##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



For the quarterly period ended: June 30, 2003



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File Number 0-26582



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WORLD AIRWAYS, INC.

(Exact name of registrant as specified in its charter)



|DELAWARE                                                       |  | 94-1358276                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



The HLH Building,
101 World Drive, Peachtree City, GA 30269

(Address of Principal Executive Offices)



(770) 632-8000

(Registrants telephone number, including area code)



---



Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  x  No ̈



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ̈No  x



The number of shares of the registrants Common Stock outstanding on
July 31, 2003 was 11,194,098.



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##### Table of Contents

WORLD AIRWAYS, INC.



JUNE 30, 2003 QUARTERLY REPORT ON FORM 10-Q



TABLE OF CONTENTS



|                             |  |         |  |                                                                                                                     |  | Page
|---------------------------- |  | ------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ----
|                             | 
|PART IFINANCIAL INFORMATION |  |        
|                             |  |         | 
|                             |  | Item 1. |  | Financial Statements                                                                                                |  |     
|                             |  |         | 
|                             |  |         |  | Condensed Consolidated Balance Sheets, June 30, 2003 (Unaudited) and December 31, 2002                              |  | 3   
|                             |  |         | 
|                             |  |         |  | Condensed Consolidated Statements of Operations (Unaudited), Three Months Ended June 30, 2003 and 2002              |  | 5   
|                             |  |         | 
|                             |  |         |  | Condensed Consolidated Statements of Operations (Unaudited), Six Months Ended June 30, 2003 and 2002                |  | 6   
|                             |  |         | 
|                             |  |         |  | Condensed Consolidated Statement of Changes in Stockholders Deficiency (Unaudited), Six months ended June 30, 2003 |  | 7   
|                             |  |         | 
|                             |  |         |  | Condensed Consolidated Statements of Cash Flows (Unaudited), Six months ended June 30, 2003 and 2002                |  | 8   
|                             |  |         | 
|                             |  |         |  | Notes to Condensed Consolidated Financial Statements                                                                |  | 9   
|                             |  |         | 
|                             |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                               |  | 13  
|                             |  |         | 
|                             |  | Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                                                          |  | 16  
|                             |  |         | 
|                             |  | Item 4. |  | Controls and Procedures                                                                                             |  | 16  
|                             | 
|PART IIOTHER INFORMATION    |  |        
|                             |  |         | 
|                             |  | Item 4. |  | Submission of Matters to a Vote of Securities Holders                                                               |  | 17  
|                             |  |         | 
|                             |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                                    |  | 18  



2



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##### Table of Contents

ITEM 1. FINANCIAL STATEMENTS

WORLD AIRWAYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



ASSETS

(in thousands)



|                                                                                                                 |  | (unaudited) June30, 2003 |         | December 31,2002
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ----------------
|CURRENT ASSETS                                                                                                   |  |                          |         |                 
|Cash and cash equivalents, including restricted cash of $1,172 at June 30, 2003 and
$665 at December 31, 2002    |  | $                        | 14,749  |                 
|Accounts receivable, less allowance for doubtful accounts of $287 at June 30, 2003
and $255 at December 31, 2002 |  |                          | 43,003  |                 
|Prepaid expenses and other current assets                                                                        |  |                          | 6,043   |                 
|                                                                                                                 |  |                          |         |                 
|Total current assets                                                                                             |  |                          | 63,795  |                 
|                                                                                                                 |  |                          |         |                 
|EQUIPMENT AND PROPERTY                                                                                           |  |                          |         |                 
|Flight and other equipment                                                                                       |  |                          | 76,106  |                 
|Equipment under capital leases                                                                                   |  |                          | 9,463   |                 
|                                                                                                                 |  |                          |         |                 
|                                                                                                                 |  |                          | 85,569  |                 
|Less: accumulated depreciation and amortization                                                                  |  |                          | 45,082  |                 
|                                                                                                                 |  |                          |         |                 
|Net equipment and property                                                                                       |  |                          | 40,487  |                 
|                                                                                                                 |  |                          |         |                 
|LONG-TERM OPERATING DEPOSITS                                                                                     |  |                          | 18,574  |                 
|                                                                                                                 |  |                         
|OTHER ASSETS AND DEFERRED CHARGES, NET                                                                           |  |                          | 1,526   |                 
|                                                                                                                 |  |                          |         |                 
|TOTAL ASSETS                                                                                                     |  | $                        | 124,382 |                 
|                                                                                                                 |  |                          |         |                 



(Continued)



3



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##### Table of Contents

WORLD AIRWAYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(continued)



LIABILITIES AND STOCKHOLDERS DEFICIENCY

(in thousands except share amounts)

|                                                                                                                                                                            |  | (unaudited) June 30, 2003 |         |   | December 31, 2002 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ----------------- | -
|CURRENT LIABILITIES                                                                                                                                                         |  |                           |         |   |                   |  
|Notes payable                                                                                                                                                               |  | $                         | 17,567  |   |                   | $
|Accounts payable                                                                                                                                                            |  |                           | 22,950  |   |                   |  
|Accrued rent                                                                                                                                                                |  |                           | 11,822  |   |                   |  
|Unearned revenue                                                                                                                                                            |  |                           | 2,911   |   |                   |  
|Accrued maintenance                                                                                                                                                         |  |                           | 3,065   |   |                   |  
|Accrued salaries and wages                                                                                                                                                  |  |                           | 13,808  |   |                   |  
|Accrued taxes                                                                                                                                                               |  |                           | 2,871   |   |                   |  
|Other accrued liabilities                                                                                                                                                   |  |                           | 3,163   |   |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|Total current liabilities                                                                                                                                                   |  |                           | 78,157  |   |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|LONG-TERM OBLIGATIONS, NET OF CURRENT MATURITIES                                                                                                                            |  |                           | 40,545  |   |                   |  
|                                                                                                                                                                            |  |                          
|OTHER LIABILITIES                                                                                                                                                           |  |                           |         |   |                   |  
|Deferred gain from sale-leaseback transactions, net of accumulated amortization of
$2,571 at June 30, 2003 and $2,005 at December 31, 2002                                  |  |                           | 3,343   |   |                   |  
|Accrued post-retirement benefits                                                                                                                                            |  |                           | 3,235   |   |                   |  
|Deferred rent                                                                                                                                                               |  |                           | 14,778  |   |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|Total other liabilities                                                                                                                                                     |  |                           | 21,356  |   |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|TOTAL LIABILITIES                                                                                                                                                           |  |                           | 140,058 |   |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|STOCKHOLDERS DEFICIENCY                                                                                                                                                    |  |                           |         |   |                   |  
|Preferred stock, $.001 par value (5,000,000 shares authorized; no shares issued or outstanding)                                                                             |  |                           |        |   |                   |  
|Common stock, $.001 par value (100,000,000 shares authorized; 12,275,341 shares
issued; 11,194,098 shares outstanding at June 30, 2003 and 11,077,098 at December 31, 2002) |  |                           | 12      |   |                   |  
|Additional paid-in capital                                                                                                                                                  |  |                           | 24,544  |   |                   |  
|Accumulated deficit                                                                                                                                                         |  |                           | (27,375 | ) |                   |  
|Treasury stock, at cost (1,081,243 shares at June 30, 2003 and December 31, 2002)                                                                                           |  |                           | (12,857 | ) |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|Total stockholders deficiency                                                                                                                                              |  |                           | (15,676 | ) |                   |  
|                                                                                                                                                                            |  |                           |         |   |                   |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                               |  |                           |         |   |                   |  
|                                                                                                                                                                            |  |                          
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIENCY                                                                                                                              |  | $                         | 124,382 |   |                   | $
|                                                                                                                                                                            |  |                           |         |   |                   |  



See accompanying Notes
to Condensed Consolidated Financial Statements



4



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WORLD AIRWAYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, 2003 and 2002

(in thousands except per share data)

(unaudited)



|                                                  |  | 2003 |         |   | 2002 |  
|------------------------------------------------- |  | ---- | ------- | - | ---- | -
|OPERATING REVENUES                                |  |      |         |   |      |  
|Flight operations                                 |  | $    | 116,014 |   |      | $
|Other                                             |  |      | 617     |   |      |  
|                                                  |  |      |         |   |      |  
|Total operating revenues                          |  |      | 116,631 |   |      |  
|                                                  |  |      |         |   |      |  
|OPERATING EXPENSES                                |  |      |         |   |      |  
|Flight                                            |  |      | 35,541  |   |      |  
|Maintenance                                       |  |      | 19,463  |   |      |  
|Aircraft costs                                    |  |      | 20,852  |   |      |  
|Fuel                                              |  |      | 18,624  |   |      |  
|Flight operations subcontracted to other carriers |  |      | 133     |   |      |  
|Commissions                                       |  |      | 3,889   |   |      |  
|Depreciation and amortization                     |  |      | 1,309   |   |      |  
|Sales, general and administrative                 |  |      | 9,000   |   |      |  
|                                                  |  |      |         |   |      |  
|Total operating expenses                          |  |      | 108,811 |   |      |  
|                                                  |  |      |         |   |      |  
|OPERATING INCOME                                  |  |      | 7,820   |   |      |  
|                                                  |  |     
|OTHER INCOME (EXPENSE)                            |  |      |         |   |      |  
|Interest expense                                  |  |      | (1,168  | ) |      |  
|Interest income                                   |  |      | 93      |   |      |  
|Other, net                                        |  |      | (102    | ) |      |  
|                                                  |  |      |         |   |      |  
|Total other expense                               |  |      | (1,177  | ) |      |  
|                                                  |  |      |         |   |      |  
|EARNINGS BEFORE INCOME TAXES                      |  |      | 6,643   |   |      |  
|                                                  |  |     
|INCOME TAXES                                      |  |      | 250     |   |      |  
|                                                  |  |      |         |   |      |  
|NET EARNINGS                                      |  | $    | 6,393   |   |      | $
|                                                  |  |      |         |   |      |  
|BASIC EARNINGS PER SHARE                          |  |      |         |   |      |  
|Net earnings                                      |  | $    | 0.58    |   |      | $
|                                                  |  |      |         |   |      |  
|Weighted average shares outstanding               |  |      | 11,109  |   |      |  
|DILUTED EARNINGS PER SHARE                        |  |      |         |   |      |  
|Net earnings                                      |  | $    | 0.44    |   |      | $
|                                                  |  |      |         |   |      |  
|Weighted average shares outstanding               |  |      | 16,472  |   |      |  



See accompanying Notes
to Condensed Consolidated Financial Statements



5



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WORLD AIRWAYS, INC.

CONDENSED STATEMENTS OF OPERATIONS

Six Months Ended June 30, 2003 and 2002

(in thousands except per share data)

(unaudited)



|                                                  |  | 2003 |         |   | 2002 |  
|------------------------------------------------- |  | ---- | ------- | - | ---- | -
|OPERATING REVENUES                                |  |      |         |   |      |  
|Flight operations                                 |  | $    | 239,291 |   |      | $
|Other                                             |  |      | 983     |   |      |  
|                                                  |  |      |         |   |      |  
|Total operating revenues                          |  |      | 240,274 |   |      |  
|                                                  |  |      |         |   |      |  
|OPERATING EXPENSES                                |  |      |         |   |      |  
|Flight Operations                                 |  |      | 69,973  |   |      |  
|Maintenance                                       |  |      | 42,683  |   |      |  
|Aircraft rent and insurance                       |  |      | 42,748  |   |      |  
|Fuel                                              |  |      | 39,985  |   |      |  
|Flight operations subcontracted to other carriers |  |      | 225     |   |      |  
|Commissions                                       |  |      | 8,548   |   |      |  
|Depreciation and amortization                     |  |      | 2,781   |   |      |  
|Sales, general and administrative                 |  |      | 17,848  |   |      |  
|                                                  |  |      |         |   |      |  
|Total operating expenses                          |  |      | 224,791 |   |      |  
|                                                  |  |      |         |   |      |  
|OPERATING INCOME                                  |  |      | 15,483  |   |      |  
|                                                  |  |     
|OTHER INCOME (EXPENSE)                            |  |      |         |   |      |  
|Interest expense                                  |  |      | (2,402  | ) |      |  
|Interest income                                   |  |      | 190     |   |      |  
|Other, net                                        |  |      | (13     | ) |      |  
|                                                  |  |      |         |   |      |  
|Total other expense                               |  |      | (2,225  | ) |      |  
|                                                  |  |      |         |   |      |  
|                                                  |  |     
|EARNINGS BEFORE INCOME TAXES                      |  |      | 13,258  |   |      |  
|                                                  |  |     
|INCOME TAXES                                      |  |      | 250     |   |      |  
|                                                  |  |      |         |   |      |  
|NET EARNINGS                                      |  | $    | 13,008  |   |      | $
|                                                  |  |      |         |   |      |  
|BASIC EARNINGS PER SHARE                          |  |      |         |   |      |  
|Net earnings                                      |  | $    | 1.17    |   |      | $
|                                                  |  |      |         |   |      |  
|Weighted average shares outstanding               |  |      | 11,093  |   |      |  
|DILUTED EARNINGS PER SHARE                        |  |      |         |   |      |  
|Net earnings                                      |  | $    | 0.91    |   |      | $
|                                                  |  |      |         |   |      |  
|Weighted average shares outstanding               |  |      | 15,995  |   |      |  



See accompanying Notes
to Condensed Consolidated Financial Statements



6



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##### Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS DEFICIENCY

Six Months Ended June 30, 2003

(in
thousands except share amounts)

(unaudited)



|                                  |  | Common Stock |    | AdditionalPaid-in Capital |   | Accumulated Deficit |  |   | Treasury Stock,at Cost |   |  | TotalStockholdersDeficiency |        
|--------------------------------- |  | ------------ | -- | ------------------------- | - | ------------------- |  | - | ---------------------- | - |  | ---------------------------- | -------
|Balance at December 31, 2002      |  | $            | 12 |                           | $ | 24,361              |  | $ | (40,383                | ) |  | $                            | (12,857
|Amortization of warrants          |  |              |   |                           |   | 92                  |  |   |                       |   |  |                              |       
|Exercise of 117,000 Stock Options |  |              |   |                           |   | 91                  |  |   |                       |   |  |                              |       
|Net earnings                      |  |              |   |                           |   |                    |  |   | 13,008                 |   |  |                              |       
|                                  |  |              |    |                           |   |                     |  |   |                        |   |  |                              |        
|Balance at June 30, 2003          |  | $            | 12 |                           | $ | 24,544              |  | $ | (27,375                | ) |  | $                            | (12,857
|                                  |  |              |    |                           |   |                     |  |   |                        |   |  |                              |        



See accompanying Notes
to Condensed Consolidated Financial Statements.



7



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WORLD AIRWAYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2003 and 2002

(in thousands)

(unaudited)



|                                                                                        |  | 2003 |         |   | 2002 |  
|--------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                        |  | $    | 21,504  |   |      | $
|                                                                                        |  |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                                    |  |      |         |   |      |  
|Net earnings                                                                            |  |      | 13,008  |   |      |  
|Adjustments to reconcile net earnings to net cash provided by operating activities:     |  |      |         |   |      |  
|Depreciation and amortization                                                           |  |      | 2,781   |   |      |  
|Deferred gain recognition                                                               |  |      | (566    | ) |      |  
|Loss on sale of property and equipment                                                  |  |      | 161     |   |      |  
|Other                                                                                   |  |      | (5      | ) |      |  
|Provision for doubtful accounts receivable                                              |  |      | 32      |   |      |  
|Increase (decrease) in cash resulting from changes in operating assets and liabilities: |  |      |         |   |      |  
|Accounts receivable                                                                     |  |      | (14,644 | ) |      |  
|Deposits, prepaid expenses and other assets                                             |  |      | (535    | ) |      |  
|Accounts payable, accrued expenses and other liabilities                                |  |      | (1,948  | ) |      |  
|Unearned revenue                                                                        |  |      | 1,935   |   |      |  
|                                                                                        |  |      |         |   |      |  
|Net cash provided by operating activities                                               |  |      | 219     |   |      |  
|                                                                                        |  |      |         |   |      |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                    |  |      |         |   |      |  
|Purchases of equipment and property                                                     |  |      | (1,588  | ) |      |  
|Proceeds from disposal of equipment and property                                        |  |      | 15      |   |      |  
|                                                                                        |  |      |         |   |      |  
|Net cash used in investing activities                                                   |  |      | (1,573  | ) |      |  
|                                                                                        |  |      |         |   |      |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                    |  |      |         |   |      |  
|Increase (decrease) in line of credit borrowing arrangement, net                        |  |      | 471     |   |      |  
|Repayment of debt                                                                       |  |      |        |   |      |  
|Proceeds from exercise of stock options                                                 |  |      | 91      |   |      |  
|Deferral (repayment) of aircraft rent obligations                                       |  |      | (5,963  | ) |      |  
|                                                                                        |  |      |         |   |      |  
|Net cash used in financing activities                                                   |  |      | (5,401  | ) |      |  
|                                                                                        |  |      |         |   |      |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    |  |      | (6,755  | ) |      |  
|                                                                                        |  |      |         |   |      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              |  | $    | 14,749  |   |      | $
|                                                                                        |  |      |         |   |      |  



See accompanying Notes
to Condensed Consolidated Financial Statements



8



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##### Table of Contents

WORLD AIRWAYS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



|1. |  | Management believes that all adjustments necessary for a fair statement of results have been included in the Condensed Consolidated Financial Statements for the interim periods
presented, which are unaudited. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported
amounts 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 period. Actual results could differ from those
estimates and the results of operations for the six months ended June 30, 2003 are not necessarily indicative of the results to be expected for the year ending December 31, 2003.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These interim period Condensed Consolidated Financial Statements and
accompanying footnotes should be read in conjunction with the Consolidated Financial Statements contained in World Airways Annual Report on Form 10-K for the year ended December 31, 2002.



|2. |  | Earnings per Share
|-- |  | ------------------



The following table sets forth the computations of basic and diluted earnings per share (in thousands except per share data):



|                                                                   |  | Three Months Ended June 30, 2003
|------------------------------------------------------------------ |  | --------------------------------
|                                                                   |  | Earnings(Numerator)             
|Basic EPS                                                          |  |                                 
|Earnings available to common stockholders                          |  | $                               
|                                                                   |  |                                 
|Effect of Dilutive Securities                                      |  |                                 
|Options                                                            |  |                                 
|8% convertible debentures                                          |  |                                 
|                                                                   |  |                                 
|Diluted EPS                                                        |  |                                 
|Earnings available to common stockholders plus assumed conversions |  | $                               
|                                                                   |  |                                 
|                                                                   | 
|                                                                   |  | Three Months Ended June 30, 2002
|                                                                   |  | Earnings(Numerator)             
|Basic EPS                                                          |  |                                 
|Earnings available to common stockholders                          |  | $                               
|                                                                   |  |                                 
|Effect of Dilutive Securities                                      |  |                                 
|Options                                                            |  |                                 
|8% convertible debentures                                          |  |                                 
|                                                                   |  |                                 
|Diluted EPS                                                        |  |                                 
|Earnings available to common stockholders plus assumed conversions |  | $                               
|                                                                   |  |                                 



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|                                                                   |  | Six Months Ended June 30, 2003
|------------------------------------------------------------------ |  | ------------------------------
|                                                                   |  | Earnings(Numerator)           
|Basic EPS                                                          |  |                               
|Earnings available to common stockholders                          |  | $                             
|                                                                   |  |                               
|Effect of Dilutive Securities                                      |  |                               
|Options                                                            |  |                               
|8% convertible debentures                                          |  |                               
|                                                                   |  |                               
|Diluted EPS                                                        |  |                               
|Earnings available to common stockholders plus assumed conversions |  | $                             
|                                                                   |  |                               
|                                                                   | 
|                                                                   |  | Six Months Ended June 30, 2002
|                                                                   |  | Earnings(Numerator)           
|Basic EPS                                                          |  |                               
|Earnings available to common stockholders                          |  | $                             
|                                                                   |  |                               
|Effect of Dilutive Securities                                      |  |                               
|Options                                                            |  |                               
|8% convertible debentures                                          |  |                               
|                                                                   |  |                               
|Diluted EPS                                                        |  |                               
|Earnings available to common stockholders plus assumed conversions |  | $                             
|                                                                   |  |                               



|3. |  | Accounting for Stock-Based Compensation
|-- |  | ---------------------------------------



At June 30, 2003, the Company has three stock-based compensation plans. The Company accounts for those plans under the recognition and measurement
principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based compensation cost is reflected in net earnings, as all options granted under
those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based compensation (in thousands, except share data):



|                                                                                                                                   |  | Quarter Ended June30, |       |   | Six Months EndedJune 30, |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ----- | - | ------------------------ | -
|                                                                                                                                   |  | 2003                  |       |   | 2002                     |  
|Net earnings, as reported                                                                                                          |  | $                     | 6,393 |   |                          | $
|Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects |  |                       | (214  | ) |                          |  
|                                                                                                                                   |  |                       |       |   |                          |  
|Pro forma net earnings                                                                                                             |  |                       | 6,179 |   |                          |  
|Earnings per share                                                                                                                 |  |                       |       |   |                          |  
|Basicas reported                                                                                                                  |  | $                     | 0.58  |   |                          | $
|Basicpro forma                                                                                                                    |  | $                     | 0.56  |   |                          | $
|Dilutedas reported                                                                                                                |  | $                     | 0.44  |   |                          | $
|Dilutedpro forma                                                                                                                  |  | $                     | 0.42  |   |                          | $



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##### Table of Contents

The per share weighted-average fair value of stock options granted during the second quarter of 2002 was
$1.12 (no stock options were granted during the second quarter of 2003), and for the first six months of 2003 and 2002 was $0.77 and $0.91, respectively, on the date of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions:



|                         |  | Quarter Ended June 30, |   |  |      |   | Six Months Ended June 30, | 
|------------------------ |  | ---------------------- | - |  | ---- | - | ------------------------- | 
|                         |  | 2002                   |   |  | 2002 |   |                           | 
|Expected dividend yield  |  | 0                      | % |  | 0    | % |                           | 
|Risk-free interest rate  |  | 3.0                    | % |  | 4.2  | % |                           | 
|Expected life (in years) |  | 5.5                    |   |  | 4.9  |   |                           | 
|Expected volatility      |  | 132                    | % |  | 141  | % |                           | 



|4. |  | Capital Stock
|-- |  | -------------



On May 27, 2003, the Company was notified by NASDAQ that it is in compliance with all requirements for continued listing on The NASDAQ SmallCap Market.
The Company was required to demonstrate a closing bid price of at least $1.00 per share on or before May 19, 2003, and immediately thereafter evidence a closing bid price of at least $1.00 for a minimum of 10 consecutive trading days. With the
opening of business on Thursday, May 29, 2003, the Companys symbol was changed from WLDAC back to WLDA.



|5. |  | Air Transportation Safety and System Stabilization Act
|-- |  | ------------------------------------------------------



On April 23, 2003, the Company was granted conditional approval from the Air Transportation Stabilization Board (ATSB) for a federal loan
guarantee of $27 million. This approval is subject to several conditions, including:

| |  |  | all the conditions contained in the Air Transportation Safety and System Stabilization Act and regulations thereunder;
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| |  |  | structural and financial enhancements acceptable to the ATSB;
| | - |  | -------------------------------------------------------------

| |  |  | resolution of certain issues involving collateral;
| | - |  | --------------------------------------------------

| |  |  | receipt by the ATSB of additional compensation in amounts or on terms acceptable to the ATSB;
| | - |  | ---------------------------------------------------------------------------------------------

| |  |  | final documents and agreements in form and substance satisfactory to the ATSB; and
| | - |  | ----------------------------------------------------------------------------------

| |  |  | satisfactory completion of due diligence by the ATSB.
| | - |  | -----------------------------------------------------



The ATSB will continue to perform business and legal due diligence as the transaction progresses and the Company will be working expeditiously with the
ATSB to meet the required conditions. The Company plans to use the net proceeds of the ATSB guaranteed loan to repay all borrowings outstanding with Wells Fargo Foothill, Inc. (Foothill) and the balance for working capital purposes.
There can be no assurance that the conditions will be met and that this source of financing will be available to the Company.



|6. |  | Exchange Offer
|-- |  | --------------



On July 23, 2003, the Company filed a registration statement on Form S-4, a tender offer statement and other related documents with the Securities and
Exchange Commission to commence an exchange offer for its outstanding 8% Convertible Senior Subordinated Debentures due August 2004. The Company is offering to exchange up to $40.5 million principal amount of newly issued 8% Convertible Senior
Subordinated Debentures due August 2009 for its existing debentures. The new convertible debentures will be exchanged for an equal principal amount of existing convertible debentures tendered. The exchange offer is subject to various conditions and
will expire at 5:00 p.m., New York City time, on September 18, 2003, unless the Company extends it.



|7. |  | Georgia Headquarters Job Tax Credit
|-- |  | -----------------------------------



In June 2003, the Georgia Department of Revenue approved our application for the Georgia Headquarters Job Tax Credit (the HQC). The HQC is
available for corporate taxpayers (a) establishing or relocating their headquarters to Georgia, (b) investing a minimum of $1 million in certain property, and (c) employing a minimum number of new full-time employees in the State of Georgia that pay
at or above a required wage level. This credit may be used for either corporate state income tax or payroll withholding tax. Based on our June 2003 approval letter from the Georgia Department of Revenue, we have been qualified for $510,000 of tax
credits related to fiscal 2001. If we continue to meet the statutory requirements for each year we are eligible, our total potential estimated benefit could be in excess of $2.0 million on a pre-tax basis. In accordance with the statute, we began
using the credit against our Georgia witholding tax payment in July 2003.



|8. |  | Sub-lease Obligation
|-- |  | --------------------



The Company is obligated under an operating lease for office space at its former headquarters in Herndon, Virginia through April 2006. The Company
received rental income, sufficient to offset its lease expense through March 2002, after which time no rental income was received. The Company is currently seeking a new sub-lessee for this office space. As a result, the Company recognized a $1.7
million liability at December 31, 2002 for costs that will continue to be incurred, without economic benefit to the Company, over the remaining term of its lease of this office space. During the first quarter of 2003, the Company used $0.4 million
of the accrual for lease costs incurred during this period. The Company reviewed its estimates and assumptions at March 31, 2003, and determined that an



11



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##### Table of Contents

additional $0.4 million should be added to the accrual, resulting in a $1.7 million balance at March 31,
2003. During the second quarter of 2003, the Company used $0.4 million of the accrual. The Company reviewed its estimates and assumptions at June 30, 2003, and determined that an additional $0.6 million should be added to the accrual, resulting in a
$2.0 million balance at June 30, 2003. The fair value of the liability was determined based on the remaining lease rentals, reduced by estimated sublease rentals that can be reasonably obtained for the property. The liability is included in other
accrued liabilities on the accompanying consolidated balance sheets.



If the Company is not successful in finding a suitable sub-lessee in the anticipated time or if the sublease rentals from a new sub-lessee are less than anticipated, the Company will be required to recognize an additional liability for
these costs. This liability will be adjusted for changes, if any, resulting from revisions to estimated cash flows, measured using the credit-adjusted risk-free rate that was used to measure the liability initially of 8 percent.



The Companys total obligation at June 30, 2003 under the lease is $4.4
million.



|9. |  | Union Negotiations
|-- |  | ------------------



The Companys flight attendants, approximately 44% of the Companys employees, who are represented by the International Brotherhood of Teamsters
(the Teamsters), are subject to a four-year collective bargaining agreement that became amendable July 1, 2000. On July 25, 2003, the Company and its flight attendants, represented by the Teamsters, reached a tentative agreement to
extend the flight attendant collective bargaining agreement. Results of the ratification vote are expected on or about August 31, 2003. The new amendable date for the agreement will be August 31, 2006, subject to ratification by the World
Airways flight attendants.



The Companys cockpit
crewmembers, approximately 27% of the Companys employees, who are represented by the Teamsters, are subject to a collective bargaining agreement that became amendable June 30, 2003.



|10. |  | Emergency Wartime Supplemental Appropriations Act, 2003
|--- |  | -------------------------------------------------------



On April 16, 2003, President Bush signed into law the Emergency Wartime Supplemental Appropriations Act, 2003 (the Act) which includes
distribution of funds to air carriers to offset the increased costs of compliance with new federal safety and security regulations mandated following the events of September 11, 2001. There is also a provision allocating funds to be disbursed
specifically for the reimbursement of expenses related to cockpit door reinforcement. As a condition of accepting funds under the Act, the Company was required to enter into a contract limiting executive compensation, as defined in the Act. The
Company received $486,000 related to reimbursement of security expenses in May 2003 and reported this as a reduction of flight expenses in the second quarter of 2003. The Company has not yet received notification from the Transportation Security
Administration concerning the amount of funds to be received for the expenses related to reinforcing the cockpit doors.



12



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##### Table of Contents

|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of World Airways, Inc. (World Airways or the
Company) Annual Report on Form 10-K for the year ended December 31, 2002. The information contained herein is not a comprehensive management overview and analysis of the financial condition and results of operations of the Company, but
rather updates disclosures made in the aforementioned filing.



The Company
desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the Act). Therefore, this report contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the reliance on key strategic alliances, fluctuations in operating results and other risks detailed from time to time in the Companys filings with the Securities and Exchange Commission. These
risks could cause the Companys actual results for 2003 and beyond to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company.



OVERVIEW



General



For the second quarter of 2003, the Companys net earnings were $6.4 million compared to net earnings of $2.0 million for the same period in 2002.



The following table provides statistical data, used by management in evaluating the operating performance of the Company, for the quarters
ended June 30, 2003 and 2002.



|                                         |  | Quarter Ended June 30, | 
|---------------------------------------- |  | ---------------------- | 
|                                         |  | 2003                   | 
|Revenue block hours:                     |  |                        | 
|Full service passenger                   |  | 4,467                  | 
|Full service cargo                       |  | 3,659                  | 
|ACMI passenger                           |  | 1,110                  | 
|ACMI cargo                               |  | 1,399                  | 
|Miscellaneous                            |  | 247                    | 
|                                         |  |                        | 
|Total                                    |  | 10,882                 | 
|                                         |  |                        | 
|Aircraft at quarter-end                  |  | 17                     | 
|Average available aircraft per day       |  | 17                     | 
|Average daily utilization                |  | 7.0                    | 
|(block hours flown per day per aircraft) |  |                        | 



For the first six months of 2003, the
Companys net earnings were $13.0 million compared to net earnings of $6.9 million for the same period in 2002. The following table provides statistical data, used by management in evaluating the operating performance of the Company, for the
six months ended June 30, 2003 and 2002.



|                                         |  | Six Months Ended June 30, | 
|---------------------------------------- |  | ------------------------- | 
|                                         |  | 2003                      | 
|Revenue block hours:                     |  |                           | 
|Full service passenger                   |  | 10,646                    | 
|Full service cargo                       |  | 6,643                     | 
|ACMI passenger                           |  | 2,164                     | 
|ACMI cargo                               |  | 2,987                     | 
|Miscellaneous                            |  | 498                       | 
|                                         |  |                           | 
|Total                                    |  | 22,938                    | 
|                                         |  |                           | 
|Aircraft at quarter-end                  |  | 17                        | 
|Average available aircraft per day       |  | 16.5                      | 
|Average daily utilization                |  | 7.7                       | 
|(block hours flown per day per aircraft) |  |                           | 



13



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##### Table of Contents

Significant Customer Relationships



The Company is highly dependent on revenues from the U.S. Air Force (USAF). The loss of the USAF as a customer would have a
material adverse effect on the Company. The Companys principal customers, and the percent of revenues from those customers, for the quarter and six months ended June 30, 2003 and 2002 are as follows:



|                                        |  | Quarter EndedJune 30, |   |  | Six Months EndedJune 30, |  
|--------------------------------------- |  | --------------------- | - |  | ------------------------ | -
|                                        |  | 2003                  |   |  | 2002                     |  
|USAF                                    |  | 74.0                  | % |  | 79.6                     | %
|Sonair Serviceo Aereo (Sonair)        |  | 6.0                   | % |  | 8.3                      | %
|Emery Air Freight Corporation (Emery) |  | 6.0                   | % |  | 6.0                      | %



RESULTS OF OPERATIONS



Three Months Ended June 30, 2003 Compared to Three Months Ended
June 30, 2002



Operating Revenues. Revenues from
operations increased $28.2 million, or 31.9%, to $116.6 million in 2003 from $88.4 million in 2002. The revenue increase in the second quarter of 2003 was due principally to an increase in both military cargo flying for the USAF and commercial cargo
full service flying. This increase in revenue was offset by a reduction in military passenger revenue for the USAF. Total block hours increased 30.4% and the yield per block hour increased slightly due to more full-service flying.



Operating Expenses. Total operating expenses increased $23.5 million, or 27.5%,
in 2003 to $108.8 million from $85.3 million in 2002.



Flight operations
expenses include all expenses related directly to the operation of the aircraft other than aircraft costs, fuel and maintenance. Also included are expenses related to flight dispatch and flight operations administration. Flight operations expenses
increased $9.0 million, or 33.9%, in 2003. This resulted primarily from an increase of $4.3 million in pilot crew costs, $1.9 million in flight communication costs, $1.0 million in landing/security/handling fees, and $0.7 million of flight attendant
expenses. Flight operations expenses were higher due to an accrual for estimated contractual profit sharing payments to flight employees for 2003 as well as additional simulator training. The remaining increase in flight costs is directly
attributable to increased cargo flying for the USAF as well as more commercial cargo full service flying in the second quarter of 2003 compared to the same period in 2002.



Maintenance expenses increased $8.0 million, or 69.5%, in 2003. In the second quarter of 2003, the Company incurred $3.2 million more for
engine overhauls than in the 2002 second quarter. Component repairs, maintenance reserves and materials increased $1.5, $0.9, and $0.8 million, respectively, due to the 30.4% increase in block hours flown, the timing of scheduled maintenance checks
as well as supporting two additional aircraft which were added to the fleet.



Fuel expenses increased $5.4 million, or 41.2%, in 2003 due to higher per-gallon costs as well as more consumption associated with the increase in full service flying. The Company is generally able to pass fuel cost increases through to its
customers.



Sales, general and administrative expenses increased $1.4 million,
or 18.0%, in 2003. The increase was primarily due to an accrual for estimated profit sharing payments to management and administrative employees for 2003 and additional loss accrual for the former office space in Herndon, Virginia, in connection
with adjusting the Companys liability at June 30, 2003.



Six Months
Ended June 30, 2003 Compared to Six Months Ended June 30, 2002



Operating Revenues. Revenues from operations increased $63.8 million, or 36.2%, to $240.3 million in 2003 from $176.4 million in 2002. The revenue increase was due principally to an increase in both military cargo flying for
the USAF and commercial cargo full service flying. Total block hours increased 34.5% and the yield per block hour increased slightly due to more full-service flying.



Operating Expenses. Total operating expenses increased $57.7 million, or 34.5%, in 2003 to $224.8 million from $167.1



14



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##### Table of Contents

million in 2002.



Flight operations expenses include all expenses related directly to the operation of the aircraft other than aircraft costs, fuel and maintenance. Also included are
expenses related to flight dispatch and flight operations administration. Flight operations expenses increased $18.2 million, or 35.2%, in 2003. This resulted primarily from an increase of $6.6 million in pilot crew costs, $4.5 million in flight
communication costs, $3.0 million in landing/security/handling fees, and $2.5 million of flight attendant expenses. Flight operations expenses were higher due to an accrual for estimated contractual profit sharing payments to flight employees for
2003 as well as additional simulator training. The remaining increase in flight costs is directly attributable to increased cargo flying for the USAF and commercial cargo full service flying in the first six months of 2003 compared to the same
period in 2002.



Maintenance expenses increased $20.9 million, or 96.1%, in
2003. In the first six months of 2003, the Company incurred $9.2 million more for engine overhauls than in the same period of 2002. Landing gear overhaul expense increased $1.2 million due to two overhauls in 2003 compared to none in 2002.
Maintenance reserves, component repairs, materials and parts rental increased $2.7, $2.2, $1.4 and $0.9 million, respectively, due to the 34.5% increase in block hours flown, the timing of scheduled maintenance checks as well as supporting two
additional aircraft which were added to the fleet.



Fuel expenses increased
$14.6 million, or 57.6%, in 2003 due to higher per-gallon costs as well as more consumption associated with the increase in full service flying. The Company is generally able to pass fuel cost increases through to its customers.



Sales, general and administrative expenses increased $3.1 million, or 20.8% in 2003. The
increase was primarily due to an accrual for estimated profit sharing payments to management and administrative employees for 2003 and additional loss accrual for the former office space in Herndon, Virginia, in connection with adjusting the
Companys liability at June 30, 2003.



LIQUIDITY AND CAPITAL RESOURCES



The Company is highly leveraged. At June 30, 2003, the Companys current
assets were $63.8 million and current liabilities were $78.2 million. The ratio of the Companys current assets to its current liabilities (current ratio) was 0.8:1. At June 30, 2003, the Company had outstanding long-term debt of
$40.5 million, consisting of its 8% Convertible Senior Subordinated Debentures that are due in August 2004. At June 30, 2003, the loan outstanding under the Loan and Security Agreement (the Agreement) with Wells Fargo Foothill, Inc.
(Foothill) was $17.6 million and the aggregate amount of outstanding letters of credit was $1.9 million. At June 30, 2003, the Company had a nominal amount of unused availability.



In addition, the Company has significant long-term obligations relating to operating leases
for aircraft and spare engines. In fiscal 2002 and 2001, the Company paid amounts less than its original contractual aircraft rent obligations under agreements with its lessors that amended the terms of the original aircraft lease
agreements to provide for the repayment of the unpaid contractual rent obligations. The accrual for unpaid contractual rent obligations is $11.4 million and is included as accrued rent in the current liabilities section of the Balance Sheet at June
30, 2003. During the remainder of 2003, the Company will repay approximately $2.5 million of this contractual accrued rent obligation.



On April 23, 2003, the Company was granted conditional approval from the Air Transportation Stabilization Board (ATSB) for a federal loan guarantee of $27
million. This approval is subject to several conditions, including:

| |  |  | all the conditions contained in the Air Transportation Safety and System Stabilization Act and regulations thereunder;
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| |  |  | structural and financial enhancements acceptable to the ATSB;
| | - |  | -------------------------------------------------------------

| |  |  | resolution of certain issues involving collateral;
| | - |  | --------------------------------------------------

| |  |  | receipt by the ATSB of additional compensation in amounts or on terms acceptable to the ATSB;
| | - |  | ---------------------------------------------------------------------------------------------

| |  |  | final documents and agreements in form and substance satisfactory to the ATSB; and
| | - |  | ----------------------------------------------------------------------------------

| |  |  | satisfactory completion of due diligence by the ATSB.
| | - |  | -----------------------------------------------------



The ATSB will continue to perform business and legal due diligence as the transaction progresses and the Company will be working expeditiously with the ATSB to meet the
required conditions. The Company plans to use the net proceeds of the ATSB guaranteed loan to repay all borrowings outstanding with Foothill and the balance for working capital purposes. There can be no assurance that the conditions will be met and
that this source of financing will be available to the Company.



In July 2003,
the Company filed a registration statement on Form S-4, a tender offer statement and other related documents with the Securities and Exchange Commission to commence an exchange offer for its 8% Convertible Senior Subordinated Debentures.



As a result of the Companys high financial leverage:



| |  |  | The Company does not have the ability to obtain additional financing. Its existing debt is secured by substantially all of its assets. In addition, the terms of its existing credit
facility restrict its ability to incur additional indebtedness or issue equity securities unless it uses the proceeds of those transactions to prepay amounts outstanding under the credit facility. The ATSB guaranteed loan will also be secured by
substantially all of the Companys assets and will contain restrictive provisions which would require prepayments in the event that the Company sells any significant assets, receives proceeds from future borrowings from other sources and
issuances of certain securities or receives net proceeds from insurance and condemnation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Companys ability to fund general corporate requirements, including capital expenditures, may be impaired. The Company has substantial obligations to pay principal and
interest on its debt and other recurring fixed costs. Further, the Company may be required to prepay portions of the ATSB guaranteed loan under various circumstances. Accordingly, the Company may have to use its working capital to fund such payments
and other recurring fixed costs instead of funding general corporate requirements.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company ability to respond to competitive developments and adverse economic conditions may be limited. Without the ability to obtain additional financing and with
substantial fixed costs, the Company may not be able to fund the capital expenditures required to keep it competitive or to withstand prolonged adverse economic conditions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If the Company does not complete the exchange offer and replace its existing credit facility, under the terms of the existing credit facility with Foothill the Company will be
obligated to complete by May 29, 2004 an amendment to, extension or refinancing of, or other modification to the existing debentures in form and on terms and conditions satisfactory to Foothill. If the Company fails to so amend, extend, refinance or
modify the existing debentures, the Companys lenders may declare all of its obligations under the existing credit facility immediately due and payable.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





15



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Although there can be no assurances, World Airways believes that the combination of its existing contracts and additional
business which it expects to obtain, along with its existing cash and financing arrangements, will be sufficient to allow the Company to meet its cash requirements related to operating and capital requirements for 2003.



Cash Flows from Operating Activities



Operating activities provided $0.2 million in cash during the six months ended June 30, 2003
compared to providing $6.3 million in the comparable 2002 period. The cash provided in 2003 principally reflects the $13.0 million net earnings offset by a $14.6 million increase in accounts receivable, less a $ 0.5 million decrease in cash due to
changes in other operating assets and liabilities, and net non-cash statement of operations charges of $2.4 million. The cash provided in 2002 principally reflects the $6.9 million net earnings, net non-cash statement of operations charges of $1.5
million, a $0.6 million decrease in accounts receivable and a net increase of $2.7 million in other operating assets and liabilities.



Cash Flows from Investing Activities



Investing activities used $1.5 million in the first six months of 2003 compared to using $0.9 million in the comparable period of 2002. In both 2003 and 2002, cash was
used for the purchase of rotable spare parts and other fixed assets.



Cash Flows from Financing Activities



Financing
activities used $5.4 million in cash for the six months ended June 30, 2003, which was primarily due to payment of deferred aircraft rent of $6.0 million offset by a $0.5 million increase in the amount owed under the Agreement with Foothill. For the
six months ended June 30, 2002, financing activities used $0.8 million, which was primarily due to a reduction in the amount owed under the Accounts Receivable Management and Security Agreement with GMAC Commercial Credit, LLC of $7.2 million and
debt repayments of $0.9 million offset by deferred aircraft rent obligations of $7.3 million.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------



Part I, Item 3 of this report should be read in conjunction with Part II, Item 7a of World Airways, Inc. Annual Report on Form 10-K for the year ended December 31, 2002.
The information contained herein is not a quantitative and qualitative discussion about market risk the Company faces, but rather updates disclosures made in the aforementioned filing.



World Airways continues to not have any material exposure to market risks.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



The Companys management, with participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and
operation of the Companys disclosure controls and procedures as of the end of the fiscal period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys
disclosure controls and procedures as of the end of the period covered by this quarterly report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in
reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. The Company believes that a
controls system, no matter how well designed and operated cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, within a company have been detected.



16



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##### Table of Contents

PART II



|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- |  | ---------------------------------------------------



The 2003 Annual Meeting of Shareholders of World Airways, Inc. was held on May 1, 2003. A total of 7,974,535 shares were present or represented by proxy at the meeting.
They represented approximately 72% of the Companys outstanding shares.



The individuals named below were elected to a three-year term as Class II Directors:



|Name                       |  | VotesReceived |  | VotesWithheld
|-------------------------- |  | ------------- |  | -------------
|John E. Ellington          |  | 7,794,912     |  | 179,623      
|General Ronald R. Fogleman |  | 7,907,263     |  | 67,272       
|Russell L. Ray, Jr.        |  | 7,355,361     |  | 619,174      



Daniel J. Altobello, A. Scott Andrews,
Joel H. Cowan, Hollis L. Harris, Peter M. Sontag, and Wan Malek Ibrahim continued as Directors of the Company as of June 30, 2003. On July 28, 2003, Wan Malek Ibrahim tendered his resignation due to health reasons.



The selection of KPMG LLP as the independent certified public accountants and auditor for the
Company for the year ending December 31, 2003 was ratified, with 7,896,731 shares voting for, 32,671 shares voting against and 45,133 shares abstaining.



|ITEM 6. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
|------- |  | ----------------------------------------------------------------



(a) Exhibits



|No.                                                                                                                                                                                                                                                                                     |  | Description                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|31.1                                                                                                                                                                                                                                                                                    |  | Certification of Hollis L. Harris, Chairman of the Board and Chief Executive Officer.                                                      
|                                                                                                                                                                                                                                                                                        | 
|31.2                                                                                                                                                                                                                                                                                    |  | Certification of Gilberto M. Duarte, Jr., Chief Financial Officer.                                                                         
|                                                                                                                                                                                                                                                                                        | 
|32.1                                                                                                                                                                                                                                                                                    |  | Certification of Hollis L. Harris Pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.       
|                                                                                                                                                                                                                                                                                        | 
|32.2                                                                                                                                                                                                                                                                                    |  | Certification of Gilberto M. Duarte, Jr. Pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                                                                                                                                                                                                                                                                                       
|(b) Reports on Form 8-K                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                       
|The Company furnished a Current Report on Form 8-K and an amendment on Form 8-K/A to the
Securities and ExchangeCommission on May 2, 2003 in connection with a press release issued on April 30, 2003, announcing the Companys financial results for the quarter ended March 31, 2003.



* * * * * * * * * * * *
* * *



17



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



WORLD AIRWAYS, INC.By:

/s/    GILBERTO M. DUARTE,
JR.Principal Accounting and Financial Officer




Date: August 14, 2003