no assurance that the Company will
have the financial resources necessary to purchase the senior subordinated
notes upon a change of control or that such repurchase will then be permitted
under the credit facility.

The indenture contains certain covenants that, among other things, limits
the Company's ability and that of its subsidiaries to incur additional
indebtedness and issue preferred stock, pay dividends or make other
distributions, make investments, dispose of assets, issue capital stock of
subsidiaries, create certain liens securing indebtedness, enter into certain
transactions with affiliates, sell assets or enter into certain mergers and
consolidations or sell all or substantially all of the Company's assets.

OTHER LOANS

Prior to its acquisition by the Company, Whitehall had a credit facility
with a bank. The credit facility consisted of a $12,000 line of credit and a
$3,000 standby letter of credit agreement. The line of credit bore interest at
prime. The Company repaid this debt at the closing of its acquisition of
Whitehall with proceeds borrowed under the Amended Credit Facility.

The Company has term loan agreements in the aggregate principal amount of
$17,700 to finance certain equipment and rotable parts on long-term leases
which secure the loans. These loans bear interest ranging from 7.40% to 8.21%
and are payable monthly through July 2003. These loans contain financial and
other covenants and mandatory prepayment events, as defined. At December 31,
1998 and March 31, 1999 (unaudited), the Company was in compliance with all
covenants of these loans. See Note 14.

In connection with the acquisition of Kratz-Wilde (See Note 2), a
subsidiary of the Company delivered a non-interest bearing promissory note
(guaranteed by the Company) to the sellers in the original principal amount of
$2,200. Payments of $1,250 are due on January 1, 1999 and January 1, 2000.
Interest on this note has been imputed at 8%. A payment of $1,250 (unaudited)
was made during January 1999.

In connection with the acquisition of Caribe and AIDI (See Note 2), a
subsidiary of the Company delivered to the sellers a promissory note in the
original principal amount of $5,000, which was

F-21
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

guaranteed by the Company. The note is payable over a two year period with an
interest rate of 8% per annum. The first payment of $2,500 (unaudited) was made
during March 1999.

NOTE 6--RELATED-PARTY TRANSACTIONS

The Company leases its current corporate headquarters and warehouse in
Miami, Florida (the "Miami Property") from an entity controlled by certain
shareholders of the Company. The lease on the Miami Property calls for annual
payments in the amount of $893 expiring on December 2, 2014. In connection with
the purchase of the Miami Property by the related party, the Company made an
unsecured $2,466 loan to the related party, which loan bears interest at 8% per
annum, with principal and interest due in a single payment on December 2, 2004.
The remaining outstanding balance of $2,204 is reflected as amounts due from
related parties in the accompanying consolidated balance sheets.

The Company leases a warehouse in Miami, Florida, from an executive of the
Company. The lease expires on July 31, 2001 and requires annual payments of
$41, $42 and $25 in 1999, 2000 and 2001, respectively.

The Company previously leased a warehouse in Pearland, Texas, from a
related party. The lease required annual payments of $114 and was to expire on
December 2, 2000. On March 31, 1998, the Company purchased the Pearland
property from the related party for $1,800 in cash and through the reduction of
an accounts receivable due from the related party at the date of the sale.

The Company believes that the terms of its agreements with related parties
are no less favorable than could have been obtained from unaffiliated third
parties.

At December 31, 1997, as payment of bonuses, six officers of the Company
were each granted 3 shares of the Company's common stock. The fair value of
these shares on the date of issuance, $677, has been included in general and
administrative expenses in the accompanying 1997 statement of operations. On
June 18, 1998, the Compensation Committee of the Company's Board of Directors
rescinded this share grant. No consideration was provided or will be provided
in the future in connection with the rescission.

At December 31, 1997, two former officers of Whitehall were indebted to
Whitehall in the aggregate amount of approximately $363. These receivables were
written off by Whitehall in 1998, prior to the acquisition of Whitehall by the
Company.

NOTE 7--COMMITMENTS AND CONTINGENCIES

LITIGATION AND CLAIMS

On November 26, 1997, the Company settled an outstanding legal claim
against a former employee and shareholder of the Company. As part of this
settlement, the employee agreed to leave the Company and transfer 75 shares of
the Company's common stock back to the Company, which shares were immediately
retired. The fair value of the shares at the date of the settlement, $2,625, is
included in the accompanying 1997 statement of income as a gain on litigation
settlement with former employee.

F-22
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 7--COMMITMENTS AND CONTINGENCIES--(CONTINUED)

On January 8, 1999, Paine Webber Incorporated filed in the Supreme Court
of the State of New York a complaint against the Company and its subsidiary,
Whitehall, alleging breach of contract claims and related claims against the
Company and Whitehall and a tortious interference with a contract claim against
the Company. Paine Webber alleges that it is due a fee in connection with the
Company's acquisition of TIMCO, based upon a 1997 agreement between Whitehall
and Paine Webber relating to a then proposed acquisition of TIMCO by Whitehall
which did not occur. Paine Webber is seeking approximately $1,000, plus costs
and an unstated amount of punitive damages. Paine Webber is also seeking
approximately $250 allegedly due relating to the failure of Whitehall to honor
an alleged right of first refusal provision in the 1997 agreement.

The Company believes that its acquisition of TIMCO was not within the
scope of the 1997 Paine Webber/Whitehall agreement and that claims brought
under this agreement against the Company and Whitehall are without merit. The
Company is vigorously defending these claims. Although the Company can give no
assurance, based upon the available facts, the Company believes that the
ultimate outcome of this matter will not have a material adverse effect upon
its financial condition.

On June 4, 1998, Kenneth L. Harding filed an action against the Company in
the United States District Court of Oklahoma. Harding alleges that he had a
contract with AvEng Trading Partners, Inc. (which was subsequently acquired by
the Company) that he would receive a commission of 20% of the margin on all
aircraft parts sales to American Airlines prior to November 1997, in addition
to a $2 monthly retainer which he was paid prior to termination of the contract
in November 1997. Harding claims that James Stoecker, AvEng's principal (who
subsequently became employed by the Company), confirmed and ratified Harding's
claim when Mr. Stoecker was an employee of the Company. Mr. Stoecker and the
Company severed their relationship in November 1997. The Company is vigorously
defending this action. Although the Company can give no assurance, based upon
the available facts, the Company believes that the ultimate outcome of this
matter will not have a material adverse effect upon its financial condition.
See Note 14.

On June 24, 1998, Zantop International Airlines, Inc. filed an action
against Aero Corp.-Macon, Inc., one of the Company's subsidiaries (which is now
part of TIMCO), in the Superior Court of Bibb County, Georgia. The suit seeks
an unspecified amount of damages and certain equitable relief arising out of
the July 1997 sale to Aero Corp.-Macon, Inc. (then a subsidiary of Whitehall)
of certain assets used in connection with the operation of Aero Corp.-Macon,
Inc. The nature of the action involves a contractual dispute relative to
certain purchase price adjustments and inventory purchases. The Company is
vigorously defending this action. Although the Company can give no assurance,
based upon the available facts, the Company believes that the ultimate outcome
of this matter will not have a material adverse effect upon its financial
condition.

The Company is also involved in various lawsuits and other contingencies
arising out of operations in the normal course of business. In the opinion of
management, the ultimate resolution of these claims and lawsuits will not have
a material adverse effect upon the financial position of the Company.

ENVIRONMENTAL MATTERS

The Company is taking remedial action pursuant to Environmental Protection
Agency and Florida Department of Environmental Protection ("FDEP") regulations
at Aero Corp.-Lake City.

F-23
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 7--COMMITMENTS AND CONTINGENCIES--(CONTINUED)

Ongoing testing is being performed and new information is being gathered to
continually assess the impact and magnitude of the required remediation efforts
on the Company. Based upon the most recent cost estimates provided by
environmental consultants, the Company believes that the total remaining
testing, remediation and compliance costs for this facility will be
approximately $2,400. Testing and evaluation for all known sites on Aero
Corp.-Lake City's property is substantially complete and the Company has
commenced a remediation program. The Company is currently monitoring the
remediation, which will extend into the future. Subsequently, the Company's
accruals were increased because of this monitoring, which indicated a need for
new equipment and additional monitoring. Based on current testing, technology,
environmental law and clean-up experience to date, the Company believes that it
has established an accrual for a reasonable estimate of the costs associated
with its current remediation strategies.

To comply with the financial assurances required by the FDEP, the Company
has issued a $1,700 standby letter of credit in favor of the FDEP.

Additionally, there are other areas adjacent to Aero Corp.-Lake City's
facility that could also require remediation. The Company does not believe that
it is responsible for these areas; however, it may be asserted that Whitehall
and other parties are jointly and severally liable and are responsible for the
remediation of those properties. No estimate of any such costs to the Company
is available at this time.

In connection with the sale of Whitehall's electronics business, Whitehall
was required to perform, at its own expense, an environmental site assessment
at the electronics business' facility. Whitehall was also required to remedy
all recognized environmental conditions identified in the assessment to bring
such facility into compliance with all applicable Federal, State, and local
environmental laws. The buyer of this business, subject to the terms and
conditions set forth in the agreement, has the option of requiring Whitehall to
repurchase this property for $300. The buyer of this business, subject to the
terms and conditions set forth in the agreement, recently exercised its option
of requiring Whitehall to repurchase this property for $300 (unaudited).

Accrued expenses in the accompanying December 31, 1997, 1998 and March 31,
1999 consolidated balance sheets include $3,400, $3,148 and $2,891 (unaudited),
respectively, related to obligations to remediate the environmental matters
described above.

Future information and developments will require the Company to
continually reassess the expected impact of the environmental matters discussed
above. Actual costs to be incurred in future periods may vary from the
estimate, given the inherent uncertainties in evaluating environmental
exposures. These uncertainties included the extent of required remediation
based on testing and evaluation not yet completed and the varying costs and
effectiveness of remediation methods.

OTHER MATTERS

The Company has employment agreements with certain of its officers and key
employees which extend from two to four years. The employment agreements
provide that such officers and key employees may earn bonuses, based upon a
sliding percentage scale of their base salaries, provided

F-24
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 7--COMMITMENTS AND CONTINGENCIES--(CONTINUED)

the Company achieves certain financial operating results, as defined. Further,
certain of these employment agreements provide for certain severance benefits
in the event of a change of control.

At January 1, 1995, five officers and employees of the Company were
granted options (the "Options") by the partners to purchase an aggregate of
13.5% of the outstanding limited partnership interests in the Partnership for
an aggregate exercise price of $1,437, which was greater than the fair market
value, as determined by an independent third party, of the interests in the
Partnership at that date. At January 1, 1996, the Options were exercised in
full by delivery to the partners of full recourse promissory notes representing
the payment in full of the exercise price of the Options.

The Company has purchase commitments to various airlines whereby the
Company sells aircraft inventory as agent for such airlines. Pursuant to such
agreements, the Company has commitments to various airlines requiring the
Company to purchase a minimum amount of inventory from such airlines if minimum
sales targets are not met. Such commitments which total approximately $9,646
are to be fulfilled over the next three years. In the opinion of management,
the Company's commitments will be realized through future sales of aircraft
inventory owned by such airlines.

NOTE 8--LEASES

On December 17, 1998, the Company entered into an operating lease for its
build-to-suit corporate headquarters and warehouse facility with First Security
Bank, National Association, as trustee of a newly created trust, as lessor. The
lease has an initial term of five years and is a triple net lease with annual
rent as provided in the lease. The lease contains financial covenants regarding
the Company's financial performance and certain other affirmative and negative
covenants which it will be obligated to comply with during the term of the
lease. Substantially all of the Company's subsidiaries have guaranteed its
obligations under the lease. Additionally, the Company has an option to acquire
the new facility at the end of the lease for an option price as determined in
the lease. Alternatively, if the Company does not purchase the new facility at
the end of the lease, it will be obligated to pay certain amounts as provided
in the lease.

The development of the new facility has been financed by the trust through
a $35,500 loan facility provided by a syndicate of financial institutions.
Pursuant to the agreements entered into in connection with this financing, the
Company is obligated to develop the new facility on behalf of the trust and is
responsible for the timely completion thereof within an established
construction budget. The Company and substantially all of its subsidiaries have
guaranteed the repayment of $31,200 of the trust's obligations under the
agreements. The trust's obligations under these agreements are secured by a
lien on the real property and improvements comprising the new facility and on
the fixtures therein. Further, the Company has posted an irrevocable letter of
credit in favor of the trust in the amount of approximately $8,000 to secure
both its obligations under the lease and the trust's obligations under these
agreements.

The Company leases certain buildings and office equipment under operating
lease agreements. Two of the buildings are leased from related parties of the
Company (See Note 6). For the years ended December 31, 1996, 1997 and 1998,
rent expense under leases amounted to $2,118, $2,582 and $2,423, respectively.

F-25
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 8--LEASES--(CONTINUED)

Minimum rental commitments under all leases (excluding the operating lease
for the new facility discussed above) are as follows:

<TABLE>
<CAPTION>
OPERATING LEASES
---------------------------------------
TO RELATED TO THIRD CAPITAL
YEARS ENDING DECEMBER 31, PARTIES PARTIES LEASES
- --------------------------------------- ------------ ---------- -----------
<S> <C> <C> <C>
1999 ............................... $ 1,181 $ 3,714 $ 432
2000 ............................... 941 3,057 432
2001 ............................... 893 2,805 432
2002 ............................... 893 2,528 432
2003 ............................... 893 2,496 432
Thereafter ......................... 9,823 24,938 6,228
Amount related to interest ......... -- -- (4,171)
-------- -------- --------
$ 14,624 $ 39,538 $ 4,217
======== ======== ========
</TABLE>

NOTE 9--DOMESTIC AND EXPORT SALES INFORMATION

Substantially all of the Company's operating profits and identifiable
assets are sourced from or located in the United States. Information about the
Company's domestic and export sales for the three years ended December 31, 1998
follows:

<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Net Revenue by Geographical Areas:
United States ................... $ 164,381 $ 245,515 $ 409,611
Export Sales:
Europe ......................... 40,308 43,318 62,144
Far East ....................... 14,907 13,852 10,925
Latin America .................. 12,138 19,853 18,136
--------- --------- ---------
$ 231,734 $ 322,538 $ 500,816
========= ========= =========
</TABLE>

NOTE 10--EARNINGS PER SHARE

The Company adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share" during 1997. SFAS 128 establishes standards
for computing and presenting basic and diluted earnings per share. Basic
earnings per share is computed by dividing net income by the weighted average
common shares outstanding during the year. Diluted earnings per share is based
on the combined weighted average number of common shares and common share
equivalents outstanding which include, where appropriate, the assumed exercise
of options. In computing diluted earnings per share, the Company has utilized
the treasury stock method. All prior period earnings per share data have been
restated to conform with SFAS 128.

F-26
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 10--EARNINGS PER SHARE--(CONTINUED)

The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings per share is as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------------ ----------------------------
1996 1997 1998 1998 1999
-------- -------- -------- ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Weighted average shares outstanding
used in calculating basic earnings
per share ............................. 10,630 12,261 12,277 12,293 12,569
Effect of dilutive options ............. 139 189 419 283 414
------ ------ ------ ------ ------
Weighted average common and common
equivalent shares used in calculating
diluted earnings per share ............ 10,769 12,450 12,696 12,576 12,983
====== ====== ====== ====== ======
Options outstanding which are not
included in the calculation of diluted
earnings per share because their impact
is antidilutive ....................... 69 204 55 20 10
====== ====== ====== ====== ======
</TABLE>

For business combinations accounted for as pooling of interests, earnings
per share computations are based on the aggregate of the weighted-average
outstanding shares of the constituent businesses, adjusted to equivalent shares
of the surviving business for all periods presented.

PRO FORMA EARNINGS PER SHARE

Prior to June 26, 1996, the operations of ASC were conducted by the
Partnership, a Delaware general partnership and, therefore, the results of
operations for the period January 1, 1996 through June 26, 1996, do not include
a provision for income taxes, as the income of the Partnership passed directly
to its partners.

The following pro forma adjustments to record income taxes at the
Company's estimated effective tax rate have been reflected in the pro forma
earnings per share data presented in the accompanying consolidated statements
of income for the year ended December 31, 1996:

<TABLE>
<S> <C>
Historical income before income taxes, equity income of affiliate
and extraordinary item .................................................. $ 23,039
Pro forma provision for income taxes ..................................... 8,648
--------
Pro forma income before equity income of affiliate and extraordinary item 14,391
Equity income of affiliate, net of income taxes .......................... 255
--------
Pro forma income before extraordinary item ............................... 14,646
Extraordinary item, net of income taxes .................................. 1,862
--------
Pro forma net income ..................................................... $ 12,784
========
</TABLE>

Pro forma basic earnings per share have been computed by dividing pro
forma net income by the weighted average number of common shares outstanding.
Pro forma diluted earnings per share is

F-27
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

based on the combined weighted average number of common shares and common share
equivalents outstanding which include, where appropriate, the assumed exercise
of options.

NOTE 11--INCOME TAXES

The income tax expense for the years ended December 31, 1996, 1997 and
1998 consists of the following:

<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Current ...........................
Federal .......................... $ 6,288 $ 6,544 $ 15,099
State ............................ 708 437 1,493
-------- ------- --------
6,996 6,981 16,592
-------- ------- --------
Deferred ..........................
Federal .......................... (4,689) 142 (1,006)
State ............................ (690) 137 (100)
-------- ------- --------
(5,379) 279 (1,106)
-------- ------- --------
Total income tax expense .......... $ 1,617 $ 7,260 $ 15,486
======== ======= ========
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets as of December 31, 1997 and 1998 are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
----------- ----------
<S> <C> <C>
Deferred tax assets, net:
Allowance for doubtful accounts ......... $ 534 $ 3,827
Accruals ................................ 2,166 1,197
Writedown of investment ................. 1,800 1,800
Inventories ............................. 1,783 3,151
Property and equipment .................. 1,844 655
Equipment on lease ...................... (693) (1,161)
Other ................................... 135 (1,415)
-------- --------
7,569 8,054
Less: valuation allowance ............... (3,027) (2,406)
-------- --------
Net deferred tax assets ................. $ 4,542 $ 5,648
======== ========
</TABLE>

The Company has established a valuation allowance to offset the deferred
tax assets that have resulted from items that will only be deductible when such
items are actually incurred. The valuation allowance will be maintained until
it is more likely than not that these deferred tax assets will be realized.

F-28
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 11--INCOME TAXES--(CONTINUED)

The reconciliation of the federal statutory rate and the Company's
effective tax rate is as follows for the year ended December 31:

<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Federal income tax at the statutory rate ...................... 35.0% 35.0% 35.0%
Increases (reductions) in tax rate resulting from:
Partnership income not subject to taxation ................... ( 8.8) -- --
Step-up in tax basis resulting from transfer of J/T's interest
(See Note 1) ............................................... (15.2) -- --
Transfer of net assets of the Partnership to the Company
(See Note 1) ................................................. ( 5.1) -- --
Change in deferred tax allowance .............................. ( 0.7) 20.2 (1.4)
State income taxes, net of federal tax benefit ................ 3.8 4.9 4.4
Other ......................................................... ( 2.0) (0.8) 0.5
----- ---- ----
Effective income tax rate ..................................... 7.0% 59.3% 38.5%
===== ==== ====
</TABLE>

NOTE 12--STOCK OPTION PLANS

The Company has two stock option plans (the "Plans"), (i) the 1996
Director Stock Option Plan (the "Director Plan"), under which options to
acquire a maximum of the greater of 150 shares or 2% of the number of shares of
Common Stock then outstanding may be granted to directors of the Company, and
(ii) the 1996 Stock Option Plan (the "1996 Plan"), under which options to
acquire a maximum of the greater of 650 shares of Common Stock or 8% of the
number of shares Common Stock then outstanding may be granted to executive
officers, employees (including employees who are directors), independent
contractors and consultants of the Company. The price at which the Company's
common stock may be purchased upon the exercise of options granted under the
Plans will be required to be at least equal to the per share fair market value
of the Common Stock on the date the particular options are granted. Options
granted under the Plans may have maximum terms of not more than ten years.
Generally, options granted under the Plans may be exercised at any time up to
three months after the person to whom such options were granted is no longer
employed or retained by the Company or serving on the Company's Board of
Directors.

Pursuant to the Plans, unless otherwise determined by the Compensation
Committee of the Company's Board of Directors, one-third of the options granted
under the Plans are exercisable upon grant, one-third are exercisable on the
first anniversary of such grant and the final one-third are exercisable on the
second anniversary of such grant. However, options granted under the Plans
shall become immediately exercisable if the holder of such options is
terminated by the Company or is no longer a director of the Company, as the
case may be, subsequent to certain events which are deemed to be a "change in
control" of the Company.

In connection with the merger with Whitehall, outstanding stock options to
purchase shares of Whitehall common stock under the Whitehall stock option
plans were converted into the right to receive that number of shares of the
Company's common stock as the holders would have been entitled to receive had
they exercised their options immediately prior to the merger and participated
in the merger.

F-29
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 12--STOCK OPTION PLANS--(CONTINUED)

The following summarizes outstanding stock options:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
TOTAL EXERCISE PRICE
--------- -----------------
<S> <C> <C>
Options outstanding, December 31, 1995 ...................... 225 $ 13.22
Granted .................................................... 264 23.19
Cancelled .................................................. -- --
Exercised .................................................. (33) 12.13
-----
Outstanding at December 31, 1996 ............................ 456 19.38
Granted .................................................... 381 25.47
Cancelled .................................................. (43) 23.01
Exercised .................................................. (48) 16.51
-----
Outstanding at December 31, 1997 ............................ 746 23.10
Granted .................................................... 446 27.93
Cancelled .................................................. (6) 22.85
Exercised .................................................. (101) 17.98
-----
Outstanding at December 31, 1998 ............................ 1,085 24.15
=====
Options exercisable:
At December 31, 1998 ....................................... 697 24.15
Available to grant under Plans at December 31, 1998 ......... 415
</TABLE>

The following table summarizes information about outstanding and
exercisable stock options at December 31, 1998:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
--------------------------------------- ----------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICE SHARES REMAINING CONTRACTUAL LIFE SHARES EXERCISE PRICE
- ------------------------ -------- ---------------------------- -------- -----------------
<S> <C> <C> <C> <C>
$ 8.12 - 16.25 123 9.0 123 $ 12.28
16.25 - 24.37 148 7.0 141 19.38
24.37 - 32.50 620 8.6 314 26.52
32.50 - 40.62 194 9.2 119 35.93
- -------------------- ----- --- --- --------
$ 8.12 - 40.62 1,085 8.5 697 $ 24.15
==================== ===== === === ========
</TABLE>

F-30
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 12--STOCK OPTION PLANS--(CONTINUED)

The Company accounts for the fair value of its option grants in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" whereby no compensation cost related to stock options is deducted
in determining net income. Had compensation cost for the Company's stock option
plans been determined pursuant to Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's
net income and earnings per share would have decreased accordingly. Using the
Black-Scholes option pricing model, the Company's pro forma net income, pro
forma earnings per share and pro forma weighted average fair value of options
granted, with related assumptions, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1996 1997 1998
------------- -------------- -------------
<S> <C> <C> <C>
Pro forma net income ........................... $ 18,035 $ 3,346 $ 19,887
Pro forma basic earnings per share ............. $ 1.67 $ 0.27 $ 1.62
Pro forma diluted earnings per share ........... $ 1.67 $ 0.27 $ 1.57
Risk free interest rates ....................... 6% 7% 5%
Expected lives ................................. 7-10 years 7-10 years 7-10 years
Expected volatility ............................ 40% 40% 40%
Weighted average grant date fair value ......... $ 15.81 $ 16.35 $ 16.43
</TABLE>

NOTE 13--SAVINGS PLAN

Effective January 1, 1995, the Company established a qualified defined
contribution plan (the "Plan") for eligible employees. The Plan provides that
employees may contribute up to the maximum percent of pretax earnings as
allowed by the U.S. tax code and the Company may elect, at its discretion, to
make contributions to the Plan in any year. The Company contributed
approximately $309, $296 and $810 to the Plan in 1996, 1997 and 1998,
respectively. The Company does not provide retired employees with health or
life insurance benefits.

Whitehall had a voluntary 401(k) savings plan for eligible employees. At
its discretion, Whitehall contributed 50% of employee contributions, up to 1.5%
of the employee's base salary. Contributions totaled approximately $40 in 1996
and $86 in 1997.

NOTE 14--SUBSEQUENT EVENTS (UNAUDITED)

The Company has filed a registration statement with the Securities and
Exchange Commission relating to the public sale of 2,000,000 shares of the
Company's common stock. The proceeds of the offering, if completed, will be used
to repay amounts outstanding under the Amended Credit Facility. See Note 5.
The Company has also filed a separate registration statement with respect to the
public offering of $85.0 million of the Company's senior subordinated notes due
2008. The Company intends to continually assess market conditions and complete
the offering of the notes when the Company determines market conditions are
appropriate. No assurances can be given as to when or if the Company will
complete the offering of the notes.

On May 6, 1999, the Company settled its outstanding litigation with
Kenneth L. Harding for $50. See Note 7.

In April 1999, the Company repaid term-loans aggregating $4,984 in
connection with the sale of certain equipment and rotable parts and the
associated long term lease which secured the loan. See Note 5.

F-31
<PAGE>

AVIATION SALES COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(FINANCIAL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 14--SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)

On May 11, 1999, the Amended Credit Facility was further amended to
increase the revolving loan and letter of credit facility to $300,000. See Note
5.

NOTE 15--QUARTERLY FINANCIAL DATA (UNAUDITED)

Results have been restated for pooling transactions. See Note 2.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------------- ------------- ----------- --------------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
1997:
Operating revenues ............................ $ 68,404 $ 77,153 $ 81,360 $ 95,621
Income from operations ........................ 7,148 10,634 468 6,748(a)
Net income (loss) ............................. 4,183 5,580 (3,747) (1,172)
Diluted income (loss) before extraordinary item
per share ................................... $ 0.34 $ 0.45 $ (0.30) $ (0.10)
Diluted net income (loss) per share ........... $ 0.34 $ 0.45 $ (0.30) $ (0.10)
</TABLE>

- ----------------
(a) Includes gain on legal settlement with former employee and shareholder of
approximately $2,600.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------------- -------------- -------------- --------------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
1998:
Operating revenues ..................... $ 102,174 $ 109,135 $ 127,469 $ 162,038
Income from operations ................. 10,436 13,420 17,732 19,781
Net income ............................. 3,748 5,600 7,921 8,224
Diluted income before extraordinary item
per share ............................ $ 0.35 $ 0.44 $ 0.63 $ 0.64
Diluted net income per share ........... $ 0.30 $ 0.44 $ 0.63 $ 0.64
</TABLE>

F-32
<PAGE>

SCHEDULE II

AVIATION SALES COMPANY AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS FOR
THE THREE YEARS ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
ADDITIONS
CHARGED TO
BALANCE AT COST AND (A) (B) BALANCE AT
DESCRIPTION BEGINNING OF YEAR EXPENSES OTHER DEDUCTIONS END OF YEAR
- ------------------------------- ------------------- ----------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
receivable:
Year Ended December 31-
1996 ...................... $2,683 $1,954 $ -- $ 339 $ 4,298
====== ====== ====== ====== =======
1997 ...................... $4,298 $8,157 $ -- $5,133 $ 7,322
====== ====== ====== ====== =======
1998 ...................... $7,322 $1,692 $5,304 $1,829 $12,489
====== ====== ====== ====== =======
</TABLE>

- ----------------
(A) Represents allowance for doubtful accounts acquired in purchase accounting.

(B) Represents accounts receivable written-off.

F-33

<PAGE>
================================================================================

2,000,000 Shares

Aviation Sales Company

Common Stock

[AVIATION SALES COMPANY LOGO]

--------
P R O S P E C T U S

, 1999

--------
Salomon Smith Barney

Deutsche Banc Alex.Brown

Robert W. Baird & Co.
Incorporated

Warburg Dillon Read LLC

================================================================================

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Except as set forth below, the following fees and expenses will be paid by
Aviation Sales in connection with the issuance and distribution of the
securities registered hereby and do not include underwriting commissions and
discounts. All such expenses, except for the SEC registration, NASD filing and
New York Stock Exchange listing fees, are estimated.

<TABLE>
<S> <C>
SEC registration fee .......................... $ 52,318.84
NASD filing fee ............................... 18,235.16
New York Stock Exchange listing fee ........... 10,000.00
Legal fees and expenses ....................... 550,000.00
Accounting fees and expenses .................. 250,000.00
Transfer Agent's and Registrar's fees ......... 10,000.00
Blue Sky Fees ................................. 7,500.00
Printing and engraving expenses ............... 150,000.00
Miscellaneous ................................. 311,946.00
--------------
Total ........................................ $ 1,080,000.00
==============
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to the provisions of Section 145(a) of the Delaware General
Corporation Law, Aviation Sales has the power to indemnify anyone made or
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of Aviation Sales) because such person
is or was a director or officer of Aviation Sales against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in the defense or settlement of such action, suit, or
proceeding, provided that (i) such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of
Aviation Sales and (ii) in the case of a criminal proceeding such person had no
reasonable cause to believe his conduct was unlawful.

With respect to an action or suit by or in the right of Aviation Sales to
procure a judgment in its favor, Section 145(b) of the Delaware General
Corporation Law provides that Aviation Sales shall have the power to indemnify
anyone who was, is, or is threatened to be made a party to a threatened,
pending, or completed action or suit brought by or in the right of Aviation
Sales to procure a judgment in its favor because such person is or was a
director or officer of Aviation Sales against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, provided that such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of Aviation Sales, except that no indemnification shall be made
in a case in which such person shall have been adjudged to be liable to
Aviation Sales unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall have determined upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses.

Indemnification as described above shall only be granted in a specific
case upon a determination that indemnification is proper under the
circumstances using the applicable standard of conduct which is

II-1
<PAGE>

made by (a) a majority of a quorum of directors who were not parties to such
proceeding, (b) independent legal counsel in a written opinion if such quorum
cannot be obtained or if a quorum of disinterested directors so directs, or (c)
the shareholders of Aviation Sales.

Section 145(g) of the Delaware General Corporation Law permits the
purchase and maintenance of insurance to indemnify directors and officers
against any liability asserted against or incurred by them in any such
capacity, whether or not Aviation Sales itself would have the power to
indemnify any such director or officer against such liability. Aviation Sales
has obtained such insurance and premiums are paid by Aviation Sales.

The Certificate of Incorporation of Aviation Sales provides for the
indemnification of directors and officers of Aviation Sales to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law, as the
same may be amended or supplemented. The Certificate of Incorporation further
provides that the indemnification provided for therein shall not be exclusive
of any rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.

The Certificate of Incorporation also contains a provision that eliminates
the personal liability of Aviation Sales' directors to Aviation Sales or its
shareholders for monetary damages for breach of fiduciary duty as a director.
The provision does not limit a director's liability for (i) breaches of duty of
loyalty to Aviation Sales or its shareholders, (ii) acts or omissions not in
good faith, involving intentional misconduct or involving knowing violations of
law, (iii) the payment of unlawful dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law, or (iv)
transactions in which the director received an improper personal benefit.
Depending on judicial interpretation, the provision may not affect liability
for violations of the federal securities laws.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Aviation
Sales pursuant to the foregoing provisions, or otherwise, Aviation Sales has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Aviation Sales of expenses incurred or
paid by a director, officer or controlling person of Aviation Sales in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Aviation Sales will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<S> <C>
NUMBER DESCRIPTION
------------ ---------------------------------------------------------------------------------------------
*1.1 Form of Underwriting Agreement
4.1 Registrant's Certificate of Incorporation, as amended, filed as Exhibits 3.1 and 3.2 to
Registrant's Registration Statement on Form S-1, File No. 333-3650, hereby incorporated by
reference.
4.2 Registrant's Bylaws filed as Exhibit 3.3 to Registrant's Registration Statement on Form S-1,
File No. 333-3650, hereby incorporated by reference.
*5.1 Opinion of Akerman, Senterfitt & Eidson, P.A.
**23.1 Consent of Arthur Andersen LLP
23.2 Consent of Akerman, Senterfitt & Eidson, P.A. (Included in Exhibit 5.1)
*23.3 Consent of Deloitte & Touche LLP
*24.1 Powers of Attorney (included on the signature page of this registration statement)
</TABLE>

- ----------------
* Previously filed
** Filed herewith

II-2
<PAGE>

(b) Financial Statement Schedules

Schedule II--Valuation and Qualifying Accounts for the Three Years Ended

December 31, 1998

All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Aviation Sales pursuant to the foregoing provisions, or otherwise, Aviation
Sales has been advised that, in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Aviation
Sales of expenses incurred or paid by a director, officer or controlling person
of Aviation Sales in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, Aviation Sales will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the Offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Miami, State of Florida, on June 10,
1999.

AVIATION SALES COMPANY

By /s/ DALE S. BAKER
------------------------
Dale S. Baker, President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement on Form S-3 has been signed by the
following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------------------------------- ------------------------------------------ --------------
<S> <C> <C>
/s/ DALE S. BAKER President, Chief Executive and Financial June 10, 1999
- ------------------------------- Officer and Chairman of the Board
Dale S. Baker (Principal Executive and
Financial Officer)

/s/ GARLAN BRAITHWAITE Vice President, Finance June 10, 1999
- ------------------------------- (Principal Accounting Officer)
Garlan Braithwaite

/s/ *HAROLD M. WOODY Executive Vice President and Director June 10, 1999
- -------------------------------
Harold M. Woody

/s/ *ROBERT ALPERT Director June 10, 1999
- -------------------------------
Robert Alpert

/s/ *SAM HUMPHREYS Director June 10, 1999
- -------------------------------
Sam Humphreys

/s/ PHILIP B. SCHWARTZ Director June 10, 1999
- -------------------------------
Philip B. Schwartz

/s/ *GEORGE F. BAKER Director June 10, 1999
- -------------------------------
George F. Baker

/s/ *JEFFREY N. GREENBLATT Director June 10, 1999
- -------------------------------
Jeffrey N. Greenblatt

* /s/ DALE S. BAKER
- -------------------------------
Dale S. Baker, under power
of attorney dated April 19, 1999
</TABLE>

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------- -------------------------------
<S> <C>
23.1 Consent of Arthur Andersen LLP
</TABLE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the use
of our report (and to all references to our Firm) included in or made a part of
this registration statement.

ARTHUR ANDERSEN LLP

Miami, Florida,

June 10, 1999.