EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of December 2,
1997 ("Agreement"), is by and between World Airways, Inc., a Delaware
corporation, its successors and assigns (hereinafter "World") and Russell L.
Ray, Jr. ("Ray").

         WHEREAS, Ray has served as World's President and Chief Executive
Officer since June, 19, 1997;

         WHEREAS, World desires to continue to employ Ray, and Ray desires to
continue to serve World, after the date hereof, as President and Chief Executive
Officer;

         NOW, THEREFORE, World and Ray, in consideration of the mutual covenants
and promises contained herein, do hereby agree as follows:

1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Ray, and Ray accepts such employment, as World's
President and Chief Executive Officer.

2. TERM. The period of employment shall be from the date first written above
through September 30, 1999 (the "Initial Term"). Ray's employment hereunder will
extend automatically for an additional twelve (12) months on the same terms and
conditions set forth herein (individually, a "Renewal Term", and collectively,
the "Renewal Terms"), if World does not provide Ray with at least twelve (12)
month's prior written notice of World's intention not to renew this Agreement.

3. POSITION AND DUTIES. Ray shall continue to serve as President and Chief
Executive Officer of World with the duties described in World's By-Laws, as in
effect on the date hereof. Ray shall continue to serve as a Director of World.
Ray may serve on the board of directors of other companies with the prior
approval of World's Chairman of the Board, or with the prior approval of the
full Board of Directors. Ray's current service on the Boards of COMTRAD is
deemed approved. Ray shall devote substantially all of his working time and
attention to the business and affairs of World.

4. COMPENSATION AND RELATED MATTERS.

        (A) BASE SALARY. Ray shall receive a minimum salary of $350,000 per
annum payable in monthly installments through September 30, 1999, in accordance
with the payroll procedures for World's salaried employees in effect during the
term of this Agreement.
 
        (B) ELIGIBILITY FOR BONUSES. Ray shall be eligible to receive an annual
bonus, as determined annually in good faith by the Compensation Committee in the
range of 0 - 75% of his base salary. Ray shall be entitled to participate in all
bonus and incentive compensation plans or arrangements hereinafter made
available by World to its officers and directors.

        (C) STOCK OPTIONS. Ray shall be granted options (the "Term Options") to
purchase 100,000 shares of World's Common Stock, par value $.001 per share
("World Airways Common Stock"), pursuant to the 1995 World Airways Stock Option
Plan (the "Plan"), at an exercise price equal to the market price on the date of
grant (the "Exercise Price"), as set forth in that certain Stock Option
Agreement between World and Ray of even date herewith (the "Option Agreement"),
a copy of which is attached as Exhibit A hereto.

         Ray shall also be granted options to purchase 150,000 shares of World's
Common Stock, (the "Performance Options") subject to the following vesting: the
Option as to the first 50,000 of the 150,000 Performance Options at the exercise
price shall vest on the first day following any twenty (20) trading-day period
during which the Company's stock traded at or above 125 percent of the Exercise
Price;

               (i) the Option as to the second 50,000 of the 150,000 Performance
Options shall vest on the first day following any twenty (20) trading-day period
during which the Company's stock traded at or above 150 percent of the Exercise
Price; 

               (ii) the Option as to the third 50,000 of the 150,000 Performance
Options shall vest on the first day following any twenty (20) trading-day period
during which the Company's stock traded at or above 175 percent of the Exercise
Price;

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          (D) BUSINESS EXPENSES. Ray shall be entitled to reimbursement of
reasonable business-related expenses consistent with World's policies from time
to time.

          (E) FRINGE BENEFITS. Ray shall be entitled to all employee benefits
made available now or in the future to other officers of World. In the event
this Agreement is terminated by either party for any reason other than death or
for cause, Ray may participate in World's health and other benefit programs for
a period of one year from the date of Ray's termination, or until Ray obtains
comparable coverage, whichever is earlier. (F) VACATIONS. Ray shall be entitled
to one (1) month of paid vacation in each calendar year. Ray shall be entitled
to all paid holidays observed by World. (G) INDEMNIFICATION; D&O INSURANCE.
World shall provide (or cause to be provided) to Ray indemnification against all
expenses (including attorneys' fees), judgements, fines and amounts paid in
settlements in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of World) by reason of his being or
having been an officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Ray in defending any
such civil, criminal, administrative or investigative action, suit or proceeding
and maintain directors' and officers' liability insurance coverage (including
coverage for securities-related claims) upon substantially the same terms and
conditions as set forth in the Indemnification Agreement dated as of January 1,
1994 between Ray and World Airways, Inc. (the "Indemnity Agreement").

5. TERMINATION OF EMPLOYMENT.

         (A) DEATH. Ray's employment hereunder shall terminate upon his death,
in which event World shall have no further obligation to Ray or his estate with
respect to compensation, other thanthe disposition of life insurance and related
benefits and accrued and unpaid base salary and incentive compensation for 
periods prior to the date of death.

         (B) BY WORLD FOR DISABILITY. If Ray incurs a disability and such
disability continues for a period of six (6) consecutive months, then World may
terminate this Agreement upon written notice to Ray, in which event World shall
have no obligation to Ray with respect to compensation under Section 4(a) of
this Agreement. The term "disability" means a physical or mental illness that
will prevent Ray form doing substantial gainful work for at least six (6) months
or is likely to result in death. If Ray becomes entitled to Social Security
benefits payable on account of disability, he will be deemed conclusively to be
disabled for purposes of this Agreement.

         (C) BY WORLD FOR CAUSE. The Board of Directors of World may terminate
this Agreement for Cause. If this Agreement is terminated for cause, this
Agreement will terminate and World will have no further obligations under this
Agreement to Ray. "Cause" shall be defined as: (i) willful failure to perform at
the direction of the resolutions of the Board of Directors (other than any such
failure resulting from Ray's incapacity due to physical or mental illness or any
such actual or anticipated failure after Ray gives notice of termination of
employment for Good Reason (as hereinafter defined)); (ii) willful dishonesty
with the intent to mislead in connection with Ray's employment hereunder; or
(iii) gross negligence in the performance of the services contemplated by this
Agreement. Ray may only be terminated for Cause pursuant to a resolution duly
adopted by the affirmative vote of a majority of the entire membership of the
Board at a meeting of the Board in which a quorum of the Board is present
throughout, finding that, in the good faith opinion of the Board, Ray was guilty
of conduct set forth in clause (i), (ii), or (iii) above, and specifying the
particulars thereof in detail; provided, however, that Ray may not be terminated
for Cause unless: (1) Ray receives prior written notice of World's intention to
terminate this Agreement for Cause and the specific reasons therefor; and (2)
Ray has an opportunity to be heard (in person or in writing, at the sole
discretion of the Board) by World's Board of Directors and be given, if the acts
are correctable, fifteen (15) days to correct the act or acts (or non-action)
giving rise to such written notice. If the Board by resolution duly adopted by
the affirmative vote of a majority of the entire membership of the Board finds
that Ray fails to make such correction within fifteen (15) days to do so, this
Agreement may be terminated for Cause.

         (D) BY WORLD FOR OTHER THAN CAUSE. In the event the Board of Directors
terminates this Agreement for reasons other than causes as defined in
sub-paragraph (c) above, World will pay to Ray within ten (10) days of notice of
termination (or, in the case of incentive bonus compensation, within ten (10)
days of determination of amounts payable under the applicable bonus plan

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generally) the remainder of his base salary, including deferred salary and/or
bonus compensation, payable under this Agreement, discounted to present value at
the time of payment at an annual discount rate of 8%. In addition, all granted
but unvested stock options under the Option Agreement shall become immediately
exercisable, and all granted but unvested Performance Options shall also become
exercisable if and to the extent Ray's date of termination occurs during one or
more of the twenty (20) day trading periods described in Section 5(c)(i)-(iii).
In the event that any payment to Ray under this paragraph is subject to any
federal or state excise tax, World shall pay to Ray an additional amount equal
to the excise tax imposed including additional federal and state income and
excise taxes as a result of the payments under this paragraph, and such payment
will be made when the excise tax and income taxes are due. Whether an excise tax
is payable, and the amount of the excise tax and additional income taxes
payable, shall be determined by World's accountants and World shall hold Ray
harmless for any and all taxes, penalties, and interest that may become due as a
result of the failure to properly determine that an excise tax is payable or the
correct amount of the excise tax and additional income taxes, together with all
legal and accounting fees reasonably incurred by Ray in connection with any
dispute with any taxing authority with respect to such determinations and/or
payments. Ray agrees to use his best efforts to minimize any taxes for which
World may become liable hereunder.

         (E) BY RAY. Ray may terminate his employment hereunder (for purposes of
this Agreement "Good Reason") after giving at least 30 days notice in the event
that: 

             (i) World relocates its general and administrative offices or Ray's
place of employment to an area other than the Washington, D.C. Standard
Metropolitan Statistical Area,

             (ii) he is assigned any duties substantially inconsistent with
his responsibilities as described by Section 3 hereof or a substantial adverse
alteration is made to the nature or status of such responsibilities and such
assignment or alteration is not remedied within 30 days after notice to World,

             (iii) World reduces his annual base salary as in effect on the date
hereof or as the same may be increased from time to time; 

             (iv) World fails,without Ray's consent, to pay Ray any portion of
his current compensation, or to pay him any portion of an installment of
deferred compensation under any deferred compensation program of World, within
seven (7) days after notice to World of such failure;

             (v) World fails to continue in effect any compensation plan in
which Ray participates which is material to Ray's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by World to continue
Ray's participation therein (or in such substitute or alternative Plan) on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of Ray's participation relative to other participants;

             (vi) World fails to continue to provide Ray with benefits
substantially similar to those enjoyed by Ray under any of World's pension, life
insurance, medical, health and accident, or disability plans in which Ray was
participating, World takes any action which would directly or indirectly
materially reduce any of such benefits or deprive Ray of any material fringe
benefit enjoyed by Ray, or World fails to provide Ray with the number of paid
vacation days to which Ray is entitled hereunder;

             (vii) World terminates, or purports to terminate Ray's employment
hereunder contrary to the requirements of Section 5(c) hereof (for purposes of
this Agreement, no such termination or purported termination shall be
effective);

             (viii) the Board approves the sale, liquidation or dissolution of
World prior to the end of this agreement; or 

             (ix) a "Change of Control" shall be deemed to have occurred as 
defined in Section 5(f) hereof. 

         (F) CHANGES OF CONTROL. for purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following events:

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             (i) any Person is or becomes the Beneficial Owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), directly or indirectly, of securities of World representing
more than 50% of the combined voting power of World's then outstanding
securities; or

             (ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of World and any new
director (other than a director designated by a Person who has entered into an
agreement with World to effect a transaction described in clause (i), (iii) or
(iv) or this Section 5(f)) whose election by the Board of World or nomination
for election by the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office whoeither were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof; 
or

             (iii) the shareholders of World approve a merger or
consolidation of World or with any other corporation, other that (A) a merger or
consolidation which would result in the voting securities of World outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity),
in combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of World or any of its affiliates, at
least 50% of the combined voting power of the voting securities of World or such
surviving entity outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization of World
(or similar transaction) in which no Person acquires more than 50% if the
combined voting power of World then outstanding securities; or

             (iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or disposition by World of all
or substantially all of World's assets.

         (G) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified and used
in Section 13(d) and 14(d) thereof; however, a Person shall not include (i)
World or any of its subsidiaries or affiliates; (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of World or any of
their subsidiaries; (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities; or (iv) a corporation owned, directly or
indirectly, by the stockholders of World in substantially the same proportions
as their ownership of stock of World.

         (H) EFFECT OF TERMINATION BY RAY. In the event that Ray decides to
terminate this Agreement and his employment with World or any successor in
interest in accordance with the provisions of Section 5(e), World shall have the
same obligations as set forth in Section 5(d) hereof, except that the
undiscounted remainder of Ray's base salary shall not be less than 12 months
salary. Any other payments due or actions required under this paragraph shall be
made as lump sums or taken within 10 days of termination of the Agreement.

         (I) EXCISE TAX INDEMNITY. In the event that any payment to Ray under
Section 5(e) is subject to any federal or state excise tax, World shall pay to
Ray an additional amount equal to the excise tax imposed including additional
federal and state income and excise taxes as a result of the payments under this
paragraph, and such payment will be made when the excise tax and income taxes
are due. Whether an excise tax is payable, and the amount of the excise tax and
additional income taxes payable, shall be determined by World's accountants and
World Shall hold Ray harmless for any and all taxes, penalties, and interest
that may become due as a result of the failure to properly determine that an
excise tax is payable or the correct amount of the excise tax and additional
income taxes, together with all legal and accounting fees reasonably incurred by
Ray in connection with any dispute with any taxing authority with respect to
such determinations and/or payments. In the event of a disagreement between
World and Ray as to whether the termination was for Good Reason, that issue
shall be submitted within twenty (20) days of the notice of termination to
binding arbitration.

         (J)      NOTICE OF TERMINATION.  Termination of this Agreement by World
or termination of this Agreement by Ray shall be communicated by written notice
to the other party hereto, specifically indicating the termination provision
relied upon.

<PAGE>

6. CONFIDENTIALITY. Ray shall not, during the term of this Agreement or
thereafter, disclose to anyone (except to the extent reasonably necessary for
Ray to perform his duties hereunder or as may be required by law) any
confidential information concerning the business or affairs of World (or of any
affiliate or subsidiary of World), including but not limited to lists of and
records relating to customers, business plans, business negotiations, market
information, financial and cost information, and scientific and technical
information (whether of World or entrusted to World by a third party under a
confidentiality agreement or understanding) which Ray shall have acquired in the
course of, or incident to, the performance of his duties pursuant to the terms
of this Agreement or pursuant to any prior dealings with World or any affiliate
or subsidiary of Word. Ray shall hold in strictest confidence, as a fiduciary,
any and all such confidential information, and shall comply with all
instructions of World for preservation of the confidentiality of such
information.

7. NONCOMPETE. For a period of one (1) year following the date of termination of
Ray's employment hereunder other than by World without Cause or by Ray for Good
Reason, Ray will not, directly or indirectly, whether as an owner, partner,
shareholder, consultant, agent, employee, co-venturer or otherwise, or through
any other person or entity, engage in the business of selling and/or providing
ACMI leases or any other business which is competitive with World's business
within World's existing or expanded business markets.

8. BENEFICIARY. The Beneficiary of any payment to be made in the event of Ray's
death shall be his wife, or such other person or persons as Ray shall designate
in writing to World. If no beneficiary shall survive Ray, any such payments
shall be made to his estate.

9. ARBITRATION. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration conducted in
Washington, D.C., under the commercial arbitration rules of the American
Arbitration Association then in effect.

10. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior to subsequent time.

11. GOVERNING LAW. This Agreement is governed by and shall be construed in
accordance with the laws of the State of Virginia without regard to the choice
of law provisions thereof. Ray agrees to submit to personal jurisdiction in the
State of Virginia.

12. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.

13. SUCCESSORS. This Agreement shall be binding upon World, its successors and
assigns, including any corporation or other business entity which may acquire
all or substantially all of World's assets or business, or within which World
may be consolidated or merged, or any surviving corporation in a merger
involving World.

14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.

15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.

16. COMPLETE AGREEMENT. This Agreement sets forth the complete and entire
understanding between World and Ray regarding Ray's employment and replaces and
supersedes all prior agreements or understandings, whether oral or in writing,
between the parties.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

                                      WORLD AIRWAYS, INC.

                                      By:      _______________________________
                                               T. Coleman Andrews, III
                                               Chairman of the Board


                                               _______________________________
                                               Russell L. Ray, Jr.