Conventional air plasma spray technique and two powders, NiCrAlY and CoNiCrAlY, were used to produce the M-CrAlY type of coating on the Inconel 713LC substrate. Two phase coatings, consisting of Ni and/or Co solid solution and NiAl intermetallic phase, were produced. A certain amount of imperfectly melted powder particles, voids and aluminium oxide was also present. After air plasma spraying the coatings were annealed at widely ranging temperatures (650, 800, 1000 and 1150• C) for two hours in argon-flow atmosphere. It was found that the temperature significantly affects the microstructure of resulting coatings. The oxide scale was formed by internal oxidation in a coating region primarily at higher temperatures. In this case, aluminium was depleted from the NiAl phase within the coating region and the Ni, Co, Cr solid solutions and the aluminium oxide started to form rapidly. No interaction was observed after the short thermal exposure below the substrate surface. The microstructure of coatings was recorded by scanning electron microscope. Coating thickness, amount of voids and oxide scale were measured by means of image analysis. The concentration of phases was estimated by energy dispersive microanalysis.