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: SEPTEMBER 30, 1997 Commission File Number 0-26582



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



                               DELAWARE94-1358276
         (State of incorporation)(I.R.S. Employer Identification Number)

              13873 Park Center Road, Suite 490, Herndon, VA 20171
                    (Address of Principal Executive Offices)
                                 (703) 834-9200
                         (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
November 7, 1997 was 8,003,064.




                                                         1

<PAGE>





                               WORLD AIRWAYS, INC.

                  SEPTEMBER 1997, QUARTERLY REPORT ON FORM 10Q

                                TABLE OF CONTENTS





                                                                           PAGE 

PART I - FINANCIAL INFORMATION

  Item 1.  Financial Statements

    Condensed Balance Sheets, September 30, 1997 and December 31, 1996.........3

    Condensed Statements of Operations,
    Three Months Ended September 30, 1997 and 1996.............................5

    Condensed Statements of Operations,
    Nine Months Ended September 30, 1997 and 1996..............................6

    Condensed Statement of Changes in Common Stockholders' Equity (Deficit),
    Nine months ended September 30, 1997.......................................7

    Condensed Statements of Cash Flows,
    Nine months ended September 30, 1997 and 1996..............................8

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

  Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations..........................................11


PART II - OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K...................................24



                                                         2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

                               WORLD AIRWAYS, INC.
                            CONDENSED BALANCE SHEETS
                                     ASSETS
                                 (IN THOUSANDS)
                                  
<TABLE>
<CAPTION>    
                                                                              (unaudited)  
                                                                              September 30,   December 31,
                                                                                  1997             1996
                                                                              ------------     --------
<S>                                                                           <C>              <C>
CURRENT ASSETS
     Cash and cash equivalents, including restricted
         cash of $28 at September 30, 1997
         and $338 at December 31, 1996                                        $    28,205      $     7,028

     Restricted short-term investments                                              1,106            1,047

     Trade accounts receivable, less allowance for
         doubtful accounts of $409 at September 30, 1997
         and $413 at December 31, 1996                                              6,689           14,093

     Other receivables                                                              6,463            4,464

     Due from affiliate, net                                                        1,572            4,181

     Prepaid expenses and other current assets                                      4,807            7,778

     Assets held for sale                                                             500              500
                                                                                  -------          -------

         Total current assets                                                      49,342           39,091
                                                                                  -------          -------

ASSETS HELD FOR SALE                                                                2,780            3,426

EQUIPMENT AND PROPERTY
     Flight and other equipment                                                    84,882           72,089
     Equipment under capital leases                                                11,466           11,466
                                                                                  -------          -------
                                                                                   96,348           83,555
     Less: accumulated depreciation and amortization                               24,065           18,553
                                                                                  -------          -------

         Net equipment and property                                                72,283           65,002
                                                                                  -------          -------

LONG-TERM OPERATING DEPOSITS                                                       16,100           15,951

OTHER ASSETS AND DEFERRED CHARGES, NET                                              3,084            2,687
                                                                                  -------          -------

TOTAL ASSETS                                                                  $   143,589      $   126,157
                                                                                  =======          =======

</TABLE>
                                                     (Continued)

                                                         3

<PAGE>

                               WORLD AIRWAYS, INC.
                            CONDENSED BALANCE SHEETS
                                   (CONTINUED)
              LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
                        (IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                              (unaudited)
                                                                              September 30,    December 31,
                                                                                  1997             1996  
                                                                               -----------     -----------
<S>                                                                           <C>              <C>

CURRENT LIABILITIES
     Notes payable                                                            $        --      $    11,386
     Current maturities of long-term obligations                                    9,494            9,046
     Accounts payable                                                              16,625           22,749
     Net liabilities of discontinued operations                                        --            1,834
     Unearned revenue                                                               2,970            3,046
     Accrued maintenance in excess of reserves paid                                14,099            9,770
     Accrued salaries and wages                                                    10,147            9,351
     Accrued taxes                                                                  1,411            1,225
     Due to affiliate                                                                  --               83
     Other accrued liabilities                                                        118              157
                                                                                  -------          -------
         Total current liabilities                                                 54,864           68,647
                                                                                  -------          -------

LONG-TERM OBLIGATIONS, NET                                                         76,280           30,106

OTHER LIABILITIES
     Deferred gain from sale-leaseback transactions, net of
         accumulated amortization of $19,891 at September
         30, 1997 and $19,099 at December 31, 1996                                  5,460            6,252
     Accrued maintenance in excess of reserves paid                                 2,123            6,867
     Accrued postretirement benefits                                                2,700            2,545
     Other liabilities                                                              4,136            3,378
                                                                                  -------          -------
         Total other liabilities                                                   14,419           19,042
                                                                                  -------          -------

TOTAL LIABILITIES                                                                 145,563          117,795
                                                                                  -------          -------

COMMON STOCKHOLDERS' EQUITY (DEFICIT)
     Common stock, $.001 par value (40,000,000 shares authorized; 12,000,064
         shares issued and 8,003,064 outstanding at September 30, 1997 and
         12,000,064 shares issued and
         11,282,064 outstanding at December 31, 1996)                                  12               12
     Preferred stock, $.001 par value (5,000,000 shares authorized
         and no shares issued or outstanding at September 30, 1997
         and December 31, 1996)                                                        --               --
     Additional paid-in capital                                                    42,522           42,522
     Contributed capital                                                            3,000            3,000
     Accumulated deficit                                                         (14,614)         (29,006)
     ESSOP guaranteed bank loan                                                     (370)            (805)
     Treasury stock, at cost (3,997,000 shares at September 30,
         1997 and 718,000 shares at December 31, 1996)                           (32,524)          (7,361)
                                                                                 --------        ---------
         Total common stockholders' equity (deficit)                              (1,974)            8,362
                                                                                 --------        ---------

COMMITMENTS AND CONTINGENCIES

TOTAL LIABILITIES AND COMMON STOCKHOLDERS'
     EQUITY (DEFICIT)                                                         $   143,589      $   126,157
                                                                                 ========         ========
</TABLE>


            See accompanying Notes to Condensed Financial Statements

                                                         4

<PAGE>
                               WORLD AIRWAYS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                      (IN THOUSANDS EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE><CAPTION>
                                                                                  1997             1996
                                                                              -----------      -----------
<S>                                                                           <C>              <C>
OPERATING REVENUES
     Flight operations                                                        $    79,645      $    70,118
     Flight operations subcontracted to other carriers                                115            5,016
     Other                                                                            164              263
                                                                                 --------         --------
         Total operating revenues                                                  79,924           75,397
                                                                                  -------          -------

OPERATING EXPENSES
     Flight                                                                        21,835           16,911
     Maintenance                                                                   14,918           13,855
     Aircraft costs                                                                20,351           18,982
     Fuel                                                                           6,831            6,628
     Flight operations subcontracted to other carriers                                330            4,809
     Promotions, sales and commissions                                              3,002            2,000
     Depreciation and amortization                                                  2,331            2,055
     General and administrative                                                     5,803            6,441
                                                                                  -------          -------
         Total operating expenses                                                  75,401           71,681
                                                                                  -------          -------

OPERATING INCOME                                                                    4,523            3,716
                                                                                  -------          -------

OTHER INCOME (EXPENSE)
     Interest expense                                                             (1,377)            (952)
     Interest income                                                                  747              303
     Other, net                                                                      (92)               22
                                                                                 --------         --------
         Total other expense                                                        (722)            (627)
                                                                                 --------         --------

EARNINGS FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES                                                            3,801            3,089

INCOME TAX EXPENSE                                                                   (75)            (180)
                                                                                 --------         --------

EARNINGS FROM CONTINUING OPERATIONS                                                 3,726            2,909

DISCONTINUED OPERATIONS                                                                --              180
                                                                                 --------         --------

NET EARNINGS                                                                  $     3,726      $     3,089
                                                                                 ========         ========

PRIMARY EARNINGS PER COMMON EQUIVALENT SHARE
     Continuing operations                                                    $      0.35      $      0.24
     Discontinued operations                                                           --             0.02
                                                                                ---------         --------
     Net earnings                                                             $      0.35      $      0.26
                                                                                 ========         ========

WEIGHTED AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                                                 10,775           12,000
                                                                                 ========         ========

FULLY DILUTED EARNINGS PER COMMON EQUIVALENT SHARE
     Continuing operations                                                    $      0.25      $      0.24
     Discontinued operations                                                           --             0.02
                                                                                 --------         --------
     Net earnings                                                             $      0.25      $      0.26
                                                                                 ========         ========

WEIGHTED AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                                                 16,393           12,000
                                                                                 ========         ========
</TABLE>             
                       See accompanying Notes to Condensed Financial Statements
                                                         5
<PAGE>
                                                WORLD AIRWAYS, INC.
                                        CONDENSED STATEMENTS OF OPERATIONS
                                      FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                       (IN THOUSANDS EXCEPT PER SHARE DATA)
                                                    (UNAUDITED)
<TABLE><CAPTION>
                                                                                   1997             1996
                                                                               ----------      -----------
<S>                                                                           <C>              <C>
OPERATING REVENUES
     Flight operations                                                        $   238,129      $   214,960
     Flight operations subcontracted to other carriers                              2,058           11,728
     Other                                                                            413              582
                                                                                  -------          -------
         Total operating revenues                                                 240,600          227,270
                                                                                  -------          -------

OPERATING EXPENSES
     Flight                                                                        54,949           50,193
     Maintenance                                                                   49,513           44,348
     Aircraft costs                                                                69,730           60,434
     Fuel                                                                          12,534           14,698
     Flight operations subcontracted to other carriers                              2,579           12,822
     Promotions, sales and commissions                                              7,665            5,634
     Depreciation and amortization                                                  6,662            5,949
     General and administrative                                                    19,611           17,530
                                                                                  -------          -------
         Total operating expenses                                                 223,243          211,608
                                                                                  -------          -------

OPERATING INCOME                                                                   17,357           15,662
                                                                                  -------          -------

OTHER INCOME (EXPENSE)
     Interest expense                                                             (3,423)          (2,528)
     Interest income                                                                1,085              956
     Other, net                                                                     (202)               86
                                                                                  -------          -------
         Total other expense                                                      (2,540)          (1,486)
                                                                                  -------          -------

EARNINGS FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES                                                           14,817           14,176

INCOME TAX EXPENSE                                                                  (425)            (495)
                                                                                  -------         --------

EARNINGS FROM CONTINUING OPERATIONS                                                14,392           13,681

DISCONTINUED OPERATIONS                                                                --         (32,525)
                                                                                  -------         --------

NET EARNINGS (LOSS)                                                           $    14,392      $  (18,844)
                                                                                  =======         ========

PRIMARY EARNINGS (LOSS) PER COMMON EQUIVALENT SHARE
     Continuing operations                                                    $      1.30      $      1.14
     Discontinued operations                                                           --           (2.71)
                                                                                  -------          -------
     Net earnings (loss)                                                      $      1.30      $    (1.57)
                                                                                  =======          =======

WEIGHTED AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                                                 11,080           12,000
                                                                                  =======          =======

FULLY DILUTED EARNINGS (LOSS) PER COMMON
     EQUIVALENT SHARE
     Continuing operations                                                    $      0.89      $      1.14
     Discontinued operations                                                           --           (2.71)
                                                                                  -------          -------
     Net earnings (loss)                                                      $      0.89      $    (1.57)
                                                                                  =======          =======

WEIGHTED AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                                                 16,698           12,000
                                                                                  =======          =======
</TABLE>
                       See accompanying Notes to Condensed Financial Statements
                                                         6
<PAGE>



                               WORLD AIRWAYS, INC.
                         CONDENSED STATEMENTS OF CHANGES
                    IN COMMON STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                                    Total
                                                                                                                   Common
                                                   Additional                               ESSOP     Treasury  Stockholders'
                                       Common       Paid-in   Contributed   Accumulated  Guaranteed     Stock,     Equity
                                        STOCK       CAPITAL     CAPITAL       DEFICIT     BANK LOAN    AT COST    (DEFICIT)
                                       ------      --------    ----------   -----------  -----------   --------   ---------
<S>                                   <C>         <C>          <C>          <C>           <C>          <C>         <C>       
BALANCE AT
     DECEMBER 31, 1996                $     12    $  42,522    $  3,000     $ (29,006)    $  (805)     $(7,361)    $  8,362

Common stock repurchases                    --           --          --            --          --      (25,163)     (25,163)
     (3,279,000 shares)

Employee Savings and Stock
     Ownership Plan
     Guaranteed bank loan                    --          --          --            --         435           --          435

Net earnings                                 --          --          --        14,392          --           --       14,392
                                       --------     -------     -------       -------      -------      -------      -------

BALANCE AT
     September 30, 1997               $      12   $  42,522    $  3,000     $ (14,614)    $  (370)     $(32,524)    $(1,974)
                                       ========     =======     =======       ========     =======      ========     =======

</TABLE>



                       See accompanying Notes to Condensed Financial Statements


                                                             7

<PAGE>



                               WORLD AIRWAYS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                  1997             1996
                                                                              -----------      -----------
<S>                                                                           <C>              <C>

CASH AND CASH EQUIVALENTS AT BEGINNING
     OF PERIOD                                                                $     7,028      $    25,271

CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)                                                                14,392         (18,844)
Adjustments to reconcile net income (loss) to cash
     provided (used) by operating activities:
     Depreciation and amortization                                                  6,662            5,949
     Deferred gain recognition                                                      (792)            (794)
     Gain on sale of property and equipment                                           131             (25)
     Loss (gain) on disposal of discontinued operations                                --            7,641
     Other                                                                            155                5
     Changes in certain assets and liabilities net of effects of non-cash
         transactions:
         Decrease (increase) in accounts receivable                                 8,140          (7,268)
         (Increase) decrease in restricted short-term investments                    (59)              345
         Decrease in deposits, prepaid expenses
             and other assets                                                       2,850            3,677
         (Decrease) increase in accounts payable, accrued
             expenses and other liabilities                                       (6,781)           18,859
         Decrease in unearned revenue                                                (76)         (10,229)
         Decrease in air traffic liability                                             --            (192)
                                                                                 --------        ---------
     Net cash provided (used) by operating activities                              24,622            (876)
                                                                                 --------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property                                               (5,285)          (9,411)
Proceeds from disposals of equipment and property                                     545              321
                                                                                 --------        ---------
     Net cash used by investing activities                                        (4,740)          (9,090)
                                                                                 --------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in line of credit borrowing arrangement, net                  (7,096)            2,496
Issuance of debt                                                                   50,799            5,884
Repayment of debt                                                                (15,835)         (12,479)
Purchase of World Airways common stock, at cost                                  (25,163)               --
Debt issuance costs                                                               (1,410)            (100)
Costs relating to sale of stock                                                        --             (13)
                                                                                 --------         --------
     Net cash provided (used) by financing activities                               1,295          (4,212)
                                                                                 --------         --------

NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                                              21,177         (14,178)
                                                                                 --------         --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    $    28,205      $    11,093
                                                                                 ========         ========

                       See accompanying Notes to Condensed Financial Statements
</TABLE>


                                                             8

<PAGE>
                               WORLD AIRWAYS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

1.    The condensed balance sheet of World Airways, Inc. ("World Airways" or the
      "Company") as of September 30, 1997, the related condensed statements of
      operations for the three and nine month periods ended September 30, 1997
      and 1996, the condensed statements of changes in common stockholders'
      equity (deficit) for the nine months ended September 30, 1997, and the
      condensed statements of cash flows for the nine months ended September 30,
      1997 and 1996 are unaudited. In the opinion of management, all adjustments
      necessary for a fair presentation of such financial statements have been
      included. Such adjustments consisted only of normal recurring items.
      Interim results are not necessarily indicative of results for a full year.

      The condensed financial statements and notes are presented as required by
      Form 10-Q and do not contain certain information included in the Company's
      annual financial statements and notes. These financial statements should
      be read in conjunction with the financial statements and the notes
      included in the Company's Form 10-K for the year ended December 31, 1996.

2.    In July 1996, the Company announced its decision to exit its scheduled
      service operations by October 1996 and focus its operations on its core 
      business: operating aircraft under contracts with international carriers,
      the U.S.Government, and international tour operators. Consistent with this
      decision, World Airways ceased all scheduled operations as of October 27,
      1996. As a result, the Company's scheduled service operations were
      reflected as discontinued operations as of June 30, 1996, and prior period
      results were restated to reflect scheduled service operations as 
      discontinued operations. Loss from discontinued operations (net of income
      tax effect) approximated $11.7 million for the year ended December 31, 
      1996. In addition, an estimated loss on disposal of $21.0 million (net of
      income tax effect) which was recorded as of June 30, 1996, included the
      following: $13.6 million for estimated operating losses during the phase-
      out period; a $2.6 million estimated loss to be incurred in connection 
      with sub-leasing DC-10 aircraft which would not be utilized in the 
      Company's operations subsequent to the phase-out of scheduled service
      operations; a $2.3 million writeoff of related leasehold improvements; and
      $2.0 million for passenger reprotection expenses. The Company has incurred
      approximately $21.2 million of these costs through September 30, 1997. The
      Company does not expect to incur any additional costs relating to
      scheduled service operations. In connection with the discontinuance of the
      Company's scheduled service operations, the Company was subject to claims
      by various third parties and may be subject to further claims in the
      future (see Note 5).

3.    On August 26, 1997, the Company completed a private offering, issuing
      $50.0 million of 8% convertible senior subordinated debentures (the 
      "Debentures") due in 2004 (the "Offering").  The Debentures are unsecured
      obligations, convertible into shares of the Company's common stock at 
      $8.90 per share, and subordinated to all present and future senior 
      indebtedness of the Company.  The Company's intended use of the net
      proceeds of the Offering is to repurchase approximately 4.0 million shares
      of its common stock, repay certain indebtedness, increase working capital
      and for general corporate purposes.  After completion of the Offering,
      the Company repaid approximately $3.8 million as full settlement of an 
      outstanding spare parts loan.  Failure by the Company to repurchase at
      least 4.0 million shares of common stock within 150 days after the sale of
      the Debentures constitutes a repurchase event whereby each holder of the
      Debentures would have the right, at the holder's option, to require the 
      Company to repurchase such holder's Debentures at 100% of their principal
      amount, plus accrued interest (the "Repurchase Event"). The ability of the
      Company to repurchase the Debentures upon a Repurchase Event will be 
      dependent on the Company's ability to raise sufficient funds through 
      additional borrowings or equity sales and compliance with applicable
      securities laws.  Accordingly, there can be no assurance that the Company
      will be able to repurchase the Debentures upon a Repurchase Event.

4.    In 1996, World Airways instituted a program to purchase up to one million
      shares of its publicly-traded Common Stock pursuant to open market
      transactions. As of September 30, 1997, World Airways had purchased
      770,000 shares of Common Stock at an aggregate cost of approximately $7.8
      million pursuant to such program.

      In connection with the above-mentioned Offering, the Company and
      WorldCorp, Inc. ("WorldCorp") entered into an agreement (the "Agreement")
      

                                                         9

<PAGE>
      for the purchase by World Airways of up to 4.0 million shares of common
      stock owned by WorldCorp at a purchase price of $7.65 per share. On
      September 18, 1997, the Company purchased 3,227,000 shares of its common 
      stock from WorldCorp for approximately $24.7 million. Discussions with MHS
      Berhad ("MHS") following the Offering could have an impact on the number
      of shares of common stock ultimately repurchased from WorldCorp. MHS has
      certain rights under a shareholders agreement, dated as of February 3, 
      1994, as amended, among WorldCorp, MHS and the Company. This agreement
      includes a provision that provides that if WorldCorp were to dispose of 
      its holdings in the Company with the result that WorldCorp's ownership 
      interest in the Company falls below 51% of the outstanding shares of
      common stock, then MHS may either sell its shares to a third party or 
      require WorldCorp to sell a pro rata number of shares held by MHS to the
      party purchasing WorldCorp's shares. As a result of the repurchase of 
      3,227,000 shares of common stock by World Airways from WorldCorp, MHS has
      the right to sell 773,000 shares of common stock. Accordingly, WorldCorp,
      MHS and the Company have engaged in preliminary discussions as to the
      potential repurchase of common stock owned by MHS. The Company anticipates
      that these discussions will continue, although there can be no assurance
      that these discussions will result in any stock repurchases from MHS.
      Should MHS not exercise its right to sell the 773,000 shares of common
      stock, the Company currently intends to repurchase the shares from
      WorldCorp.

5.    The Company reached a settlement in September 1997 with its engine
      manufacturer for reimbursements related to disputed spare engine lease
      charges. As a result of this settlement, the Company reversed aircraft
      costs of approximately $2.4 million, consisting of lease expenses of
      approximately $0.9 million and $1.5 million originally recorded in 1996
      and the first six months of 1997, respectively.

6.    The Company was recently informed that MAS received notice from the
      Malaysian Hadj Board that MAS will not participate in the 1998 Hadj
      pilgrimage. Notwithstanding, MAS has assured the Company that it will
      honor its contractual obligations. For the nine months ended September 30,
      1997, the Company received approximately $17.0 million in revenues as a
      result of aircraft provided to MAS for 1997 Hadj operations.

7.    In October 1997, one of the Company's MD-11 aircraft was damaged upon its
      landing in Montevideo, Uruguay. The aircraft is expected to be out of
      service for approximately two months while certain repairs are made. The
      Company expects insurance to cover repair and certain related costs, but
      expects that the Company's loss of revenues that would have been generated
      by the aircraft's use will have an adverse effect on its financial
      condition and results of operations for the fourth quarter of 1997.

8.    For a discussion of commitments and contingencies see "Management's
      Discussion and Analysis of Financial Condition and Results of Operations-
      Legal and Administrative Proceedings".

9.    In February 1997, the Financial Accounting Standards Board issued 
      Statement of Financial Accounting Standards ("SFAS") No. 128 ("FAS #128")
      Earnings per Share, and SFAS No. 129 ("FAS #129") Disclosure of 
      Information About Capital Structure.  FAS #128 was issued to simplify the
      computation of earnings per share and to make the U.S. standard more 
      compatible with the standards of other countries and that of the
      International Accounting Standards Committee.  FAS #128 replaces primary 
      and full diluted earnings per share with basic earnings and diluted 
      earnings per share. FAS #129 will change some of the required disclosures
      about capital structure.  It is not expected that these statements will
      have a material effect on the Company's financial statements in the 
      future. The statements are effective for the year ended December 31, 1997.

                                                        10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations presented below relates to the operations of World Airways, Inc.
("World Airways" or "the Company") as reflected in its financial statements.
World Airways was organized in March 1948 and became a wholly owned subsidiary
of WorldCorp, Inc. ("WorldCorp") in a holding company reorganization in 1987. In
February 1994, pursuant to an October 1993 agreement, WorldCorp sold 24.9% of
its ownership to MHS Berhad ("MHS"), a Malaysian aviation company. Effective
December 31, 1994, WorldCorp increased its ownership in the Company to 80.1%
through the purchase of 5% of World Airways common stock held by MHS. In October
1995, the Company completed an initial public offering in which 2,000,000 shares
were issued and sold by the Company and 900,000 shares were sold by WorldCorp.
On September 18, 1997, the Company repurchased 3,227,000 shares of its common
stock from WorldCorp. At September 30, 1997, WorldCorp and MHS owned 46.3% and
24.9%, respectively, of the outstanding common stock of World Airways. The
balance was publicly traded.

On August 26, 1997, the Company completed a private offering, issuing $50.0
million of 8% convertible senior subordinated debentures (the "Debentures") due
in 2004 (the "Offering"). The Debentures are unsecured obligations, convertible
into shares of the Company's common stock at $8.90 per share, and subordinated
to all present and future senior indebtedness of the Company. The Company's
intended use of net proceeds of the Offering is to repurchase approximately 4.0
million shares of its common stock, repay certain indebtedness, increase working
capital and for general corporate purposes. After completion of the Offering,
the Company repaid approximately $3.8 million as full settlement of an
outstanding spare parts loan. Failure by the Company to repurchase at least 4.0
million shares of common stock within 150 days after the sale of the Debentures
constitutes a repurchase event whereby each holder of the Debentures would have
the right, at the holder's option, to require the Company to repurchase such
holder's Debentures at 100% of their principal amount, plus accrued interest
(the "Repurchase Event"). The ability of the Company to repurchase the
Debentures upon a Repurchase Event will be dependent on the Company's ability to
raise sufficient funds through additional borrowings or equity sales and
compliance with applicable securities laws. Accordingly, there can be no
assurance that the Company will be able to repurchase the Debentures upon a
Repurchase Event.

In 1996, World Airways instituted a program to purchase up to one million shares
of its publicly-traded Common Stock pursuant to open market transactions. As of
September 30, 1997, World Airways had purchased 770,000 shares of Common Stock
at an aggregate cost of approximately $7.8 million pursuant to such program.

In connection with the above-mentioned Offering, the Company and WorldCorp, Inc.
("WorldCorp") entered into an agreement (the "Agreement") for the purchase by
World Airways of up to 4.0 million shares of common stock owned by WorldCorp at
a purchase price of $7.65 per share. On September 18, 1997, the Company
purchased 3,227,000 shares of its common stock from WorldCorp for approximately
$24.7 million. Discussions with MHS Berhad ("MHS") following the Offering could
have an impact on the number of shares of common stock ultimately repurchased
from WorldCorp. MHS has certain rights under a shareholders agreement, dated as
of February 3, 1994, as amended, among WorldCorp, MHS and the Company. This
agreement includes a provision that provides that if WorldCorp were to dispose
of its holdings in the Company with the result that WorldCorp's ownership
interest in the Company falls below 51% of the outstanding shares of common
stock, then MHS may either sell its shares to a third party or require WorldCorp
to sell a pro rata number of shares held by MHS to the party purchasing
WorldCorp's shares. As a result of the repurchase of 3,227,000 shares of common
stock by World Airways from WorldCorp, MHS has the right to sell 773,000 shares
of common stock. Accordingly, WorldCorp, MHS and the Company have engaged in
preliminary discussions as to the potential repurchase of common stock owned by
MHS. The Company anticipates that these discussions will continue, although
there can be no assurance that these discussions will result in any stock
repurchases from MHS. Should MHS not exercise its right to sell the 773,000
shares of common stock, the Company currently intends to repurchase the shares
from WorldCorp.

The Private Securities Litigation Reform Act of 1995 (the "Act") was recently
passed by Congress. The Company desires to take advantage of the "safe harbor"
provisions of 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

                                                        11

<PAGE>
actual results for 1997 and beyond to differ materially from those expressed in
any forward looking statements made by, or on behalf of, the Company.

OVERVIEW

GENERAL

World Airways is a global provider of long-range passenger and cargo air
transportation outsourcing services to major international airlines under fixed
rate, multi-year contracts. The Company's passenger and freight operations
employ 12 wide-body aircraft which are operated under contracts, primarily with
Pacific Rim airlines. These contracts generally require the Company to supply
aircraft, crew, maintenance and insurance ("ACMI" or "wet lease"), while the
Company's customers are responsible for a large portion of the other operating
expenses, including fuel. World Airways' airline customers have determined that
outsourcing a portion of their wide-body passenger and cargo requirements can be
less expensive, and offers greater operational and financial flexibility, than
purchasing new aircraft and additional spare parts required for such aircraft.
World Airways also leads a contractor teaming arrangement that is one of the
largest single suppliers of commercial airlift services to the United States Air
Force's Air Mobility Command ("U.S. Air Force" or "USAF").

In July 1996, World Airways restructured its business to focus on ACMI contract
services. As such, the Company ceased all scheduled passenger and scheduled
charter services as of October 27, 1996, taking a one-time charge of $21.0
million as of June 30, 1996 (see "Discontinuation of Scheduled Service
Operations").

The Company generally charges customers on a block hour basis rather than a per
seat or per pound basis. "Block hours" are defined as the elapsed time computed
from the moment the aircraft first moves under its own power at the point of
origin to the time it comes to rest at its final destination. The Company
provides most services under two types of contracts: wet lease contracts and
full service contracts. Under wet lease contracts, the Company provides the
aircraft, cockpit crew, maintenance and insurance and the customer provides all
other operating services and bears all other operating expenses, including fuel
and fuel servicing, marketing costs associated with obtaining passengers and/or
cargo, airport passenger and cargo handling fees, landing fees, cabin crews,
catering, ground handling and aircraft push-back and de-icing services. Under
full service contracts, the Company provides fuel, catering, ground handling,
cabin crew and all related support services as well. Accordingly, the Company
generally charges a lower rate per block hour for wet lease contracts than full
service contracts, although it does not necessarily earn a lower profit. Because
of shifts in the mix between full service contracts and wet lease contracts,
fluctuations in revenues are not necessarily indicative of volume trends or
profitability. It is important, therefore, to measure the Company's business
volume by block hours flown and to measure profitability by operating income per
block hour.

The Company's operating philosophy is to build on its existing ACMI
relationships to achieve a strong platform for future growth. World Airways
concentrates on ACMI contracts which shift yield, load factor and certain cost
risks to the customer. The customer bears the risk of filling the aircraft with
passengers or cargo and assumes a large portion of the operating expenses,
including fuel. World Airways has elected to emphasize its ACMI business because
the Company perceives a number of opportunities created by a growing global
economy, particularly growth in second and third world economies where the
demand for airlift exceeds capacity. World Airways attempts to maximize
profitability by combining its multi-year ACMI contracts with short term,
higher-yielding ACMI agreements which meet the peak seasonal requirements of its
customers. The Company responds opportunistically to rapidly changing market
conditions by maintaining a flexible fleet of aircraft that can be deployed in a
variety of configurations.

As is common in the air transportation industry, the Company has relatively high
fixed aircraft costs. World Airways operates a fleet of eight MD-11 and four
DC10-30 wide-body aircraft and, while the Company believes that the lease rates
on its MD-11 aircraft are favorable relative to lease rates of other MD-11
operators, the Company's MD-11 aircraft have higher lease costs (although lower
operating costs) than its DC10-30 aircraft. Therefore, achieving high average
daily utilization of its aircraft (particularly its MD-11 aircraft) at
attractive yields are important factors to the Company's financial results. In
addition to fixed aircraft costs, a portion of the Company's labor costs are
fixed due to monthly minimum guarantees to cockpit crewmembers and flight
attendants.


                                                        12

<PAGE>
SIGNIFICANT CUSTOMER RELATIONSHIPS

The Company's business relies heavily on its contracts with Malaysian Airline 
System Berhad ("Malaysian Airlines"), Philippine Airlines, Inc. ("Philippine 
Airlines"), P.T. Garuda Indonesia ("Garuda") and the U.S. Air Force.  For the
first nine months of 1997, these customers provided approximately 23%, 34%, 13%
and 22%, respectively, of the

Company's revenues and 25%, 36%, 13% and 14%, respectively, of total block
hours. In 1996, these customers provided approximately 34%, 15%, 13%, and 25%,
respectively, of the Company's revenues and 42%, 17%, 14%, and 17%,
respectively, of total block hours flown from continuing operations.

MALAYSIAN AIRLINES. World Airways has provided wet lease services to Malaysian
Airlines since 1981, providing wet lease services for Malaysian Airlines'
scheduled passenger and cargo operations as well as transporting passengers for
the annual Hadj pilgrimage. MHS, which owned 24.9% of the Company as of
September 30, 1997, also owns 29.1% of Malaysian Airlines. In 1997, the Company
entered into a new 32-month agreement for year-round operations (including the
Hadj) with Malaysian Airlines whereby the Company will provide two passenger
aircraft with cockpit crews, maintenance and insurance to Malaysian Airlines'
newly-formed charter division through May 1999. The Company provided three
aircraft for 1997 Hadj operations.

The Company was recently informed that MAS received notice from the Malaysian
Hadj Board that MAS will not participate in the 1998 Hadj pilgrimage.
Notwithstanding, MAS has assured the Company that it will honor its contractual
obligations, described above. For the nine months ended September 30, 1997, the
Company received approximately $17.0 million in revenues as a result of aircraft
provided to MAS for 1997 Hadj operations.

The Company has a long-term contract to operate three MD-11 cargo aircraft for
Malaysian Airlines. However, beginning in July 1996, and as mutually agreed by
the parties, World Airways redeployed two cargo aircraft, which had been
operating under these contracts, into another contract. The Company and
Malaysian Airlines are currently discussing the future redeployment of these
aircraft back into Malaysian Airlines' operations in order to meet the
contracts' original obligations. The Company can provide no assurances, however,
that the Company will, in fact, be able to do so. Revenues associated with these
contractual obligations are included in the Company's backlog amount included
herein.

GARUDA. The Company has flown for Garuda periodically since 1973 and yearly
since 1988. Since 1988, the Company has been one of the largest providers of
passenger services to Indonesia for the Hadj pilgrimage. The Indonesian Hadj
pilgrimage is the world's largest due to the size of Indonesia's Islamic
population. In 1997, approximately 40,000 of the 200,000 Indonesians who
traveled to Jeddah for the Hadj pilgrimage flew on the Company's aircraft. The
Company is currently negotiating an agreement with Garuda to operate six
aircraft during the 1998 pilgrimage.

PHILIPPINE AIRLINES. World Airways presently operates two MD-11 passenger
aircraft for Philippine Airlines under an agreement with high minimum monthly
utilization levels. Philippine Airlines, however, is experiencing financial
difficulties, and since March 1997 had been making monthly lease payments to the
Company on an installment basis according to a payment plan agreed to by the
Company and Philippine Airlines at the beginning of each month. On July 11,
1997, World Airways agreed to shift two of the four MD-11s originally operating
for Philippine Airlines to other customers during the third quarter. As of
September 30, 1997, Philippine Airlines is in compliance with its agreements
with the Company and has reconfirmed its commitment to operate the remaining two
MD-11s currently in its fleet until February 1998. Failure by Philippine
Airlines to meet its aircraft lease obligations, if not offset by other
business, would have a material adverse effect on the financial condition, cash
flows and results of operations of the Company.

VASP. On July 3, 1997, World Airways entered a binding Memorandum of Agreement
with Viacao Aereo Sao Paulo ("VASP") for the lease of two MD-11 passenger
aircraft for a six-month term with a six-month renewal option. The Company is
currently negotiating the terms of this lease with VASP, with commencement
anticipated no earlier than late 1997. The loss of this agreement, a
renegotiation of its terms or a substantial reduction of business for VASP, if
not replaced, could have a material adverse effect on the financial condition or
results of operations of World Airways. The Company is also leasing a cargo
plane to VASP under an ACMI contract which began in June 1997.


                                                        13

<PAGE>
U.S. AIR FORCE.  The Company has provided international air transportation to 
the U.S. Air Force since 1956. The overall downsizing of the U.S. military
places a premium on the mobility of the U.S. armed forces.  This is reflected
in the stable size over the past several years of the USAF's procurement of
commercial airlift services.  Although the Company's agreements with the USAF 
provide for full service contracts with certain minimum performance
requirements, the Company has risks similar to an ACMI agreement because the 
USAF agreements are cost-plus contracts at attractive rates.

The USAF awards points to air carriers acting alone or through teaming
arrangements in proportion to the number and type of aircraft such carriers make
available to Civil Reserve Air Fleet. The Company utilizes such teaming
arrangements to maximize the value of potential awards. The Company leads a
contractor teaming arrangement that enjoys a 51% market share of the USAF's
overall commercial airlift requirement. During a period in which the U.S.
military downsized substantially, the Company's portion of the fixed USAF award
increased from $15.6 million for the government's 1992-93 fiscal year, to $73.9
million for the government's 1997-98 fiscal year. The current annual contract
commenced on October 1, 1997 and expires on September 30, 1998. World Airways,
however, cannot determine how future cuts in military spending may affect future
operations with the U.S. Air Force.

As a result of these and other contracts, the Company had an overall contract
backlog at September 30, 1997 of $353.1 million, compared to $462.0 million at
September 30, 1996. Approximately $65.1 million of the backlog relates to
operations during the remainder of 1997. The Company's backlog for each contract
is determined by multiplying the minimum number of block hours guaranteed under
the applicable contract by the specified hourly rate under such contract.
Approximately 63% of the backlog relates to its contracts with Malaysian
Airlines. In addition, a significant portion of the Company's current contracts
expire near the end of 1997. Although there can be no assurance that it will be
able to secure additional business to reduce this excess capacity, the Company
is actively seeking customers for 1998 and beyond. The Company's financial
results and financial condition would be affected adversely if the Company is
unable to secure additional business to reduce this excess capacity.

SEASONALITY

Historically, World Airways' business has been significantly affected by
seasonal factors. During the first quarter, World Airways typically experiences
lower levels of utilization and yields due to lower demand for passenger and
cargo services relative to other times of the year. World Airways experiences
higher levels of utilization and yields in the second quarter, principally due
to peak demand for commercial passenger services associated with the annual Hadj
pilgrimage. In 1997, World Airways' flight operations associated with the Hadj
pilgrimage occurred from March 15 to May 20. Because the Islamic calendar is a
lunar-based calendar, the Hadj pilgrimage occurs approximately 10 to 12 days
earlier each year relative to the Western (Gregorian) calendar. As a result,
revenues resulting from future Hadj pilgrimage contracts will continue to shift
from the second quarter to the first quarter over the next several years. World
Airways believes that its contracts with Malaysian Airlines and the USAF should
lessen the effect of these seasonal factors.

GEOGRAPHIC CONCENTRATION

The Company derives a significant percentage of its revenues and block hours
from its operations in the Pacific Rim region. While the Company believes the
Pacific Rim region is a growth market for air transportation, any economic
decline or any military or political disturbance in this area may interfere with
the Company's ability to provide service in this area and could have a material
adverse effect on the financial condition or results of operations of the
Company.

UTILIZATION OF AIRCRAFT

Due to the large capital costs of leasing and maintaining World Airways'
aircraft, each of World Airways' aircraft must have high utilization at
attractive rates in order for World Airways to operate profitably. Although
World Airways' strategy is to enter into long-term contracts with its customers,
the terms of World Airways' existing customer contracts are substantially
shorter than the terms of World Airways' lease obligations with respect to the
aircraft. As mentioned above, a significant portion of World Airways' contract
backlog at September 30, 1997, relates to its multi-year contracts with
Malaysian Airlines. In addition, a significant portion of World Airways' current

                                                        14

<PAGE>
contracts expire near the end of 1997. There can be no assurance that World
Airways will be able to enter into additional contracts with new or existing
customers or that it will be able to obtain enough additional business to fully
utilize each aircraft. World Airways' financial results could be materially
adversely affected even by relatively brief periods of low aircraft utilization
and yields. In order to maximize aircraft utilization, World Airways does not
intend to acquire new aircraft unless such aircraft would be necessary to
service existing needs or World Airways has obtained additional ACMI contracts
for the aircraft to service. World Airways is seeking to obtain additional ACMI
contracts with new and existing customers, to which such new aircraft would be
dedicated when placed in service, but World Airways can provide no assurance
that it will obtain new ACMI contracts or that existing ACMI contracts will be
renewed or extended.

MAINTENANCE

Engine maintenance accounts for most of the Company's annual maintenance
expenses. Typically, the hourly cost of engine maintenance increases as the
aircraft ages. The Company outsources major airframe maintenance and power plant
work to several suppliers. The Company has a 10-year contract expiring in August
2003 with United Technologies Corporation's Pratt & Whitney Group for all
off-wing maintenance on the PW 4462 engines that power its MD-11 aircraft. Under
this contract, the manufacturer agreed to provide such maintenance services at a
cost not to exceed specified rates per hour during the term of the contract. The
specified rates per hour are subject to annual escalation, increasing
substantially in 1998. Accordingly, while the Company believes the terms of this
agreement have resulted in lower engine maintenance costs than it otherwise
would incur, engine maintenance costs will increase substantially during the
last five years of the agreement. The Company has begun to accrue these
increased expenses in 1997 and such expenses will continue to increase during
the remainder of the term of the contract as the Company's aircraft fleet ages.

OPERATING LOSSES

While the Company generated operating income each year from 1987 through 1992
and in 1995, it sustained operating losses in 1993 and 1994 of $7.3 million and
$5.2 million, respectively, and net losses of $9.0 million in each of these two
years. For the year ended December 31, 1996, the Company incurred a net loss of
$14.0 million, which resulted from operating losses incurred in the Company's
scheduled service operations, which were discontinued in 1996, and the related
estimated loss on disposal. Earnings from continuing operations were $18.4
million for 1996. While the Company generated operating income for the nine
months ended September 30, 1997 of $17.4 million, there can be no assurance that
the Company will be able to continue generating operating income for the
remainder of 1997 or future years.

DISCONTINUATION OF SCHEDULED SERVICE OPERATIONS

The Company commenced service between Tel Aviv and New York in July 1995. In the
first quarter of 1996, the Company generated $4.2 million in losses related to
these operations. In the second quarter of 1996, the Company expanded its
scheduled service operations with service between the United States and South
Africa and introduced scheduled charter operations between the United States and
various destinations within Europe. As the Company was unable to operate these
scheduled service operations profitably, in July 1996, the Company announced its
decision to exit its scheduled service operations by October 1996 and focus its
operations on its core wet lease operations. Consistent with this decision,
World Airways ceased all scheduled operations as of October 27, 1996. As a
result, the Company's scheduled service operations were reflected as
discontinued operations as of June 30, 1996, and prior period results were
restated to reflect scheduled service operations as discontinued operations.
Loss from discontinued operations (net of income tax effect) approximated $11.7
million for the year ended December 31, 1996. In addition, an estimated loss on
disposal of $21.0 million (net of income tax effect) was recorded as of June 30,
1996 and the Company does not expect to incur any additional costs relating to
scheduled service operations.

CONTROL BY WORLDCORP; POTENTIAL CONFLICTS OF INTEREST

As of September 30, 1997, WorldCorp owned approximately 46.3% of the outstanding
World Airways common stock. WorldCorp is a holding company that owns positions
in two companies: InteliData and World Airways. WorldCorp is highly leveraged
and therefore requires substantial funds to cover debt service each year. As a
holding company, all of WorldCorp's funds are generated through its

                                                        15

<PAGE>
subsidiaries, neither of which is expected to pay dividends in the foreseeable
future. As a result of WorldCorp's cash requirements, it may be required to sell
additional shares of common stock, and such sales, or the threat of such sales,
could have a material adverse effect on the market price of the common stock.
Except as limited by contractual arrangements with MHS, WorldCorp also is in a
position to control the outcome of many issues submitted to World Airways'
stockholders, including the election of all of World Airways' Board of
Directors, adoption of amendments to World Airways' Certificate of
Incorporation, and approval of mergers.

In connection with a $15.0 million loan from a commercial bank (the "Bank
Loan"), WorldCorp had pledged all of the shares of common stock beneficially
owned by WorldCorp (the "WorldCorp Shares"). The Bank Loan was scheduled to
mature on September 29, 1997. On September 18, 1997, the Company purchased
3,227,000 of itscommon stock from WorldCorp for approximately $24.7 million in
cash. WorldCorp used a portion of these proceeds to retire the Bank Loan prior 
to its maturity.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1996

Total block hours, including discontinued operations, decreased 2,410 hours, or
18%, to 10,917 hours in the third quarter of 1997 from 13,327 hours in 1996,
with an average of 12.3 available aircraft per day in 1997 compared to 15.0 in
1996. Average daily utilization (block hours flown per day per aircraft) was 9.7
hours in 1997 and 1996. In 1997, wet lease contracts accounted for 68% of total
block hours, an increase from 45% in 1996. Total operating revenues increased
$4.5 million, or 6%, to $79.9 million in 1997 from $75.4 million in 1996.

CONTINUING OPERATIONS

Block hours from continuing operations increased to 10,917 hours in the third
quarter of 1997 from 9,337 hours in 1996.

OPERATING REVENUES. Revenues from flight operations increased $9.5 million to
$79.6 million in 1997 from $70.1 million in 1996. This increase corresponds
primarily to an increase in block hours flown in 1997 compared to 1996.

OPERATING EXPENSES.  Total operating expenses increased $3.7 million, or 5%, in
1997 to $75.4 million from $71.7 million in 1996.

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 $4.9 million, or 29%, in
1997 to $21.8 million from $16.9 million in 1996. This increase resulted
primarily from and increase in block hours flown and higher crew costs relating
to an accrual for the profit sharing bonus plan and an increase in wage rates,
partially offset by the shift in the mix of business from full service to wet 
lease operations.

Maintenance expenses increased $1.0 million, or 7%, in 1997 to $14.9 million
from $13.9 million in 1996. This increase resulted primarily from the increase
in the number of aircraft dedicated to the Company's continuing operations and
an increase in costs associated with the MD-11 aircraft and related engines as a
result of certain manufacturer guarantees and warranties which began to expire
in 1995 and will fully expire by 1998. The Company expects its maintenance
expense to further increase in 1997 and 1998 due to escalations in the specified
rates per hour under the Company's maintenance agreement.

Aircraft costs increased $1.4 million, or 7%, in 1997 to $20.4 million from
$19.0 million in 1996. This increase resulted primarily from the increase in the
number of aircraft dedicated to the Company's continuing operations, partially
offset by the return of one DC-10 aircraft in the fourth quarter of 1996 and two
aircraft in the third quarter of 1997 and a decrease in aircraft insurance as a
result of a reduction in insurance policy rates. The Company reached a
settlement in September 1997 with its engine manufacturer for reimbursements
related to disputed spare engine lease charges. As a result of this settlement,
the Company reversed lease expenses of approximately $2.4 million, consisting of
lease expenses of approximately $0.9 million and $1.5 million originally
recorded in 1996 and the first six months of 1997, respectively.

                                                        16

<PAGE>
Promotions, sales and commissions increased $1.0 million in 1997, or 50%, to
$3.0 million from $2.0 million in 1996. This increase resulted primarily from
expenses incurred in connection with two customer contracts.

Depreciation and amortization increased $0.2 million, or 10%, in 1997 to $2.3
million from $2.1 million in 1996. This increase resulted primarily from an
increase in spare parts required to support the additional MD-11 aircraft
described above, offset by a decrease in the amortization of certain intangible
assets.

General and administrative expenses decreased $0.6 million, or 9%, in 1997 to
$5.8 million from $6.4 million in 1996. This decrease was primarily due to a
reduction in administrative personnel and communication expenses. As part of its
strategy to increase its marketing efforts, the Company is currently increasing
its sales and marketing staff.  As a result, the Company expects a modest
increase in general and administrative expenses during the remainder of 1997.

DISCONTINUED OPERATIONS

The Company commenced service between Tel Aviv and New York in July 1995. In the
first quarter of 1996, the Company generated $4.2 million in losses related to
these operations. In the second quarter of 1996, the Company expanded its
scheduled service operations with service between the United States and South
Africa and introduced scheduled charter operations between the United States and
various destinations within Europe. As the Company was unable to operate these
scheduled service operations profitably, in July 1996, the Company announced its
decision to exit its scheduled service operations by October 1996 and focus its
operations on its core wet lease operations. Consistent with this decision,
World Airways ceased all scheduled operations as of October 27, 1996. As a
result, the Company's scheduled service operations were reflected as
discontinued operations as of June 30, 1996, and prior period results were
restated to reflect scheduled service operations as discontinued operations.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1996

Total block hours, including discontinued operations, decreased 2,801 hours, or
7%, to 35,067 hours in the first nine months of 1997 from 37,868 hours in 1996,
with an average of 13.2 available aircraft per day in 1997 compared to 13.8 in
1996. Average daily utilization (block hours flown per day per aircraft)
decreased to 9.7 hours in 1997 from 10.0 hours in 1996. In 1997, wet lease
contracts accounted for 83% of total block hours, an increase from 64% for the
nine months ended September 30, 1996. Total operating revenues increased $13.3
million, or 6%, to $240.6 million in 1997 from $227.3 million in 1996.

CONTINUING OPERATIONS

Block hours from continuing operations increased 3,723 hours, or 12%, to 35,067
hours in the first nine months of 1997 from 31,344 hours in 1996.

OPERATING REVENUES. Revenues from flight operations increased $23.1 million, or
11%, to $238.1 million in 1997 from $215.0 million in 1996. This increase was
primarily attributable to the increase in block hours flown, partially offset by
a shift in its mix of business during 1997 with an increase in wet lease
operations and a decrease in full service operations.

OPERATING EXPENSES.  Total operating expenses increased $11.6 million, or 5%, 
in 1997 to $223.2 million from $211.6 million in 1996.

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 $4.7 million, or 9%, in
1997 to $54.9 million from $50.2 million in 1996. This increase resulted
primarily from  an increase in block hours flown and higher crew costs relating
to an accrual for the profit sharing bonus plan and an increase in wage rates,
partially offset by the shift in the mix of business from full service to wet
lease operations.

Maintenance expenses increased $5.2 million, or 12%, in 1997 to $49.5 million
from $44.3 million in 1996. This increase resulted primarily from the increase
in the number of aircraft dedicated to the Company's continuing operations, the
integration of additional aircraft into the fleet, and a corresponding increase

                                                        17

<PAGE>
in block hours flown. In addition, the Company experienced an increase in costs
associated with the MD-11 aircraft and related engines as a result of certain
manufacturer guarantees and warranties which began to expire in 1995 and will
fully expire by 1998. The Company expects its maintenance expense to increase
further in 1997 and 1998 due to escalations in the specified rates per hour
under the Company's maintenance agreement. The increase was partially offset by
a reversal in 1997 of $1.0 million of accrued maintenance expense in excess of
the cost of an overhaul of a DC-10 aircraft.

Aircraft costs increased $9.3 million, or 15%, in 1997 to $69.7 million from
$60.4 million in 1996. This increase resulted from the increase in the number of
aircraft dedicated to the Company's continuing operations, primarily due
to the lease of two MD-11ER aircraft in March 1996, and the lease of additional
spare engines necessary to maintain the expanded fleet. This increase was
partially offset by the reversal of approximately $0.9 million in lease costs,
which had been recorded in 1996, as a result of a settlement with the engine
manufacturer for reimbursements related to disputed spare engine lease charges.

Fuel expenses decreased $2.2 million, or 15%, in 1997 to $12.5 million from
$14.7 million in 1996. This decrease is due primarily to the shift from full
service to wet lease operations where the Company is not responsible for fuel
costs. This decrease was partially offset by an increase in price per gallon.

Promotions, sales and commissions increased $2.1 million, or 38%, in 1997 to
$7.7 million from $5.6 million in 1996. This increase resulted primarily from
expenses incurred in connection with two customer contracts.

Depreciation and amortization increased $0.8 million in 1997 to $6.7 million
from $5.9 million in 1996. This increase resulted primarily from an increase in
spare parts required to support the additional MD-11 aircraft described above,
offset by a decrease in the amortization of certain intangible assets.

General and administrative expenses increased $2.1 million, or 12%, in 1997 to
$19.6 million from $17.5 million in 1996. This increase was primarily due to the
hiring of additional administrative personnel, beginning in the second quarter
of 1996, necessary to support the growth in the Company's core business and an
increase in property tax accruals. As part of its strategy to increase its
marketing efforts, the Company is currently increasing its sales and marketing
staff. As a result, the Company expects a modest increase in general and
administrative expenses during the remainder of 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company is highly leveraged. The Company incurred substantial debt and lease
commitments during the past three years in connection with its acquisition of
MD-11 aircraft and related spare parts. In addition, the Company issued $50.0
million of convertible debentures in August 1997, as discussed below. As of
September 30, 1997, the Company had outstanding $76.3 million in long-term debt
and capital leases, with expected debt service and capital lease expense of $1.9
million for the remainder of 1997 and $16.3 million for the year ending December
31, 1998. In addition, the Company has significant future long-term obligations
under aircraft lease obligations relating to its aircraft.

The Company has historically financed its working capital and capital
expenditure requirements out of cash flow from operating activities, public and
private sales of its common stock, secured borrowings, and other financings from
banks and other lenders. The degree to which the Company is leveraged could have
important consequences to holders of common stock, including the following: (i)
World Airways' ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes may be limited;
(ii) a substantial portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness; (iii)
World Airways' degree of leverage and related debt service obligations, as well
as its obligations under operating leases for aircraft, may make it more
vulnerable than some of its competitors in a prolonged economic downturn; (iv)
World Airways' ability to meet its payment obligations under existing and future
indebtedness, capital leases and operating leases may be limited; and (v) World
Airways' financial position may restrict its ability to pursue new business
opportunities and limit its flexibility in responding to changing business
conditions.

On August 26, 1997, the Company completed a private offering, issuing $50.0
million of 8% convertible senior subordinated debentures due in 2004. The
Debentures are unsecured obligations, convertible into shares of the Company's
common stock, and subordinated to all present and future senior indebtedness of

                                                        18

<PAGE>
the Company. The Company's intended use of the net proceeds of the Offering is
to repurchase approximately 4.0 million shares of its common stock, repay
certain indebtedness, increase working capital and for general corporate
purposes. After completion of the Offering, the Company repaid approximately
$3.8 million as full settlement of an outstanding spare parts loan. Failure by
the Company to repurchase at least 4.0 million shares of common stock within 150
days after the sale of the Debentures constitutes a repurchase event whereby
each holder of the Debentures would have the right, at the holder's option, to
require the Company to repurchase such holder's Debentures at 100% of their
principal amount, plus accrued interest. The ability of the Company to
repurchase the Debentures upon a Repurchase Event will be dependent on the
Company's ability to raise sufficient funds through additional borrowings or
equity sales and compliance with applicable securities laws. Accordingly, 
there can be no assurance that the Company will be able to repurchase the 
Debentures upon a Repurchase Event.

World Airways' cash and cash equivalents at September 30, 1997 and December 31,
1996 were $28.2 million and $7.0 million, respectively. As is common in the
airline industry, World Airways operates with a working capital deficit. At
September 30, 1997, World Airways' current assets were $49.3 million and current
liabilities were $54.9 million. World Airways has substantial long-term aircraft
lease obligations with respect to its current aircraft fleet. Although there can
be no assurances, World Airways believes that its existing contracts and
additional business which it expects to obtain in the near term, along with its
existing cash and financing arrangements and net proceeds from the Offering will
be sufficient to allow World Airways to meet its cash requirements related to
debt service and the operating and capital requirements for its continuing
operations for the next 12 months.

In 1996, World Airways instituted a program to purchase up to one million shares
of its publicly-traded common stock pursuant to open market transactions. As of
June 30, 1997, World Airways had purchased 770,000 shares of common stock at an
aggregate cost of approximately $7.8 million pursuant to such program.

In connection with the above-mentioned Offering, the Company and WorldCorp
entered into an agreement for the purchase by World Airways of up to 4.0 million
shares of common stock owned by WorldCorp at a purchase price of $7.65 per
share. On September 18, 1997, the Company purchased 3,227,000 shares of its
common stock from WorldCorp for approximately $24.7 million. Discussions with
MHS following the Offering could have an impact on the number of shares of
common stock ultimately repurchased from WorldCorp. MHS has certain rights under
a shareholders agreement, dated as of February 3, 1994, as amended, among
WorldCorp, MHS and the Company. This agreement includes a provision that
provides that if WorldCorp were to dispose of its holdings in the Company with
the result that WorldCorp's ownership interest in the Company falls below 51% of
the outstanding shares of common stock, then MHS may either sell its shares to a
third party or require WorldCorp to sell a pro rata number of shares held by MHS
to the party purchasing WorldCorp's shares. As a result of the repurchase of
3,227,000 shares of common stock by World Airways from WorldCorp, MHS has the
right to sell 773,000 shares of common stock. Accordingly, WorldCorp, MHS and
the Company have engaged in preliminary discussions as to the potential
repurchase of common stock owned by MHS. The Company anticipates that these
discussions will continue, although there can be no assurance that these
discussions will result in any stock repurchases from MHS. Should MHS not
exercise its right to sell the 773,000 shares of common stock, the Company
currently intends to repurchase the shares from WorldCorp.

In the event that World Airways enters into leases for additional aircraft,
World Airways will need to make capital expenditures for additional spare
engines and parts. No assurances can be given, however, that World Airways will
obtain all of the financing required for such capital expenditures.

CASH FLOWS FROM OPERATING ACTIVITIES

Operating activities provided $24.6 million in cash for the nine months ended
September 30, 1997 compared to using $0.9 million in the comparable period in
1996. This increase in cash in 1997 resulted primarily from an increase in net
earnings and a decrease in accounts receivable, partially offset by a decrease
in accounts payable, accrued expenses, and other liabilities.

CASH FLOWS FROM INVESTING ACTIVITIES

Investing activities used $4.7 million in cash for the nine months ended
September 30, 1997, compared to $9.1 million in the comparable period in 1996.
In 1997, cash was used primarily for the purchase of rotable spare parts, a
spare engine, and engine upgrades required for two MD-11 aircraft.

                                                        19

<PAGE>

CASH FLOWS FROM FINANCING ACTIVITIES

Financing activities provided $1.3 million in cash for the nine months ended
September 30, 1997 compared to using $4.2 million in the comparable period in
1996. This increase in cash resulted primarily from the issuance of $50.0
million of convertible debentures, partially offset by an increase in repayments
of the Company's net borrowings and the purchase of shares of the Company's
common stock for an aggregate cost of $0.5 million in 1997.

CAPITAL COMMITMENTS/FINANCING DEVELOPMENTS

In October 1992 and January 1993, the Company signed a series of agreements to
lease seven new MD-11 aircraft for initial lease terms of two to five years,
renewable for up to 10 years (and in the case of one aircraft, for 13 years) by
the Company with increasing rent costs. As of March 1995, the Company had taken
delivery of all seven aircraft, consisting of four passenger MD-11 aircraft, one
freighter MD-11, and two passenger/cargo convertible MD-11s. As part of the
lease agreements, the Company was assigned purchase options for four additional
MD-11 aircraft. In 1992, the Company made non-refundable deposits of $1.2
million toward the option aircraft and the purchase options were terminated. In
March 1996, the Company signed an agreement with the manufacturer to lease two
MD-11ER aircraft. Under the agreement, the Company leased each aircraft for a
term of 24 years with an option to return the aircraft after a seven-year period
with certain fixed termination fees. As part of the agreement, the
above-mentioned deposits were applied towards the deposits required on these two
aircraft. In addition, the Company agreed to assume an existing lease of two
additional MD-11 freighter aircraft for 20 years, beginning in 1999, in the
event that the existing lessee terminates its lease with the manufacturer at
that time.

As of September 30, 1997, World Airways has long-term leases for four DC10-30
aircraft. Three of the leases expire in 1998 and one expires in 2003.

In August 1995, the Company amended its aircraft spare parts facility under the
Credit Agreement with BNY Financial Corporation ("BNY") to provide for a
variable rate borrowing. Approximately $2.5 million of this facility was used to
pay off the previously outstanding balance of the spare parts loan facility and
$0.8 million was used to purchase additional spare parts for MD-11s required
during the remainder of 1995. The balance of this loan facility was used to
increase cash balances which were drawn down during the first half of 1995 to
purchase MD-11 spare parts.

In September 1995, the Company agreed to purchase a spare engine which was
delivered in March 1996. The engine cost approximately $8.0 million. The Company
entered into an agreement with the engine's manufacturer to finance 80% of the
purchase price over a seven-year term. The Company made payments of $1.2 million
and $0.4 million towards this purchase in September 1995 and January 1996,
respectively.

In January 1996, the Company agreed to purchase an additional engine and
received a commitment from the engine manufacturer to finance 85% of its
purchase price over a seven-year term with an interest rate to be fixed at the
time of delivery. In June 1997, the Company took delivery of the engine and
signed a note for $6.3 million. The note bears interest at a rate of 8.18% and
is payable over an 84-month period at approximately $48,000 per month with the
balance of $2.2 million due on June 18, 2004.

As discussed above, the Company signed an agreement for the lease of two MD-11ER
aircraft beginning in the first quarter of 1996 to provide additional capacity
for growth opportunities. As part of the agreement for the MD-11 aircraft, the
Company received spare parts financing from the lessor of $9.0 million of which
$3.0 million was made available with the delivery of each aircraft, and the
remaining $3.0 million was made available in December 1996. As of September 30,
1997, approximately $7.8 million had been received.

As of September 30, 1997, annual minimum payments required under the Company's
aircraft and lease obligations totaled $20.1 million for the remainder of 1997
and $79.5 million for 1998. The Company anticipates that its total capital
expenditures in 1997, which includes the spare engine, will approximate $13.0
million of which the Company has received approximately $6.3 million in
financing. The Company expects that the remaining balance will be funded from
its operating cash flow and proceeds from the Offering. As of September 30,
1997, the Company held approximately $3.3 million (at book value) of aircraft
spare parts currently available for sale.


                                                        20

<PAGE>
Effective June 30, 1996, the Company amended its Credit Agreement to include the
following: a $10.0 million spare parts loan and an $8.0 million revolving line
of credit. This amended Credit Agreement is collateralized by certain
receivables, inventory, and equipment. In addition, World Airways granted
warrants to BNY in October 1996 to purchase up to 50,000 shares of common stock.
After completion of the Offering described above, the Company repaid
approximately $3.8 million as full settlement of the spare parts loan. As of
September 30, 1997, there was no outstanding balance or borrowing capacity on 
the revolving line of credit.

In October 1997, the Company reached an agreement in principle with a financial
institution for a credit facility of up to $25.0 million to be collateralized by
certain receivables and spare parts. If the Company closes this transaction, the
proceeds would be used to increase working capital and for general corporate
purposes. No assurances can be given, however, that the agreement will be
ultimately completed.

RECENT DEVELOPMENTS

In October 1997, one of the Company's MD-11 aircraft was damaged upon its
landing in Montevideo, Uruguay. The aircraft is expected to be out of service
for approximately two months while certain repairs are made. The Company expects
insurance to cover repair and certain related costs, but expects that the
Company's loss of revenues that would have been generated by the aircraft's use
will have an adverse effect on its financial condition and results of operations
for the fourth quarter of 1997.

OTHER MATTERS

LEGAL AND ADMINISTRATIVE PROCEEDINGS

World Airways has periodically received correspondence from the FAA with respect
to minor noncompliance matters. In November 1996, as the FAA has increased its
scrutiny of U.S. airlines, World Airways was assessed a preliminary fine of
$810,000 in connection with certain security violations by ground handling crews
contracted by World Airways for services at foreign airport locations. Under 49
U.S.C., Section 46301, any violation of pertinent provisions of 49 U.S.C.
Subsection 40101 or related rules is subject to a civil penalty for each
violation. Upon review of the evidence or facts and circumstances relating to
the violation, the statute allows for the compromise of proposed civil
penalties. The penalties were proposed by the FAA in connection with recent
inspections at foreign airport facilities and relate primarily to ground
handling services provided by World Airways' customers in connection with their
operations; specifically, the inspection procedures of its aircraft, passengers
and associated cargo. In each of these instances, World Airways was in
compliance with international regulations, but not the more stringent U.S.
requirements, despite the fact that the flights in question did not originate or
terminate in the United States. World Airways has taken steps to comply with the
U.S. requirements. In September 1997, the Company entered into a consent order
and settlement agreement with the FAA in connection with the above-mentioned
alleged violations. Pursuant to this agreement, the Company is liable for the
sum of $610,000, of which $405,000 was paid in September. The remaining $205,000
was suspended and will be forgiven if the Company complies with the provisions
of the settlement agreement, including not incurring any security violations
during the one year period following the execution of the settlement agreement.
While World Airways believes it is currently in compliance in all material
respects with all appropriate standards and has all required licenses and
authorities, any material non-compliance by World Airways therewith or the
revocation or suspension of licenses or authorities could have a material
adverse effect on the financial condition or results of operations of World
Airways.

World Airways and WorldCorp (the "World Defendants") were defendants in 
litigation brought by the Committee of Unsecured Creditors of Washington 
Bancorporation in August 1992, captioned Washington Bancorporation v.
Boster et. al., Adv. Proc. 92-0133 (Bankr. D.D.C.) (the "Boster Litigation").
Under a settlement agreement, the plaintiff agreed to dismiss with prejudice the
Boster Litigation against all defendants, including the World Defendants, with 
each party to bear its own costs. Under the settlement agreement, the World 
Defendants do not have any further liability in the Boster Litigation.

In connection with the discontinuance of World Airways' scheduled service
operations, World Airways is subject to claims by various third parties and may
be subject to further claims in the future. One claim which had been filed in
connection with World Airways' discontinuance of scheduled service to South
Africa, and which sought approximately $37.8 million in compensatory and
punitive damages, has been settled by the parties for approximately $0.7
million.
                                                        21

<PAGE>

In addition, World Airways is party to routine litigation and administrative
proceedings incidental to its business, none of which is believed by World
Airways to be likely to have a material adverse effect on the financial
condition of World Airways.

EMPLOYEES

The Company's cockpit crew members, who are represented by the International
Brotherhood of Teamsters (the "Teamsters"), are subject to a four-year
collective bargaining agreement that will become amendable in July 1998.

The Company's flight attendants, who are also represented by the Teamsters, are
subject to a four-year collective bargaining agreement that will expire in
August 2000. The Company's flight attendants challenged the use of foreign
flight attendant crews on the Company's flights for Malaysian Airlines and
Garuda Indonesia which has historically been the Company's operating procedure.
The Company is contractually obligated to permit its Southeast Asian customers
to deploy their own flight attendants. While the arbitrator in this matter
recently denied the Union's request for back pay to affected flight attendants
for flying relating to the 1994 Hadj, the arbitrator concluded that the
Company's contract with its flight attendants requires the Company to first
actively seek profitable business opportunities that require using the Company's
flight attendants, before the Company may accept wet lease business
opportunities that use the flight attendants of the Company's customers. The
Company can provide no assurances as to how the imposition of this requirement
will affect the Company's financial condition and results of operations.

The Company's aircraft dispatchers are represented by the Transport Workers
Union (the "TWU"). This contract became amendable on June 30, 1993. In May 1995,
the parties reached agreement with respect to a new four-year contract. This
contract was ratified in February 1996. Fewer than 12 Company employees are
covered by this collective bargaining agreement.

The Company is unable to predict whether any of its employees not currently
represented by a labor union, such as the Company's maintenance personnel, will
elect to be represented by a labor union or collective bargaining unit. The
election by such employees of representation in such an organization could
result in employee compensation and working condition demands that could have a
material adverse effect on the financial results of the Company.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends or distributions on its
common stock since the payment of a distribution to WorldCorp in 1992. The
Company currently intends to retain its future earnings, if any, to fund the
development and growth of its business and, therefore, does not anticipate
paying any cash dividends in the foreseeable future. Any future decision
concerning the payment of dividends on its common stock will depend upon the
results of operations, financial condition and capital expenditure plans of the
Company, as well as such other factors as the Board of Directors, in its sole
discretion, may consider relevant.

WorldCorp is subject to the provisions of an indenture, expiring in 2004, which
causes the Company not to pay dividends upon the occurrence of any events of
default by WorldCorp under the indenture. However, the indenture is not
applicable to World Airways if WorldCorp's ownership percentage is below 50% of
the issued and outstanding shares of common stock. As of September 30, 1997,
WorldCorp owned approximately 46.3% of the outstanding common stock. This
percentage could increase if the Company purchases shares from other
stockholders.

INCOME AND OTHER TAXES

As of December 31, 1996, World Airways had net operating loss carryforwards
("NOLs") for federal income tax purposes of $103.8 million ($29.0 million of
which is subject to a $6.9 million annual limitation as a result of an ownership
change of World Airways for tax purposes in 1991). These NOLs, if not utilized
to offset taxable income in future periods, would expire between 1998 and 2011.
Use of World Airways' NOLs in future years could be further limited if an
ownership change were to occur in the future. World Airways believes that
neither the sale of common stock in its initial public offering nor the purchase
of 3,227,000 shares of its common stock from WorldCorp caused an ownership
change. However, the application of the Internal Revenue Code (the "Code") in
this area is subject to interpretation by the Internal Revenue Service. The NOLs

                                                        22

<PAGE>
are subject to examination by the IRS and, thus, are subject to adjustment or
disallowance resulting from any such IRS examination. In addition, conversion of
the Debentures or future transactions in the Common Stock or the common stock of
the Company's stockholders may cause an ownership change, which could result in
a substantial reduction in the annual limitation in the use of the NOLs and the
loss of a substantial portion of the NOLs available to the Company.

INFLATION

The Company believes that inflation has not had a material effect on the
Company's revenues during the past three years.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128 ("FAS #128") Earnings per Share,
and SFAS No. 129 ("FAS #129") Disclosure of Information About Capital Structure.
FAS #128 was issued to simplify the computation of earnings per share and to
make the U.S. standard more compatible with the standards of other countries and
that of the International Accounting Standards Committee. FAS #128 replaces
primary and full diluted earnings per share with basic earnings and diluted
earnings per share. FAS #129 will change some of the required disclosures about
capital structure. It is not expected that these statements will have a material
effect on the Company's financial statements in the future. The statements are
effective for the year ended December 31, 1997.

                                                        23

<PAGE>

                                                      PART IV

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

(a)  Exhibits

 NO.       DESCRIPTION

 3.1       Amended and Restated Certificate of                      Incorporated
           Incorporation.                                           By Reference

 3.2       Amended and Restated Bylaws.                             Incorporated
                                                                    By Reference

 4.1       Article IV of the Company's Amended and                  Incorporated
           Restated Certificate of Incorporation,                   By Reference
           incorporated by reference to Exhibit 3.1 filed
           herewith, and Section 6 of the Company's
           Bylaws, incorporated by reference to Exhibit
           3.2 filed herewith.

10.1       The Company's 1995 Stock Option Plan.                    Incorporated
                                                                    By Reference

10.2       Form of Directors' Indemnification                       Incorporated
           Agreement.                                               By Reference

10.3       Aircraft Lease Agreement for Aircraft Serial             Incorporated
           Number 48518 dated as of September 30,                   By Reference
           1992 between the Company and International
           Lease Finance Corporation. (Filed as Exhibit
           10.38 to WorldCorp, Inc.'s Annual Report on
           Form 10-K for the fiscal year ended
           December 31, 1992 and incorporated herein
           by reference.)

10.4       Amendment No. 1 to Aircraft Lease                        Incorporated
           Agreement for Aircraft Serial Number 48518               By Reference
           dated as of November 1992 between the
           Company and International Lease Finance
           Corporation. (Filed as Exhibit 10.68 to
           WorldCorp, Inc.'s Annual Report on Form
           10-K for the fiscal year ended December 31, 
           1993 and incorporated herein by reference.)

10.5       Amendment No. 2 to Aircraft Lease                        Incorporated
           Agreement for Aircraft Serial Number 48518               By Reference
           dated as of March 8, 1993 between the
           Company and International Lease Financial
           Corporation. (Filed as Exhibit 10.69 to
           WorldCorp, Inc.'s Annual Report on Form
           10-K for the fiscal year ended December 31, 
           1993 and incorporated herein by reference.)

10.6       Aircraft Lease Agreement for Aircraft Serial             Incorporated
           Number 48519 dated as of September 30,                   By Reference
           1992 between the Company and International
           Lease Finance Corporation. (Filed as Exhibit
           10.39 to WorldCorp, Inc.'s Annual Report on
           Form 10-K for the fiscal year ended
           December 31, 1992 and incorporated
           herein by reference.)

10.7       Amendment No. 2 to Aircraft Lease Agreement              Incorporated
           for Aircraft Serial Number 48519 dated as of             By Reference
           April 23, 1993 between the Company and Intenational
           Lease Finance Corporation.

                                                              24


<PAGE>
10.8       Amendment No. 3 to Aircraft Lease Agreement for          Incorporated
           Aircraft Serial Number 48519 dated as of April 1993      By Reference
           between the Company and International Lease
           Finance.

10.9       Aircraft Lease Agreement for Aircraft Serial Number      Incorporated
           48437 dated September 30, 1992 between the Company       By Reference
           and International Lease Finance Corporation. (Filed
           as Exhibit 10.40 to WorldCorp, Inc.'s Annual Report
           on Form 10-K for the fiscal year ended December 31, 
           1992 and incorporated herein by reference.)

10.10      Amendment No. 2 to Aircraft Lease Agreement for          Incorporated
           Aircraft Serial Number 48437 dated as of March 31,       By Reference
           1993 between the Company and International Lease 
           Finance Corporation. (Filed as Exhibit 10.73 to 
           WorldCorp, Inc.'s Annual Report on Form 10-K for the
           fiscal year ended December 31, 1993 and incorporated 
           herein by reference.)

10.11      Amendment No. 3 to Aircraft Lease Agreement for          Incorporated
           Aircraft Serial Number 48437 dated as of April 15,       By Reference
           1993 between the Company and International Lease
           Finance Corporation. (Filed as Exhibit 10.74 to 
           WorldCorp, Inc.'s Annual Report on Form 10-K for the
           fiscal year ended December 31, 1993 and incorporated
           herein by reference.)

10.12      Aircraft Lease Agreement for Aircraft Serial Number      Incorporated
           48633 dated as of September 30, 1992 between the         By Reference
           Company and International Lease Finance Corporation.
           (Filed as Exhibit 10.41 to WorldCorp, Inc.'s Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1992 and incorporated herein by reference.)

10.13      Aircraft Lease Agreement for Aircraft Serial Number      Incorporated
           48631 dated as of September 30, 1992 between the         By Reference
           Company and International Lease Finance Corporation.
           (Filed as Exhibit 10.42 to WorldCorp, Inc.'s Annual 
           Report on Form 10-K for the fiscal year ended December
           31, 1992 and incorporated herein by reference.)

10.14      Amendment No. 2 to Aircraft Lease Agreement for          Incorporated
           Aircraft Serial Number 48631 dated as of April 28,       By Reference
           1995 between the Company and International Lease 
           Finance Corporation.

10.15      Aircraft Lease Agreement for Aircraft Serial Number      Incorporated
           48632 dated as of September 30, 1992 between the         By Reference
           Company and International Lease Finance Corporation. 
           (Filed as Exhibit 10.43 to WorldCorp, Inc.'s Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1992 and incorporated herein by reference.)

10.16      Amendment No. 2 to Aircraft Lease Agreement for          Incorporated
           Aircraft Serial Number 48632 dated as of April 28,       By Reference
           1995 between the Company and International Lease 
           Finance Corporation.

10.17      Accounts Receivable Management and Security Agreement    Incorporated
           dated as of December 7, 1993 between the Company and     By Reference
           BNY Financial Corporation (Filed as Exhibit 10.46 to
           WorldCorp, Inc.'s Annual Report on Form 10-K for the
           fiscal year ended December 31, 1993 and incorporated 
           herein by reference.)

10.18      Amendment No. 1 to the Accounts Receivable Management    Incorporated
           and Security Agreement between the Company and BNY       By Reference
           Financial Corporation dated March 15, 1995 and 
           effective as of January 1, 1995.

10.19      Amendment No. 2 to the Accounts Receivable Management    Incorporated
           and Security Agreement between the Company and BNY       By Reference
           Financial Corporation dated as of August 1995.

                                                         25

<PAGE>
10.20      Stock Purchase Agreement by and among the Company,       Incorporated
           WorldCorp, Inc., Malaysian Helicopter Services Berhad    By Reference
           dated as of October 30, as Exhibit 10.87 to WorldCorp,
           Inc.'s Annual Report on Form 10-K for the fiscal year
           ended December 31, 1994 and incorporated herein 
           by reference.)

10.21      Stock Registration Rights Agreement between the          Incorporated
           Company and Malaysian Helicopter Services Berhad         By Reference
           dated as of October 30, 1993.(Filed as Exhibit 10.88 
           to WorldCorp, Inc.'s Annual Report on Form 10-K for 
           the fiscal year ended December 31, 1994 and 
           incorporated herein by reference.)

10.22      Shareholders Agreement between Malaysian Helicopter      Incorporated
           Services Berhad, WorldCorp, Inc. and the Company,        By Reference
           dated as of February 3, 1994 (Filed as Exhibit 10.89
           to WorldCorp, Inc.'s Annual Report on Form 10-K for 
           the fiscal year ended December 31, 1994 and
           incorporated herein by reference.)

10.23      Amendment No. 1 to Shareholders Agreement dated as       Incorporated
           of February 28, 1994, among WorldCorp, the Company       By Reference
           and Malaysian Helicopter Services Berhad (Filed as
           Exhibit 10.90 to WorldCorp Inc.'s Annual Report on 
           Form 10-K for the fiscal year ended December 31, 
           1994 and incorporated herein by reference.)

 
10.24      Agreement between the Company and the International      Incorporated
           Brotherhood of Teamsters representing the Cockpit        By Reference
           Crewmembers employed by the Company dated August 15,
           1994-June 30, 1998. (Filed as Exhibit 10.98 to 
           WorldCorp, Inc.'s Annual Report on Form 10-K for
           the fiscal year ended December 31, 1994 and 
           incorporated herein by reference.)

10.25      Aircraft Services Agreement dated September 26, 1994     Incorporated
           by and between the Company and Malaysian Airline         By Reference
           System Berhad. (Filed as Exhibit 10.101 to WorldCorp,
           Inc.'s Annual Report on Form 10-K for the fiscal year
           ended December 31, 1994 and incorporated herein by
           reference.)

10.26      Freighter Services Agreement dated October 6, 1994       Incorporated
           by and between the Company and Malaysian Airline         By Reference
           System Berhad. (Filed as Exhibit 10.102 to WorldCorp,
           Inc.'s Annual Report on Form 10-K for the fiscal year
           ended December 31, 1994 and incorporated herein by
           reference.)

10.27      Amendment No. 1 to Passenger Aircraft Services and       Incorporated
           Freighter Services Agreement dated December 31, 1994     By Reference
           by and between the Company and Malaysian Airline 
           System Berhad. (Filed as Exhibit 10.107 to WorldCorp,
           Inc.'s Annual Report on Form 10-K for the fiscal year
           ended December 31, 1994 and incorporated herein 
           by reference.)

10.28      Amendment No. 2 to the Aircraft Services and Freighter   Incorporated
           Services Agreements by and between the Company and       By Reference
           Malaysian Airline System Berhad, dated February 9, 1995.

10.29      Amendment No. 3 to the Freighter Services Agreement by   Incorporated
           and between the Company and Malaysian Airline System     By Reference
           Berhad dated May, 1995.

10.30      Form of Master Services Agreement between the Company    Incorporated
           and WorldCorp, Inc.                                      By Reference

10.31      Amendment No. 3 to the Accounts Receivable Management    Incorporated
           and Security Agreement between the Company and BNY       By Reference
           Financial Corporation dated as of September 28, 1995.

10.32      Amendment No. 4 to the Accounts Receivable Management    Incorporated
           and Security Agreement between the Company and BNY       By Reference
           Financial Corporation dated as of September 28, 1995.
 
                                                            26

<PAGE>

10.33      Form of Non-Employee Directors' Stock Option Plan.       Incorporated
                                                                    By Reference

11         Computation of earnings (loss) per share.                Filed
                                                                    Herewith

27         Financial data schedule for the quarter ended            Filed
           June 30, 1997                                            Herewith
                                                                     

(b)   Reports on Form 8-K

      Form 8-K dated September 18, 1997, was filed with the Securities and
Exchange Commission on October 2, 1997.



      *     *     *     *     *       *     *     *     *     *     *



                                                            27

<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/RUSSELL L. RAY, JR.
                               President, Chief Executive Officer and Principal
                               Accounting and Financial Officer





Date:  November 13, 1997

                                                        28