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                                                                    EXHIBIT 10.7

                                                                       EXECUTION
                                                                            COPY

                              SUBSIDIARY GUARANTEE

            SUBSIDIARY GUARANTEE, dated as of April 27, 2005 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, this
"Subsidiary Guarantee"), made by North American Airlines, Inc., a Delaware
corporation (the "Subsidiary Guarantor"), in favor of the Guaranteed Parties (as
defined below).

            All capitalized terms used herein and not otherwise defined herein
shall have the meanings provided for such terms in the Loan Agreement, dated as
of December 30, 2003 (the "Original Loan Agreement"), as amended by that certain
Amendment No. 1 and Waiver to Loan Agreement (the "Amendment") (and together
with the Original Loan Agreement, the "Loan Agreement", as the same may be
amended, restated, supplemented or otherwise modified from time to time) among
World Airways, Inc., a Delaware corporation, as Borrower; World Air Holdings,
Inc.; World Airways Parts Company, LLC; the Subsidiary Guarantor; Govco
Incorporated, a Delaware corporation, as Primary Tranche A Lender; Citibank,
N.A. as Alternate Tranche A Lender, Collateral Agent and Agent; Citicorp USA,
Inc. as Tranche B Lender; Citicorp North America, Inc. as Govco Administrative
Agent; Phoenix American Financial Services, Inc., as Loan Administrator; and Air
Transportation Stabilization Board, created pursuant to Section 102 of the Act
(as defined therein) (the "Board").

                                   WITNESSETH:

            WHEREAS, Section 5.15 of the Loan Agreement provides that, among
other things, within thirty (30) days following the acquisition of a Subsidiary,
other than with respect to (a) a Subsidiary which is a "controlled foreign
corporation" under Section 957 of the Internal Revenue Code or (b) an
Unrestricted Subsidiary, such Subsidiary shall execute and deliver to the Agent
and the Board a Subsidiary Guarantee in the form of Exhibit I to the Loan
Agreement dated no later than thirty (30) days following such acquisition;

            WHEREAS, pursuant to that certain Stock Purchase Agreement dated as
of April 27, 2005 among Parent, the Subsidiary Guarantor and Dan McKinnon,
individually and as trustee of the Dan and Janice McKinnon Family Trust dated
January 15, 2005, Parent has acquired all of the outstanding shares of common
stock of the Subsidiary Guarantor;

            WHEREAS, it is a condition precedent to the Amendment that the
Subsidiary Guarantor shall have executed and delivered this Subsidiary
Guarantee; and

            WHEREAS, the Subsidiary Guarantor is entering into this Subsidiary
Guarantee to satisfy the condition described in the preceding paragraph and in
order to comply with Section 5.15 of the Loan Agreement.

            NOW, THEREFORE, in consideration of the premises contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Subsidiary Guarantor hereby agrees as
follows:

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      SECTION 1. Guarantee. (a) The Subsidiary Guarantor hereby absolutely,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all (i) Obligations of the Borrower to the Agent,
the Lenders, the Supplemental Guarantor, the Govco Administrative Agent, the
Loan Administrator or the Board (together with their respective permitted
successors and assigns, each individually, a "Guaranteed Party" and
collectively, the "Guaranteed Parties") arising under or in respect of the Loan
Documents or the Notes (collectively, the "Agreements") now or hereafter
existing or arising, whether for principal, interest, fees, expenses or
otherwise, including for amounts owed to the Board or any of its permitted
successors and assigns as a result of a payment under the Board Guarantee, and
(ii) any and all expenses (including reasonable counsel fees and expenses)
actually incurred by any Guaranteed Party in enforcing any rights under this
Subsidiary Guarantee (all of the foregoing, collectively, the "Guaranteed
Obligations"). It is the intention of the parties hereto that in no event shall
the Subsidiary Guarantor's obligations under this Subsidiary Guarantee
constitute or result in a violation of any applicable fraudulent conveyance or
similar law of any relevant jurisdiction. Therefore, in the event that this
Subsidiary Guarantee would, but for the preceding sentence, constitute or result
in such violation, then the liability of the Subsidiary Guarantor under this
Subsidiary Guarantee shall be reduced to the maximum amount permissible under
the applicable fraudulent conveyance or similar laws. The Subsidiary Guarantor
agrees that in the event that any payment shall be required to be made by it
under this Subsidiary Guarantee and by the Parent pursuant to the Parent
Guarantee or any other Subsidiary pursuant to other Subsidiary Guarantees (as
applicable), it will contribute, to the maximum extent permitted by applicable
fraudulent conveyance or similar laws, in order that such contribution will not
result in a fraudulent transfer or conveyance, such amount to the Parent and/or
such other Subsidiaries so as to maximize the aggregate amount paid to the
Agent, the Lenders and the Board under this Subsidiary Guarantee, the Parent
Guarantee and the Notes. Any and all payments by the Subsidiary Guarantor
hereunder shall be made free and clear of and without deduction for any set-off
or counterclaim, or Taxes as and to the extent provided in Section 2.12 of the
Loan Agreement as if each reference to the "Borrower" therein were a reference
to the Subsidiary Guarantor.

            (b) The Subsidiary Guarantor unconditionally and irrevocably
guarantees the payment of any and all of the Guaranteed Obligations to the Agent
as agent for the Guaranteed Parties whether or not due or payable by the
Borrower upon the occurrence of any of the events specified in Section 7.1 of
the Loan Agreement or otherwise, and unconditionally and irrevocably promises to
pay such Guaranteed Obligations to the Agent as agent for the Guaranteed
Parties, or to its order, on demand, in lawful money of the United States.

      SECTION 2. Guarantee Continuing and Absolute, (a) The Subsidiary Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Agreements, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
obligations of the Borrower or the rights of the Agent or any Guaranteed Party
with respect thereto. This is a continuing guarantee of payment and not of
collection, and the liability of the Subsidiary Guarantor under this Subsidiary
Guarantee shall be absolute and unconditional, in accordance with the terms
hereof and shall remain in full force and effect without regard to, and shall
not be released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever

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(whether taking place or occurring with or without notice to or the consent of
the Subsidiary Guarantor which notice is hereby waived by the Subsidiary
Guarantor), including, without limitation: (i) any lack of validity or
enforceability of the Agreements or any other agreement or instrument relating
to the Agreements; (ii) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to, or any departure from, the Agreements,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower; (iii) any
taking, any exchange, release or non-perfection of any collateral, or any
taking, release, or amendment or waiver of, or consent to, departure from any
other guarantee, for all or any of the Guaranteed Obligations or any failure by
the Agent or any of the Guaranteed Parties to take any steps to preserve or
perfect its rights to or in any collateral securing the obligations of the
Borrower under the Agreements or the Subsidiary Guarantor hereunder; (iv) any
manner of application of collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any part of the Guaranteed Obligations or any other assets
of the Obligors, or any of their Subsidiaries; (v) any change, restructuring or
termination of the corporate structure or existence of the Subsidiary Guarantor,
the Obligors, or any of their respective Subsidiaries; (vi) the voluntary or
involuntary liquidation, sale or other disposition of all or any portion of the
assets of the Obligors, or the receivership, insolvency, bankruptcy,
reorganization or similar proceeding affecting the Obligors or any of their
assets; (vii) any termination of or change in any relationship between the
Subsidiary Guarantor and the Borrower or Parent; (viii) any change of
circumstances, whether or not foreseeable and whether or not such change does or
might vary the risk of the Subsidiary Guarantor hereunder; (ix) any exercise,
delay in the exercise or waiver of, forbearance or other indulgence with respect
to, or any election not to, or failure to, exercise, any right, remedy or power
available to the Agent or any of the Guaranteed Parties hereunder or under any
of the Agreements; or (x) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower, Parent or
the Subsidiary Guarantor.

            (b) This Subsidiary Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Agent
and the Guaranteed Parties for any reason including upon the insolvency,
bankruptcy or reorganization of the Borrower, Parent or the Subsidiary Guarantor
or otherwise, all as though such payment had not been made and the Subsidiary
Guarantor agrees to indemnify the Agent and each Guaranteed Party for all costs
and expenses incurred by the Agent or the Guaranteed Party in connection with
such rescission or return. To the extent permitted by applicable law, the
Subsidiary Guarantor hereby expressly waives the benefit of any applicable
statute of limitations and agrees that it shall be liable hereunder whenever
such rescission or return of payment occurs.

            (c) The Subsidiary Guarantor further agrees that this is a guarantee
of payment and not of collection. The Agent may require payment by the
Subsidiary Guarantor and enforce the obligations of the Subsidiary Guarantor
hereunder without first being required to enforce any claim against the Borrower
or resort to any security or other credit support for the Guaranteed
Obligations.

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      SECTIONS 3. Waiver.

            (a) To the extent permitted by applicable law, the Subsidiary
Guarantor hereby waives (i) promptness, diligence, notice of acceptance and,
except to the extent expressly provided for under any of the other Loan
Documents, any other notice with respect to any of the Guaranteed Obligations
and this Subsidiary Guarantee, including any notice of default, demand,
dishonor, presentment or protest, (ii) all defenses and discharges of a
guarantor or surety, including all defenses based on or arising out of any
defense of the Borrower or the unenforceability of the Guaranteed Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible payment in full
in cash of the Guaranteed Obligations, and (iii) any requirement that the Agent
or any Guaranteed Party protect, secure, perfect or insure any security interest
or lien on any property subject thereto or exhaust any right or take any action
against the Borrower, or any other person or entity or any collateral.

            (b) The Guaranteed Parties may, at their election, foreclose on any
security held by them or for their benefit in one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Guaranteed Obligations, make
any other accommodation with the Borrower or any other guarantor or exercise any
other right or remedy available to them against the Borrower or any other
guarantor, without affecting or impairing in any way the liability of the
Subsidiary Guarantor hereunder except to the extent the Guaranteed Obligations
have been fully, finally and indefeasibly paid in cash. The Subsidiary Guarantor
waives any defense arising out of any such election even though such election
operates, pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of the Subsidiary
Guarantor against the Borrower or any other guarantor, as the case may be, or
any security.

      SECTION 4. Subordination of Subrogation. The Subsidiary Guarantor hereby
irrevocably agrees to subordinate any Subrogation Rights (as defined below) to
the rights of the Agent or any Guaranteed Party to recover from the Borrower all
Obligations, including for amounts owed to the Board or any of its permitted
successors and assigns as a result of a payment under the Board Guarantee.
"Subrogation Rights" shall mean any and all rights of subrogation,
reimbursement, exoneration, contribution or indemnification, any right to
participate in any claim or remedy of the Agent or the Guaranteed Parties or any
collateral which any Guaranteed Party or the Agent now has or hereafter acquires
in connection with the payment, performance or enforcement of the Subsidiary
Guarantor's obligations under this Subsidiary Guarantee, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including the right to take or receive, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. To effectuate such subordination, the
Subsidiary Guarantor hereby agrees that it shall not be entitled to exercise any
Subrogation Rights or to receive any payment by the Borrower in respect of any
Guaranteed Obligations until all of the Guaranteed Obligations have been
indefeasibly paid in full. If any amount shall be paid to the Subsidiary
Guarantor in violation of the preceding sentence and the Guaranteed Obligations
shall not have been paid in full or any commitment of any Lender under any of
the Agreements shall not have been irrevocably terminated, such amount shall be
deemed to have been paid to the Subsidiary Guarantor for the benefit of, and
held in trust for, the Agent for the benefit of the Guaranteed

                                      -4-
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Parties, and shall forthwith be paid to the Agent to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured. The Subsidiary
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Agreements and that the
subordination set forth in this Section is knowingly made in contemplation of
such benefits.

      SECTION 5. Representations and Warranties. The Subsidiary Guarantor
represents and warrants that all representations and warranties made with
respect to it in the Loan Agreement and each other Loan Document are true and
correct.

      SECTION 6. Certain Covenants.

            (a) Subject to the provisions of the Loan Agreement, the Subsidiary
Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate, partnership
or other existence of the Borrower and the rights (charter and statutory) and
franchises of the Subsidiary Guarantor and the Borrower.

            (b) The Subsidiary Guarantor shall comply with the terms and
conditions of the Agreements applicable to it as if it were a party to the
Agreements.

            (c) The Subsidiary Guarantor shall not consolidate or merge into any
other Person or sell, convey, transfer or lease all or substantially all of its
assets to any Person unless, if the Subsidiary Guarantor is not the surviving
entity, such Person executes an agreement in form and substance satisfactory to
the Guaranteed Parties pursuant to which it assumes all of the obligations of
the Subsidiary Guarantor under this Subsidiary Guarantee.

      SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Loan Agreement.

      SECTION 8. No Waiver: Remedies Cumulative: Enforcement. (a) No failure or
delay on the part of any Guaranteed Party in exercising any right, power or
privilege hereunder and no course of dealing between the Subsidiary Guarantor
and the Agent or any other Guaranteed Party shall operate as a waiver of any
such right, power or privilege; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Agent or any Guaranteed Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
or such Guaranteed Party would otherwise have on any future occasion. Each and
every right, power and remedy of the Agent and Guaranteed Parties provided for
in this Subsidiary Guarantee, any document executed in connection with the
Agreements, or now or hereafter existing at law or in equity or by statute shall
be cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Agent of any
one or more of the rights, powers or remedies provided for in this Subsidiary
Guarantee, any other document executed in connection with the Agreements or now
or hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Agent of all such other
rights, powers or remedies, and no failure or delay on the part of the Agent to
exercise any such right, power or

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remedy shall operate as a waiver thereof. No notice to or demand on the
Subsidiary Guarantor in any case shall entitle the Subsidiary Guarantor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent to any other or further action in
any circumstances without notice or demand.

            (b) Notwithstanding any other provision hereof to the contrary, each
of the parties hereto and the Guaranteed Parties agrees (i) that this Subsidiary
Guarantee may be enforced only by the action of the Agent; and (ii) that the
rights and responsibilities of the Agent under this Subsidiary Guarantee with
respect to the taking of any action hereunder or the exercise or non-exercise by
the Agent of any right, power or remedy hereunder or arising hereunder,
including with respect to the enforcement of this Subsidiary Guarantee, may be
exercised by the Agent only with the consent of and shall be exercised by the
Agent upon the instructions of the Board, or if the Board Guarantee is no longer
in effect and all obligations to the Board thereunder and under the Loan
Documents have been satisfied in full, the Requisite Lenders, in each case, in
accordance with the applicable terms of the Board Guarantee and the Loan
Agreement.

            (c) Any payments made hereunder shall be allocated in accordance
with the provisions of the Loan Agreement.

      SECTION 9. Continuing Guarantee; Transfer of Obligations. This Subsidiary
Guarantee is a continuing guarantee and shall (i) remain in full force and
effect until the indefeasible payment in full of the Guaranteed Obligations and
all other amounts payable under this Subsidiary Guarantee, (ii) be binding upon
the Subsidiary Guarantor, its successors and assigns, and (iii) inure to the
benefit of the Guaranteed Parties and their permitted successors, transferees
and assigns and be enforceable by the Agent on their behalf; provided that the
Subsidiary Guarantor may not assign or transfer this Subsidiary Guarantee or any
of its interests or obligations hereunder. Without limiting the generality of
the foregoing clause (iii), the rights of the Guaranteed Parties to assign, and
their obligations with respect to assignments of, any of their rights or
obligations under the Agreements, including any assignment of or under the Board
Guarantee, shall be determined solely in accordance with the applicable terms of
the Agreements and the Board Guarantee.

      SECTION 10. Governing Law. This Subsidiary Guarantee and the rights and
obligations of the parties hereto shall be governed by, and construed in
accordance with, the law of the State of New York; provided, that the rights and
obligations of the Board hereunder shall be governed by, and construed in
accordance with, the Federal law of the United States of America, if and to the
extent such Federal law is applicable, and otherwise in accordance with the law
of the State of New York.

      SECTION 11. Submission to Jurisdiction; Service of Process.

            (a) Any legal action or proceeding with respect to this Subsidiary
Guarantee may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery hereof, the Subsidiary Guarantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto hereby irrevocably waive any objection,

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including any objection to the laying of venue or based on the grounds of forum
non conveniens, which any of them may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.

            (b) The Subsidiary Guarantor hereby irrevocably consents to the
service of any and all legal process, summons, notices and documents in any
suit, action or proceeding brought in the United States of America arising out
of or in connection with this Subsidiary Guarantee by the mailing (by registered
or certified mail, postage prepaid) or delivering of a copy of such process to
the Subsidiary Guarantor in accordance with the provisions of Section 7. The
Subsidiary Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

            (c) Nothing contained in this Section 11 shall affect the right of
the Agent or any Guaranteed Party to serve process in any other manner permitted
by law or commence legal proceedings or otherwise proceed against the Subsidiary
Guarantor in any other jurisdiction.

      SECTION 12. Waiver of Trial by Jury. THE SUBSIDIARY GUARANTOR HEREBY
IRREVOCABLY WAIVES, TO THE EXTENT ALLOWED BY LAW, ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
SUBSIDIARY GUARANTEE OR THE OTHER LOAN DOCUMENTS.

      SECTION 13. Waivers and Amendments. None of the terms or provisions of
this Subsidiary Guarantee may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Subsidiary Guarantor and
acknowledged and agreed to by the Agent and the Board, or if the Board Guarantee
is no longer in effect and all obligations to the Board thereunder and under the
Loan Documents have been satisfied in full, by the Subsidiary Guarantor and
acknowledged and agreed to by the Agent, acting on instructions of the Requisite
Lenders; provided that any provision of this Subsidiary Guarantee may be waived
by a written instrument executed by the Agent and the Board, or if the Board
Guarantee is no longer in effect and all obligations to the Board thereunder and
under the Loan Documents have been satisfied in full, the Agent, acting on
instructions of the Requisite Lenders. Any such amendment, supplement,
modification or waiver shall be binding upon the Subsidiary Guarantor, the Agent
and all future holders of the Guaranteed Obligations.

      SECTION 14. Severability. In case any provision in or obligation under
this Subsidiary Guarantee or the Guaranteed Obligations shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations in such jurisdiction,
or of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.

      SECTION 15. Right of Setoff. If an Event of Default shall have occurred
and be continuing, the Agent, the Board and each Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, but
subject to Section 10.5 of the Loan Agreement, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other Indebtedness at any time owing by such party to or for the credit
or

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the account of the Subsidiary Guarantor against any or all of the obligations of
the Subsidiary Guarantor now or hereafter existing under this Subsidiary
Guarantee and the other Loan Documents held by such party, irrespective of
whether or not such party shall have made any demand under this Subsidiary
Guarantee or any other Loan Document and although such obligations may be
unmatured. The rights of each such party under this Section 15 are in addition
to other rights and remedies (including other rights of setoff) which such party
may have.

      SECTION 16. Further Assurances. The Subsidiary Guarantor shall from time
to time, at its own cost and expense, do and perform such other and further acts
and duly execute and delivery such further documents and assurances as may be
required by applicable laws or reasonably requested by the Board or the Agent to
establish, maintain and protect the respective rights and remedies of each such
party and to carry out the intent and purpose of this Subsidiary Guarantee or
any other Loan Document.

      SECTION 17. Rules of Interpretation. The rules of interpretation specified
in the Loan Agreement shall be applicable to this Subsidiary Guarantee.

      SECTION 18. Counterparts. This Subsidiary Guarantee may be executed in any
number of counterparts and by different parties in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are attached to the same document.
Delivery of an executed signature page of this Subsidiary Guarantee by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.

                  (Remainder of page intentionally left blank)

                                       -8-
<PAGE>

            IN WITNESS WHEREOF, the Subsidiary Guarantor has duly executed this
Subsidiary Guarantee as of the day and year first above written.

                                                   NORTH AMERICAN AIRLINES, INC.

                                                   By: /s/
                                                       -------------------------
                                                       Name:
                                                       Title:

Accepted:

AIR TRANSPORTATION STABILIZATION
BOARD

By: /s/ Mark R. Dayton
    -------------------------
    Name: Mark R. Dayton
    Title: Executive Director

CITIBANK, N.A., as Agent

By; /s/
    -------------------------
    Name:
    Title: