Acquisition and Plan of Merger Announced by First Aviation

• Press Release
• Source: First Aviation Services Inc.
• On 7:00 am EST, Monday November 9, 2009

WESTPORT, CT--(Marketwire - 11/09/09) - First Aviation Services Inc. (FAvS) (Pinksheets:FAVS - News) announced that it has entered into definitive agreement with Kelly Aerospace, Inc. to acquire the business of Kelly Aerospace Turbine Rotables, Inc. through a newly formed subsidiary named Aerospace Turbine Rotables, Inc. (AeTR). FAvS has separately entered into definitive agreement to acquire the propeller overhaul repair business of Limco-Piedmont Inc. through a newly formed subsidiary Piedmont Propulsion Systems, LLC (PPS). These transactions will also result in Limco-Piedmont acquiring approximately 37% of FAvS' common stock in the form of newly issued non-voting shares, plus preferred stock and Limco-Piedmont guaranteeing certain debt required to finance the purchase of AeTR. Limco-Piedmont is a subsidiary of TAT Technologies Ltd. (NASDAQ:TATTF - News).

AeTR is a FAA and EASA approved repair station located in Wichita, KS which provides overhaul, exchange and repair services for flight critical airframe components on general aviation turbine-and-piston-powered aircraft. The company overhauls a variety of aircraft components but specializes in the repair of landing gear systems, hydrostatic, safety equipment services, hydraulic and electrical components. The company's product mix and capabilities focus on turbine aircraft on general aviation platforms with large in-service fleets.

PPS specializes in MRO services for propellers, primarily for turboprop aircraft used by regional airlines, military and corporate operators. PPS is licensed by Hartzell and McCauley to provide MRO services for their propellers and is recognized as a leader in its industry.

As described more fully in the shareholder proxy, FAvS believes these transactions will create a more competitive, profitable and dynamic firm going forward. The combination of these operations with FAvS' existing world class supply chain and distribution services provided by Aerospace Products International, Inc., will offer a full portfolio of maintenance, repair and overhaul capabilities to First Aviation customers, able to repair most major components on turboprops for the military, general aviation, and regional airline markets. The expanded capabilities will be immediately accretive to earnings.

Aaron Hollander, Chairman & CEO of First Aviation, said, "The acquisitions of Kelly Aerospace's Turbine Rotable business and Limco-Piedmont's propeller overhaul division will significantly expand our repair and overhaul capabilities. The transactions will also provide a significant increase in our equity as a result of the exchange of approximately $5.8 million newly issued common non-voting shares to Limco-Piedmont for the propeller overhaul division and credit enhancement to support the AeTR acquisition." Mr. Hollander went on to say that "the Limco-Piedmont family will be an excellent investor and partner in First Aviation. We look forward to welcoming their participation on the board of directors. They have a deep understanding of the aerospace industry and an appreciation for First Aviation's capabilities."

Dr. Avraham Ortal, CEO of Limco-Piedmont and a newly appointed director of FavS, said, "We are very pleased to make this investment in First Aviation and are enthusiastic about the prospects of the combined businesses. Aerospace Products International, Piedmont Propulsion Systems, and Aerospace Turbine Rotables, Inc. make a powerful combination."

Attached to this press release are Unaudited Pro Forma Condensed Consolidated Financial Statements for FAvS for the twelve-month period ended June 30, 2009, based upon financial information for that period provided by Kelly and Limco-Piedmont. Assuming that FAvS acquired PPS and AeTR on July 1, 2008, these Statements reflect pro forma EBITDA of $3,991,000, total assets of $70,366,000, debt of $28,489,000 and stockholders' equity of $24,612,000. Stated in terms of FAvS' current fiscal year ending January 31, 2010, based on discussions with the managements of Kelly and Piedmont, and assuming that FAvS acquired PPS and AeTR on February 1, 2009, FAvS anticipates that for the current fiscal year FAvS will have pro forma EBITDA of between $6 million and $7 million (without giving effect to the costs of the transactions described above).

The transactions are subject to various contingencies described in the proxy as well as shareholder approval which is expected at the company's annual meeting to be held on November 24, 2009.

Please see our forward looking statement at www.firstaviation.com/forward

First Aviation Services Inc. together with its subsidiaries ("FAvS"), is one of the leading suppliers of aircraft parts and components to the aviation industry worldwide, and is a provider of third party logistics and inventory management services to the aerospace industry.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

The unaudited pro forma condensed consolidated financial data set forth below are based on historical consolidated financial statements of FAvS, the historical financial statements of Aerospace Turbine Rotables, Inc. ("AeTR"), the historical financial statements of Piedmont Propulsion Systems, LLC ("PPS"), and adjustments described in the accompanying notes to the unaudited pro forma financial data. The unaudited pro forma condensed financial data is presented to give effect to FAvS's acquisitions of AeTR and PPS (collectively, the "acquisition").

The unaudited pro forma condensed balance sheet combines the historical consolidated balance sheet of FAvS as of July 31, 2009, and the historical balance sheets of AeTR and PPS as of June 30, 2009, giving effect to the acquisition as if it occurred on July 31, 2009. The unaudited pro forma condensed consolidated statements of operations combine the historical consolidated statements of operations of FAvS for the twelve months ended July 31, 2009 with the historical financial statements of AeTR and PPS for the twelve months ended June 30, 2009, giving effect to the acquisition as if it occurred at the beginning of the twelve month period ended July 31, 2009.

The pro forma condensed consolidated statements of operations reflect only the pro forma adjustments expected to have a continuing impact on the combined results beyond 12 months from the consummation of the acquisition, and do not reflect any changes in operations that may occur.

The unaudited pro forma condensed consolidated financial data are for illustrative purposes only, are hypothetical in nature and do not purport to represent what our results of operations, balance sheet or other financial information would have been if the acquisition had occurred as of the dates indicated or what such results will be for any future periods. The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable, including an allocation of the purchase price based on an estimate of fair value, and exclude certain non-recurring charges as disclosed. These estimates are preliminary and are based on information currently available and could change significantly.

The successor will acquire substantially all of the assets and certain liabilities of PPS and AeTR. The acquisitions will be accounted for under the purchase method of accounting with the assets and liabilities acquired recorded at their fair values at the date of acquisition. The results of operations of the acquired business will be included in the Condensed Consolidated Statements of Operations beginning as of the effective date of the acquisition. The purchase price will be allocated to the assets and liabilities acquired. The excess value of the purchase price over the fair value of the assets and liabilities acquired will be allocated to goodwill and other intangible assets. FAvS will finalize the purchase accounting after acquisitions and expects to do so by the end of the first quarter of the next fiscal year. The pro forma information reflects the fair values as currently estimated based on preliminary information available.

�
  First Aviation Services Inc. and Subsidiaries
  Unaudited Pro Forma Condensed Consolidated Balance Sheet
  (amounts in thousands)



                      July 31,  June 30,  June 30,
                        2009      2009      2009
                        FAvS      PPS       AeTR          Pro Forma
                      --------  --------- --------  ----------------------
                                                    Adjust-
Assets                                               ments          Total
Current assets
   Cash and cash
    equivalents       $  1,827            $     10  $    (10) f   $  1,827
   Trade
    receivables-net     13,214  $   3,454      906    (1,100) i     16,474
   Inventories, net     33,360      2,767    2,136    (1,680) i     36,583
   Prepaid expenses
    and other            1,369        103      482                   1,954
                      --------  --------- --------  --------      --------
Total current assets    49,770      6,324    3,534    (2,790)       56,838

Property and
 equipment, net          2,677        131      150                   2,958
Goodwill                            1,311    1,222    (1,222) e
                                                      (1,311) j
                                                       4,208  g
                                                       6,362  l     10,570
Intangible assets                   1,147             (1,147) k
                      --------  --------- --------  --------      --------

Total assets          $ 52,447  $   8,913 $  4,906  $  4,100      $ 70,366
                      ========  ========= ========  ========      ========

Liabilities and
 Stockholders' Equity
Current liabilities
   Accounts payable   $ 14,188  $     818 $    516  $    (44) b   $ 15,478
   Accrued
    compensation           160        150      231      (231) b        310
   Other accrued
    liabilities          1,305               1,071    (1,041) b      1,477
                                                         449  k
                                                        (307) m

   Revolving line of
    credit              21,025              (3,028)    3,028  c     28,025
                                                       7,000  h
   Notes payable -
    current
    maturities             464                  26       (26) c        464
                      --------  --------- --------  --------      --------
Total current
 liabilities            37,142        968   (1,184)    8,828        45,754

Related party
 sub-debt                2,000                 335      (335) c
                                                      (2,000) m
Long-term debt                                  12       (12) c
Intercompany debt                              796      (796) c
Other non-current
 liabilities                                   146      (146) d
                      --------  --------- --------  --------      --------
Total liabilities       39,142        968      105     5,539        45,754

Stockholders' equity
   Common stock             91                                          91
   Preferred stock                                     1,350  o,m    1,350
   Net assets                       7,945             (7,945) n
   Additional paid in
    capital             39,028                  55       (55) a     48,985
                                                       1,707  m
                                                       8,250  o


   Retained earnings
    (deficit)          (17,112)              4,746    (4,746) a    (17,112)
   Accumulated other
    comprehensive
    income                 348                                         348
                      --------  --------- --------  --------      --------
                        22,355      7,945    4,801    (1,439)       33,662
   Less: treasury
    stock               (9,050)                                     (9,050)
                      --------  --------- --------  --------      --------
Total stockholders'
 equity                 13,305      7,945    4,801    (1,439)       24,612

Total liabilities and
 stockholders' equity $ 52,447  $   8,913 $  4,906  $  4,100      $ 70,366
                      ========  ========= ========  ========      ========


See Notes to Unaudited Pro Forma Condensed Financial Statements




  First Aviation Services Inc. and Subsidiaries
  Unaudited Pro Forma Condensed Statement of Operation with EBIT
   and EBITDA presented
  (amount in thousands)

                        Twelve months ended
                  -------------------------------
                  July 31,   June 30,   June 30,          Pro Forma
                    2009       2009       2009     ------------------------
                    FavS        PPS       AeTR     Adjustments      Total
                  ---------  ---------- ---------- -----------   ----------

   Revenue        $ 105,782  $   10,013 $    9,486               $  125,281
   COGS              87,236       7,531      6,798                  101,565
                  ---------  ---------- ----------               ----------

   Gross profit
    excluding
    freight          18,546       2,482      2,688                   23,716
   Net freight
    expense           1,090                                           1,090
                  ---------  ---------- ----------               ----------

   Gross profit      17,456       2,482      2,688                   22,626


   Selling,
    general and
    administrative
    expenses         16,667         474      1,311 $    (125)  q     18,327

   Corporate
    expense           1,581         329        600      (765)  p      1,745
                  ---------  ---------- ---------- ---------     ----------
   Income (loss)
    from
    operations         (792)      1,679        777       890          2,554
                                                         320   t
   Interest
    expense, net      1,187                     58       (58)  s      1,507
   Other income
    (expense)            10                      3                       13
                  ---------  ---------- ---------- ---------     ----------

   Income (loss)
    before taxes     (1,969)      1,679        722       628          1,060
                                                         360   u
   Income taxes
    (w)                             672        290      (962)  r        360
                  ---------  ---------- ---------- ---------     ----------

   Net income
    (loss)        $  (1,969) $    1,007 $      432 $   1,230     $      700
                  =========  ========== ========== =========     ==========

   EBIT           $    (782) $    1,679 $      780               $    2,567
   EBITDA               468       1,810        852                    3,991

See Notes to Unaudited Pro Forma Condensed Financial Statements

First Aviation Services Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Financial Statements

1. The acquisitions of AeTR and PPS will be accounted for as a business combination. FAvS will finance the acquisitions with a $7.0 million borrowing under its existing $32.0 million revolving credit facility and issuance of its common and preferred stock currently valued at $9.0 million. The purchase price is subject to a working capital adjustment. Under the acquisition method of accounting, the assets and liabilities of AeTR and PPS will be recorded at their fair values as of the acquisition date.

The purchase price is determined as follows (amounts in thousands):

�
                  Cash consideration paid      $  7,000
                  Issuance of FAVS stock          9,000
                                               --------
                  Purchase price               $ 16,000
                                               ========

For purposes of the pro forma presentation, the purchase price has been allocated on a preliminary basis to the acquired tangible and intangible assets and liabilities based on their estimated fair values as of July 31, 2009 as follows (amounts in thousands);

�
                  Current assets               $  7,068
                  Property and equipment            281
                  Current liabilities            (1,919)
                  Goodwill                       10,570
                                               --------
                  Net purchase price           $ 16,000
                                               ========

Subsequent to acquisition, goodwill will be adjusted as other intangible assets are valued at fair value. Intangible assets with indefinite lives (once determined), including goodwill, will not be amortized.

The purchase price allocation above, including amounts allocated to goodwill, is presented for pro forma information only. The actual purchase price allocation will be based on the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates, which may be materially different than the estimated fair values at July 31, 2009.

2. The following describes the pro forma adjustments related to the acquisitions made in the accompanying unaudited pro forma condensed consolidated balance sheet as of July 31, 2009 and the unaudited pro forma condensed consolidated statement of operations for the twelve months ended July 31, 2009.

�
a  To eliminate AeTR historical stockholders' equity
b  To eliminate non-acquired current liabilities of AeTR
c  To eliminate non-acquired debt of AeTR
d  To eliminate deferred tax liability of AeTR
e  To eliminate pre-acquisition goodwill on AeTR
f  To eliminate non-acquired assets of AeTR
g  To record goodwill on AeTR acquisition
h  To record debt for AeTR acquisition-interest at prime rate (as defined)
   plus 4.5%
i  To adjust acquired assets to estimated fair value
j  To eliminate pre-acquisition goodwill and intangibles assets on PPS
k  To record additional current liabilities for PPS
l  To record goodwill on PPS acquisition
m  Convert FAVS sub-debt to equity
n  To eliminate net assets (equity) on PPS
o  To record estimated value of FAvS common and preferred stock to be
   issued
p  Eliminate corporate allocation
q  Eliminate estimated non-ongoing SG&A expenses on AeTR
r  Eliminate Income tax on AeTR
s  Eliminate historical interest on AeTR
t  Estimated additional interest on additional debt
u  Estimated income taxes at the statutory rate
v  Transaction expenses associated with the acquisitions are not presented
   in the accompanying Pro Forma Statement of Operations
w  The acquired companies were part of a consolidated group and do not pay
   income tax as individual companies.  Income taxes presented represent
   income tax at an estimated tax rate as if they reported separately

 
Contact:
James Howell
Chief Financial Officer
Aerospace Products International, Inc.
(203) 291-3300