<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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



                                    FORM 10-Q


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

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



       For the Quarter Ended: June 30, 2001 Commission File Number 0-26582



                               WORLD AIRWAYS, INC.
             (Exact name of registrant as specified in its charter)



       DELAWARE                                               94-1358276
       (State of incorporation)  (I.R.S. Employer Identification Number)

             HLH Building, 101 World Drive, Peachtree City, GA 30269
                    (Address of Principal Executive Offices)
                                 (770) 632-8000
                         (Registrant's telephone number)



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

The number of shares of the registrant's Common Stock outstanding on July 31,
2001 was 10,884,802.

--------------------------------------------------------------------------------
<PAGE>

                               WORLD AIRWAYS, INC.

                   June 30, 2001 QUARTERLY REPORT ON FORM 10-Q

                                TABLE OF CONTENTS




<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ----
<S>                                                                                             <C>
PART I - FINANCIAL INFORMATION

        Item 1.   Financial Statements

                  Condensed Balance Sheets, June 30,
                   2001 (Unaudited) and December 31, 2000 ...................................    3

                  Condensed Statements of Operations (Unaudited),
                  Three Months Ended June 30, 2001 and
                   2000 .....................................................................    5

                  Condensed Statements of Operations (Unaudited),
                  Six Months Ended June 30, 2001 and 2000 ...................................    6

                  Condensed Statement of Changes in Stockholders' Deficiency (Unaudited),
                  Six months ended June 30, 2001 ............................................    7

                  Condensed Statements of Cash Flows (Unaudited),
                  Six months ended June 30, 2001 and 2000 ...................................    8

                  Notes to Condensed Financial Statements ...................................    9

        Item 2.   Management's Discussion and Analysis of Financial Condition
                  and Results of Operations .................................................   10

        Item 3.   Quantitative and Qualitative Disclosures about Market Risk ................   13


PART II - OTHER INFORMATION

        Item 4.   Submission of Matters to a Vote of Security Holders .......................   13

        Item 6.   Exhibits and Reports on Form 8-K ..........................................   13
</TABLE>

                                       2
<PAGE>

                         ITEM 1.  FINANCIAL STATEMENTS
                              WORLD AIRWAYS, INC.
                            CONDENSED BALANCE SHEETS
                                     ASSETS
                                 (in thousands)



<TABLE>
<CAPTION>
                                                      (unaudited)
                                                         June 30,     December 31,
                                                           2001           2000
                                                         -------        -------
<S>                                                      <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents, including restricted
    cash of $2,882 at June 30, 2001 and
    $2,828 at December 31, 2000                          $ 3,601       $ 14,386

  Short-term marketable investments                            -          1,296

  Accounts receivable, less allowance for doubtful
    accounts of $331 at June 30, 2001 and
    December 31, 2000                                     16,026         15,758

  Prepaid expenses and other current assets                8,249          7,922
                                                         -------       --------

    Total current assets                                  27,876         39,362
                                                         -------       --------

EQUIPMENT AND PROPERTY
  Flight and other equipment                              78,210         90,060
  Equipment under capital leases                           9,463          9,463
                                                         -------       --------
                                                          87,673         99,523
  Less: accumulated depreciation and amortization         41,519         41,974
                                                         -------       --------

    Net equipment and property                            46,154         57,549
                                                         -------       --------

LONG-TERM OPERATING DEPOSITS                              18,002         15,848

MARKETABLE INVESTMENTS                                         -            389

OTHER ASSETS AND DEFERRED CHARGES, NET                       723            742
                                                         -------       --------

TOTAL ASSETS                                             $92,755       $113,890
                                                         =======       ========
</TABLE>
                                                                     (Continued)

                                       3
<PAGE>

                               WORLD AIRWAYS, INC.
                            CONDENSED BALANCE SHEETS
                                   (continued)
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                       (in thousands except share amounts)

<TABLE>
<CAPTION>

                                                                            (unaudited)
                                                                               June 30,    December 31,
                                                                                 2001         2000
                                                                               --------    ------------
<S>                                                                            <C>         <C>
CURRENT LIABILITIES
  Notes payable                                                                $ 11,349    $ 11,532
  Current maturities of long-term obligations                                     1,943       3,523
  Accounts payable                                                               21,271      19,138
  Unearned revenue                                                                7,124       6,278
  Accrued maintenance                                                             2,224       2,182
  Accrued salaries and wages                                                      8,336       8,250
  Accrued taxes                                                                   2,072       1,539
  Other accrued liabilities                                                       1,092       1,121
                                                                               --------    --------
    Total current liabilities                                                    55,411      53,563
                                                                               --------    --------

LONG-TERM OBLIGATIONS, NET OF CURRENT MATURITIES                                 41,740      48,969

OTHER LIABILITIES
  Deferred gain from sale-leaseback transactions, net of
    accumulated amortization of $10,945 at June 30,
    2001 and $10,313 at December 31, 2000                                         5,050       3,351
  Accrued post-retirement benefits                                                2,861       2,992
  Deferred rent                                                                  12,557      12,295
                                                                               --------    --------
    Total other liabilities                                                      20,468      18,638
                                                                               --------    --------

TOTAL LIABILITIES                                                               117,619     121,170
                                                                               --------    --------

STOCKHOLDERS' DEFICIENCY
  Preferred stock, $.001 par value (5,000,000 shares authorized;
    no shares issued or outstanding)                                                  -           -
  Common stock, $.001 par value (40,000,000 shares authorized;
    12,147,141 shares issued; 10,884,802 shares outstanding at June 30,
    2001 and 10,334,480 shares outstanding at December 31, 2000)                     12          12
  Additional paid-in capital                                                     24,072      23,980
  Deferred compensation, employee salary exchange program                          (399)     (1,735)
  Accumulated deficit                                                           (35,724)    (16,387)
  Treasury stock, at cost (1,262,339 shares at June 30,
    2001 and 1,812,661  shares at December 31, 2000)                            (12,825)    (13,150)
                                                                               --------    --------
    Total  stockholders' deficiency                                             (24,864)     (7,280)
                                                                               --------    --------

COMMITMENTS AND CONTINGENCIES

TOTAL LIABILITIES AND STOCKHOLDERS= DEFICIENCY                                 $ 92,755    $113,890
                                                                               ========    ========
</TABLE>
            See accompanying Notes to Condensed Financial Statements

                                       4
<PAGE>

                               WORLD AIRWAYS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                    Three Months Ended June 30, 2001 and 2000
                      (in thousands except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
OPERATING REVENUES                                                                 2001                      2000
                                                                               ------------             ------------
<S>                                                                            <C>                      <C>
  Flight operations                                                            $     76,357             $     62,529
  Other                                                                                 222                      289
                                                                               ------------             ------------
    Total operating revenues                                                         76,579                   62,818

OPERATING EXPENSES
  Flight operations                                                                  26,333                   21,000
  Maintenance                                                                        15,437                   10,295
  Aircraft rent and insurance                                                        18,614                   17,557
  Fuel                                                                                9,746                    6,825
  Flight operations subcontracted to other carriers                                      16                    2,182
  Commissions                                                                         3,609                      983
  Depreciation and amortization                                                       1,721                    1,658
  Sales, general and administrative                                                   8,242                    6,912
  Settlement of contract dispute                                                          -                   (6,975)
                                                                               ------------             ------------

    Total operating expenses                                                         83,718                   60,437


OPERATING INCOME (LOSS)                                                              (7,139)                   2,381

OTHER INCOME (EXPENSE)
  Interest expense                                                                  (2,160))                  (1,355)
  Interest income                                                                       117                      259
  Other, net                                                                            (11)                     (18)
                                                                               ------------             ------------

    Total other expense                                                              (2,054)                  (1,114)

NET EARNINGS (LOSS)                                                            $     (9,193)            $      1,267
                                                                               ============             ============



BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                                    $      (0.85)            $       0.12
                                                                               ============             ============


WEIGHTED AVERAGE SHARES OUTSTANDING                                                  10,779                   10,179
</TABLE>

            See accompanying Notes to Condensed Financial Statements

                                       5
<PAGE>

                              WORLD AIRWAYS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                    Six Months Ended June 30, 2001 and 2000
                      (in thousands except per share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                 2001                          2000
                                                                            --------------               --------------
<S>                                                                         <C>                          <C>
OPERATING REVENUES
  Flight operations                                                         $      149,926               $      124,378
  Other                                                                                422                          446
                                                                            --------------               --------------
    Total operating revenues                                                       150,348                      124,824
                                                                            --------------               --------------

OPERATING EXPENSES
  Flight operations                                                                 49,541                       38,874
  Maintenance                                                                       32,729                       20,974
  Aircraft rent and Insurance                                                       36,760                       34,918
  Fuel                                                                              17,739                       12,772
  Flight operations subcontracted to other carriers                                    924                        5,529
  Commissions                                                                        7,607                        2,534
  Depreciation and amortization                                                      3,534                        3,365
  Sales, general and administrative                                                 17,292                       13,774
  Settlement of contract dispute                                                         -                       (6,975)
                                                                            --------------               --------------
    Total operating expenses                                                       166,126                      125,765
                                                                            --------------               --------------

OPERATING LOSS                                                                     (15,778)                        (941)

OTHER INCOME (EXPENSE)
  Interest expense                                                                  (3,543)                      (2,700)
  Interest income                                                                      287                          470
  Other, net                                                                          (303)                         206
                                                                            --------------               --------------
    Total other expense                                                             (3,559)                      (2,024)
                                                                            --------------               --------------

EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING
        ACCOUNTING CHANGE                                                          (19,337)                      (2,965)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                                  --                       22,224
                                                                            --------------               --------------

NET EARNINGS (LOSS)                                                         $      (19,337)              $       19,259
                                                                            ==============               ==============

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  Earnings (loss) before cumulative effect of accounting change             $        (1.82)              $        (0.33)
  Cumulative effect of accounting change                                                --                         2.46
                                                                            --------------               --------------
    Net earnings (loss)                                                     $        (1.82)              $         2.13
                                                                            ==============               ==============


WEIGHTED AVERAGE SHARES OUTSTANDING                                                 10,629                        9,035
</TABLE>

            See accompanying Notes to Condensed Financial Statements

                                       6
<PAGE>

                              WORLD AIRWAYS, INC.
                        CONDENSED STATEMENTS OF CHANGES
                          IN STOCKHOLDERS' DEFICIENCY
                         Six Months Ended June 30, 2001
                      (in thousands except share amounts)
                                  (unaudited)


<TABLE>
<CAPTION>
                                        Common   Additional       Deferred    Accumulated       Treasury            Total
                                         Stock      Paid-in   Compensation       Deficit       Stock, at    Stockholders=
                                                    Capital                                         Cost       Deficiency
                                       -------   ----------   ------------    ------------    ----------    -------------
<S>                                  <C>          <C>        <C>               <C>           <C>             <C>

Balance at December 31, 2000           $    12     $ 23,980     $   (1,735)     $  (16,387)   $  (13,150)      $   (7,280)

Amortization of deferred
 compensation and accrual of
 changes in Employee Salary
 Exchange Program                            -            -          1,336               -           343            1,679

Common Stock Repurchases                     -            -              -               -           (18)             (18)

Amortization of warrants                     -           92              -               -                             92

Net loss                                     -            -              -         (19,337)            -          (19,337)
                                       -------     --------     ----------      ----------    ----------       ----------

Balance at June 30, 2001               $    12     $ 24,072     $     (399)     $  (35,724)   $  (12,825)      $  (24,864)
                                       =======     ========     ==========      ==========    ==========       ==========
</TABLE>



            See accompanying Notes to Condensed Financial Statements.

                                       7
<PAGE>

                               WORLD AIRWAYS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                     Six Months Ended June 30, 2001 and 2000
                                 ( in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                           2001                   2000
                                                                                 --------------         --------------
<S>                                                                             <C>                   <C>
CASH AND CASH EQUIVALENTS AT BEGINNING                                           $       14,386         $       11,725
  OF PERIOD

CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ( loss)                                                                    (19,337)                19,259
Adjustments to reconcile net earnings (loss) to cash
  provided (used) by operating activities:
  Cumulative effect of accounting change                                                      -                (22,224)
  Depreciation and amortization                                                           3,534                  3,365
  Deferred gain recognition                                                                (633)                  (615)
  Other                                                                                   1,647                  1,281
  Increase (decrease) in cash resulting from changes
   in operating assets and liabilities net of
    effects of non-cash transactions:
   Accounts receivable                                                                    4,000                  1,610
   Deposits, prepaid expenses and other assets                                              (95)                 1,090
   Accounts payable, accrued expenses and other liabilities                               1,118                 (5,677)
   Unearned revenue                                                                         846                  6,168
                                                                                 --------------         --------------
  Net cash provided (used) by operating activities                                       (8,920)                 4,257
                                                                                 --------------         --------------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property                                                      (2,651)                (2,070)
Proceeds from disposal of equipment and property                                            419                    173
Sales and maturities of marketable investments                                            1,685                     49
                                                                                 --------------         --------------
  Net cash provided (used) by investing activities                                         (547)                (1,848)
                                                                                 --------------         --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in line of credit borrowing arrangement, net                           (183)                 3,352
Repayment of debt                                                                        (8,809)                (4,066)
Issuance of debt                                                                              -                    675
Proceeds of sale/leaseback transactions                                                   7,674                  6,100
                                                                                 --------------         --------------
  Net cash provided (used) by financing activities                                       (1,318)                 6,061
                                                                                 --------------         --------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (10,785)                 8,470
                                                                                 --------------         --------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $        3,601         $       20,195
                                                                                 ==============         ==============
</TABLE>



            See accompanying Notes to Condensed Financial Statements

                                       8
<PAGE>

                               WORLD AIRWAYS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)


1.   Management believes that all adjustments necessary for a fair statement of
     results have been included in the Condensed 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, 2001 are not necessarily indicative of the results to be expected for
     the year ending December 31, 2001.

     These interim period Condensed Financial Statements and accompanying
     footnotes should be read in conjunction with the Financial Statements
     contained in World Airways= Annual Report on Form 10-K for the year ended
     December 31, 2000.

2.   Financial Statement Reclassifications

     Certain items in prior period financial statements included herein have
     been reclassified to conform to the 2001 financial statement presentation.

3.   Capital Stock

     At June 30, 2001, World Airways had 10.9 million shares of Common Stock
     outstanding, including 4.7 million shares related to the Employee Salary
     Exchange Program, which began in February 2000.

     In June 2001, World Airways was informed by NASDAQ that the Company's
     common stock had not maintained a closing bid price of $1.00 for thirty
     consecutive trading days as required by a NASDAQ SmallCap Market rule.
     According to NASDAQ, World Airways needs to meet the $1.00 price
     requirements within 90 days (by September 18, 2001). If the closing bid
     price for the stock is $1.00 or more for ten consecutive trading days
     anytime before September 18, 2001, NASDAQ will determine if compliance with
     continued listing requirements has been achieved. If by September 18, 2001,
     the Company is unable to demonstrate compliance, and has not requested a
     hearing before NASDAQ on a proposed delisting, the stock will be delisted
     from the SmallCap Market. In such a case, the Company will seek to be
     listed on the over-the-counter Bulletin Board.

4.   Transactions with Malaysia Airlines

     World Airways provided service to Malaysian Airline System Berhad
     ("Malaysia Airlines" or "MAS") from 1981 to 1999 and also leased aircraft
     from MAS during that time frame. In the second quarter of 1999, the Company
     returned the last aircraft that it had leased from MAS and effective
     October 1999 ceased operating other aircraft for MAS. In May 2000, the
     Company received $7.0 million as a result of a comprehensive settlement
     with Malaysian Airlines. The settlement related to a number of aircraft
     lease and operating agreements, the last of which terminated in 1999.

5.   Accounting Change

     Effective January 1, 2000, the Company changed its method of accounting for
     certain aircraft maintenance costs from the accrual method of accounting to
     the direct expense method. Under the new accounting method, maintenance
     costs are recognized as expense as maintenance services are performed and
     as flight hours are flown for non-refundable maintenance payments required
     by lease agreements. The Company believes that the new accounting principle
     is preferable because the direct expense method is the predominant method
     used in the airline industry and there has not been an obligating event
     prior to the maintenance checks actually being performed or flight hours
     being flown. The cumulative effect of the accounting change recorded in the
     first quarter of 2000 was $22.2 million.

                                       9
<PAGE>

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, 2000.  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 2001 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 ended June 30, 2001, the Company's operating revenues
were $76.6 million, the operating loss was $7.1 million, the net loss was $9.2
million and the loss per share was $.85 for both basic and diluted earnings per
share  ("EPS") computed on an average of 10.8 million shares.  For the second
quarter ended June 30, 2000, the Company's operating revenues were $62.8
million, operating income was $2.4 million and net income was $1.3 million.
Operating expenses for 2000 included a  $7 million credit related to a contract
settlement received from MAS. Earnings per share, both basic and diluted, was
$0.12 computed on an average of 10.2 million shares.

For the first six months of 2001, the Company's operating revenues were $150.3
million, the operating loss was $15.8 million, the net loss was $19.3 million,
and the loss per share was $1.82 for both basic and diluted EPS based on 10.6
million average shares.  For the first six months of 2000, the Company's
operating revenues were $124.8 million, the operating loss was $0.9 million and
the net loss before the cumulative effect of a change in the method of
accounting was $3.0 million. The loss per share before the cumulative effect of
the accounting change was $0.33 for both basic and diluted EPS based on 9.0
million average shares.  Net earnings after the cumulative effect of the
accounting change was $19.3 million and earnings per share, both basic and
diluted, after the cumulative effect of the accounting change was $2.13.

The Company's second quarter operations reflected a lower loss than the first
quarter of this year, which we had anticipated, although it was greater than
originally forecast due to the higher maintenance and flight operations
expenses. Based on the Company's updated business plan, contract bookings should
be less than our previous forecast, due to weakness of the cargo market and a
decline in projected passenger hours. Consequently, the Company is not
forecasting profitability in the second half of the year, as originally
projected.

The economic environment has taken a toll on airline operations throughout the
world, and it has clearly had a negative impact on the Company's cash flows and
plans for profitability. The Company will focus its efforts for the balance of
2001 on placing its aircraft in profitable operations, and in keeping its costs
under control. Specifically, the Company plans to delay the delivery of a DC-10
freighter and the hiring of any additional pilots until this aircraft is booked,
as well as to negotiate with all aircraft lessors for reductions in rent in
order to provide sufficient working capital to meet existing operational needs.
The Company will furlough approximately 130 flight attendants between now and
year-end. This is a seasonal reduction, and present plans are to recall all or
some of them in the spring of 2002.

Significant Customer Relationships

During the first six months of 2001, the Company's business relied heavily on
its contracts with the U. S. Air Force's ("USAF") Air Mobility Command ("AMC")
and Garuda Indonesia ("Garuda").  In 2001, these customers provided
approximately 62.0% and 11.7%, respectively, of the Company's revenues and 47.5%
and 17.2%, respectively, of block hours flown.  In 2000, AMC and Garuda provided
approximately 39.6% and 17.8%, respectively, of the Company's revenues and 27.3%
and 22.0%, respectively, of block hours flown.


RESULTS OF OPERATIONS

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Total block hours remained relatively constant at 7,621 for the second quarter
of 2001 compared to 7,676 hours in the second quarter of 2000, with an average
of 12.2 available aircraft in 2001 and an average of 10 aircraft in 2000.
Average daily utilization (block hours flown per day per aircraft) was 6.9 hours
in the second quarter of 2001 compared to 8.1 hours for the same period in 2000.
Cargo ACMI and commercial full-service flying decreased by approximately the
same number of block hours that AMC flying increased.

Operating Revenues.  Revenues from flight operations increased $13.8 million, or
------------------
22.1%, to $76.4 million in 2001 from $62.5 million in 2000.  This increase is
primarily due to an increase in the average yield, or revenue per block hour, as
a result of a higher percentage of full service AMC flying in 2001 compared to
2000.

                                       10
<PAGE>

Operating Expenses.  Total operating expenses increased $23.3 million, or 38.5%
------------------
in 2001 to $83.7 million from $60.4 million in 2000. Operating expenses for the
second quarter of 2000 included a  $7 million credit related to a contract
settlement received from MAS.

Flight operations expenses include all expenses related directly to the
operation of the aircraft other than aircraft cost, fuel and maintenance.  Also
included are expenses related to flight dispatch and flight operations
administration.  Flight operations expenses increased $5.3 million, or 25.4%, in
2001.  This increase resulted primarily from an increase of  $6.0 million in
pilot and flight attendant costs caused by increased staffing levels
necessitated by the increase in full service AMC flying.   Pilot costs also
increased due to contractual wage increases and additional crews hired for fleet
expansion.

Maintenance expenses increased $5.1 million, or 49.9%, in 2001. The second
quarter of 2001 included $1.4 million for an owned engine overhaul, $0.7 million
for landing gear overhauls and $0.3 million for additional work required on APU
overhauls. The Company also incurred increased maintenance of $0.8 million for
required lease maintenance payments related to the net three additional DC-10
aircraft added to the fleet, and $0.5 million for the installation of insulation
blankets related to the Airworthiness Directive (AD) issued by the Federal
Aviation Administration in 2000.  The remainder of the increase is primarily due
to scheduled maintenance checks, the repair of an inlet with foreign object
damage, seat refurbishments and higher wage expense for mechanics.

Aircraft rent and insurance costs increased $1.1 million, or 6.0%, in 2001.
This was primarily due to the increase in the number of average aircraft from 10
in the second quarter of last year to 12.2 in the second quarter of this year,
offset by reductions in the lease rates for the fleet of MD-11 aircraft.

Fuel expenses increased $2.9 million, or 42.8%, in 2001 reflecting a 27.6%
increase in the average cost of fuel per gallon and a 25.2% increase in the
number of gallons of fuel consumed as a result of an increase in full service
flying in 2001.

Subcontract flying decreased $2.2 million in the second quarter of 2001 compared
to 2000. This was the result of outsourcing flights during 2000 due to aircraft
being out of service for maintenance.

Commissions increased $2.6 million in 2001 principally as a result of the
increase in AMC business in 2001 and an increase in the commission rate on the
AMC business.

Sales, general and administrative expenses increased $1.3 million, or 19.2%, in
2001, primarily as a result of costs associated with the relocation of the
Company's headquarters from Virginia to Georgia.

Total other expense, net increased by $0.9 million in second quarter of 2001
compared to the same period in 2000. This was primarily due to the prepayment
penalties incurred due to early repayment of debt in connection with a
sale/leaseback of two owned engines in June 2001.


Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Total block hours increased 936 hours, or 6.2%, to 15,933 hours in the first six
months of 2001 from 14,997 hours in 2000, with an average of 11.6 available
aircraft in 2001 and 10 available aircraft in 2000.   Average daily utilization
(block hours flown per day per aircraft) was 7.6 hours in 2001 and 8.1 hours in
2000. The decrease in cargo ACMI and commercial full-service flying was offset
fully by the increase in block hours for AMC flying. The remainder of the
increase was due to higher block hours for commercial passenger ACMI flying.

Operating Revenues.  Revenues from flight operations increased $25.5 million, or
------------------
20.5%, to $149.9 million in 2001 from $124.4 million in 2000.  This increase was
due primarily to higher revenue per block hour, principally as a result of
increased flying  under the current 2001 fiscal year contract with AMC that
began October 1, 2000.

Operating Expenses.  Total operating expenses increased $40.4 million, or 32.1%,
------------------
in 2001 to $166.1 million from $125.8 million in 2000.  Operating expenses for
2000 included a  $7 million credit related to a contract settlement received
from MAS.

Flight operations expenses increased $10.7 million, or 27.4%, in 2001.  This
increase resulted primarily from an increase of  $10.1 million in pilot and
flight attendant costs caused by increased staffing levels necessitated by the
increase in full service AMC flying. Pilot costs also increased due to
contractual wage increases and additional crews hired for fleet expansion.

Maintenance expenses increased $11.8 million, or 56.0%, in 2001.  In the first
six months of 2001, maintenance included $3.5 million of thrust reverser and
landing gear overhauls, $1.4 million for the overhaul of an owned engine, and
$0.3 million for additional work required on APU overhauls. The Company also
incurred increased maintenance of $1.2 million for required

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<PAGE>

lease maintenance payments related to the net three additional DC-10 aircraft
added to the fleet. Maintenance expense for 2001 included an increase of $2.6
million in aircraft component repairs, of which approximately $2.0 million are
not anticipated to be incurred in future periods. This $2.0 million of costs are
related to the initiation of the power-by-the-hour maintenance agreement for
MD-11 aircraft components. In 2001, the Company incurred approximately $0.5
million for the installation of insulation blankets related to an Airworthiness
Directive (AD) issued in 2000. The remainder of the increase in 2001 is
primarily due to scheduled maintenance checks, the repair of an inlet with
foreign object damage, seat refurbishments and higher wage expense for
mechanics.

Aircraft rent and insurance costs increased $1.8 million, or 5.3%, in 2001.
This was primarily due to the increase in the number of average aircraft from 10
in 2000 to 11.6 in 2001, offset by reductions in the lease rates for the fleet
of MD-11 aircraft.

Fuel expenses increased $5.0 million, or 38.9%, in 2001 due to a 29.2% increase
in the average cost of fuel per gallon and a 21.7% increase in the number of
gallons of fuel consumed as a result of an increase in full service flying in
2001.

Subcontract flying costs decreased $4.6 million to $1.0 million in 2001 from
$5.5 million in 2000. The higher costs in 2000 resulted from outsourcing flights
during 2000 due to aircraft being out of service for maintenance.

Commissions increased $5.1 million in 2001 principally as a result of the
increase in AMC business in 2001 and an increase in the commission rate on the
AMC business.

Sales, general and administrative expenses increased $3.5 million, or 25.5%, in
2001, primarily as a result of costs associated with the relocation of the
Company's headquarters from Virginia to Georgia.

Total other expense, net increased by $1.5 million in 2001 compared to 2000.
This increase was primarily due to $0.7 million of prepayment penalties incurred
due to the early repayment of debt in connection with a  sale/leaseback of two
owned engines in June 2001, and $0.2 million related to the write-off of
property and equipment in 2001. The first six months of 2000 included a gain of
approximately $0.2 million related to insurance proceeds for which there was no
comparable gain in 2001.


LIQUIDITY AND CAPITAL RESOURCES

The Company is highly leveraged.  At June 30, 2001, the Company's cash and cash
equivalents totaled $3.6 million, which included restricted cash of  $2.9
million, and the ratio of the Company's current assets to its current
liabilities ("current ratio") was 0.5:1.   Also, as of June 30, 2001, the
Company had outstanding long-term debt and capital leases of $41.7 million and
notes payable and current maturities of long term obligations of $13.3 million.
In addition, the Company has significant long-term obligations relating to
operating leases for aircraft and spare engines. At June 30, 2001, the Company
had submitted all of its available qualified receivables under its Accounts
Receivable Management and Security Agreement and the Company had $9.4 million
additional available capacity.

Cash Flows from Operating Activities

Operating activities used $8.9 million in cash for the six months ended June 30,
2001 compared to generating $4.3 million in the comparable period of 2000.  The
cash used in 2001 principally reflects the $19.3 million loss, net non-cash
income statement charges of $4.5 million, a $4.0 million reduction in trade
accounts receivable, and a net increase in cash of $1.9 million due to other
changes in operating assets and liabilities. The cash generated in 2000
principally reflects a $1.6 million decrease in accounts receivable, a $1.1
million decrease in deposits, prepaids and other assets, and a $6.2 million
increase in unearned revenue that more than offset a $5.7 million decrease in
accounts payable, accrued expenses and other liabilities.

Cash Flows from Investing Activities

Investing activities used $0.5 million in cash for the six months ended June 30,
2001, compared to using $1.8 million in the comparable period of 2000.   In
2001, cash was generated by the sale and maturity of marketable investments, net
of purchases of rotable spare parts, computer equipment, leasehold improvements
and other fixed assets.  In 2000, cash was used primarily for the purchase of
spare parts.

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<PAGE>

Cash Flows from Financing Activities

Financing activities used $1.3 million in cash for the six months ended June 30,
2001 compared to generating $6.1 million in the comparable period of 2000.  In
2001, the Company received $7.7 million as partial proceeds from a
sale/leaseback transaction. These proceeds, along with scheduled debt payments,
resulted in repayment of $8.8 million of debt.  In 2000, the principal
transaction was the $6.1 million of cash generated by a sale/leaseback
transaction.



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. ("World Airways" or "the Company") Annual Report on
Form 10-K for the year ended December 31, 2000.  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.


                                     PART II


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


None.


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

(a)  Exhibits

No.    Description
---    -----------

     None



(b)  Reports on Form 8-K

     None

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

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<PAGE>

                                   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, 2001

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