FORM 10-Q
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D. C.  20549

                     Quarterly Report Under Section 13 or 15(d)
                       of the Securities Exchange Act of 1934

        (Mark One)

        [  X  ]Quarterly  Report  Pursuant  to  Section  13  or  15(d) of the
            Securities Exchange Act of 1934

        For the quarterly period ended March 31, 1997

        [    ]Transition  Report  Pursuant  to  Section  13  or 15(d) of  the
            Securities Exchange Act of 1934

        For   the   transition   period   from                             to


        For Quarter Ended March 31, 1997

        Commission File Number  0-16572

                             AVONDALE INDUSTRIES, INC.



            Louisiana                             39-1097012

        (State or other jurisdiction of         (I.R.S. Employer
        incorporation or organization)           Identification No.)


        P. O. Box 50280, New Orleans, Louisiana   70150

        (Address of principal executive offices)  (Zip Code)

        Registrant's telephone number, including area code 504/436-2121

        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 file  such  filing requirements
        for the past 90 days.  YES    X     NO        .

        Indicate  the  number of shares outstanding of each of  the  issuer's
        classes of common stock as of the latest practicable date.

                   Class                       Outstanding  at March 31, 1997
        Common stock, par value $1.00 per share       14,493,211 shares


                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES

                                       INDEX


                                                                  

         Part I. Financial Information                            Page No.

            Item 1.  Financial Statements

                Independent Accountants' Report 

                Consolidated Balance Sheets -
                December 31, 1996 and March 31, 1997 

                Consolidated Statements of Operations -
                Three Months Ended March 31, 1996 and 1997 

                Consolidated Statements of Cash Flows -
                Three Months Ended March 31, 1996 and 1997 

                Notes to Consolidated Financial Statements 

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

        Part II. Other Information                                      

            Item 6.  Exhibits and Reports on Form 8-K


        INDEPENDENT ACCOUNTANTS' REPORT

        To the Board of Directors and Shareholders of
          Avondale Industries, Inc.

        We  have  reviewed the condensed consolidated financial statements of
        Avondale  Industries,   Inc.  and  subsidiaries,  as  listed  in  the
        accompanying index, as of  March  31,  1997  and  for the three-month
        periods  ended  March 31, 1997 and 1996.  These financial  statements
        are the responsibility of the Company's management.

        We conducted our  review  in accordance with standards established by
        the American Institute of Certified  Public Accountants.  A review of
        interim  financial  information  consists   principally  of  applying
        analytical procedures to financial data and of  making  inquiries  of
        persons  responsible  for  financial  and  accounting matters.  It is
        substantially  less  in scope than an audit conducted  in  accordance
        with generally accepted auditing standards, the objective of which is
        the expression of an opinion regarding the financial statements taken
        as a whole.  Accordingly, we do not express such an opinion.

        Based on our review, we  are  not aware of any material modifications
        that  should  be  made  to  such  condensed   consolidated  financial
        statements  for  them  to  be  in conformity with generally  accepted
        accounting principles.

        We  have previously audited, in accordance  with  generally  accepted
        auditing  standards,  the  consolidated  balance  sheet  of  Avondale
        Industries,  Inc.  and subsidiaries as of December 31, 1996, and  the
        related consolidated  statements of operations, shareholders' equity,
        and cash flows for the year then ended (not presented herein); and in
        our report dated February  17,  1997,  we  expressed  an  unqualified
        opinion on those consolidated financial statements.  In our  opinion,
        the  information  set  forth in the accompanying consolidated balance
        sheet as of December 31,  1996  is  fairly  stated,  in  all material
        respects, in relation to the consolidated balance sheet from which it
        has been derived.




        DELOITTE & TOUCHE LLP
        New Orleans, Louisiana

        May 2, 1997


                           PART I - FINANCIAL INFORMATION

        Item 1. Financial Statements
<TABLE>
<CAPTION>
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
                                    (UNAUDITED)


                                                  December 31,     March 31,
                                                     1996            1997
                                                    ------          ------
       <S>                                        <C>             <C>
       ASSETS
        Current Assets:
          Cash and cash equivalents  ............ $ 48,944        $ 47,737
          Receivables (Note 2):
            Accounts receivable .................   14,133          13,094
            Contracts in progress ...............  105,006          95,904
          Inventories:
            Goods held for sale .................   13,184          15,344
            Materials and supplies ..............    8,601           8,800
          Deferred tax assets ...................   30,157          26,757
          Prepaid expenses ......................    2,465           2,018
                                                   -------         -------
            Total current assets ................  222,490         209,654
                                                   -------         -------
        Property, Plant and Equipment:

          Land...................................    7,984           7,984
          Construction in progress  .............    6,934           6,533
          Buildings and improvements ............   52,664          52,624
          Machinery and equipment ...............  187,029         189,080
                                                   -------         ------- 
            Total ...............................  254,611         256,221
                                                   
          Less accumulated depreciation.......... (127,009)       (129,721)
                                                   -------         ------- 
            Property, plant and equipment - net    127,602         126,500
                                                   -------         ------- 
        Goodwill - net ................              8,073           7,932
        Other assets ..................              4,707           4,104
                                                   -------         -------
            Total assets  .............          $ 362,872       $ 348,190
                                                   =======         =======
        See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
                                    (UNAUDITED)

                                                 December 31,    March 31,
                                                    1996            1997
                                                   ------          ------
        <S>                                      <C>            <C>
        LIABILITIES AND SHAREHOLDERS' EQUITY
        Current Liabilities:
          Current portion of long-term debt      $    4,957     $    2,957
          Accounts payable .....................     73,589         53,530
          Accrued employee compensation ........     11,630         11,423
          Other ................................     12,839         14,621
                                                    -------        -------
            Total current liabilities               103,015         82,531

        Long-term debt...........................    54,866         53,885

        Deferred income taxes ...................    10,300         10,300

        Other liabilities and deferred credits ..    12,838         13,039
                                                    -------        -------
          Total liabilities ...........             181,019        159,755
                                                    -------        -------
        Commitments and contingencies (Note 4)

        Shareholders' Equity:
          Common stock, $1.00 par value, 
           authorized 30,000,000 shares;
           issued - 15,927,191 shares in
           1996 and 15,956,227 in 1997 ..........    15,927         15,956
          Additional paid-in capital ............   373,911        374,173
          Accumulated deficit ...................  (196,129)      (189,838)
                                                    -------        -------
            Total ...............................   193,709        200,291

          Treasury stock (common: 1,463,016
           shares in 1996 and 1997) at cost ......  (11,856)       (11,856)
                                                    -------        ------- 
          Total shareholders' equity .............  181,853        188,435
                                                    -------        ------- 
          Total .......................           $ 362,872      $ 348,190
                                                    =======        ======= 
        See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
                                    (UNAUDITED)

                                                 THREE MONTHS ENDED MARCH 31,
                                                     1996           1997
                                                    ------         ------
          <S>                                     <C>            <C>
          Net sales............................   $ 156,496      $ 139,513

          Cost of sales .......................     139,210        120,880
                                                    -------        ------- 
          Gross profit ........................      17,286         18,633

          Selling, general and administrative
            expenses ..........................       9,033          8,334
                                                    -------        -------
          Income from operations ..............       8,253         10,299

          Interest expense ....................     ( 1,386)       ( 1,217)

          Other - net .........................         569            609
                                                    -------        ------- 
          Income before income taxes ..........       7,436          9,691

          Income taxes ........................       2,700          3,400
                                                    -------        -------
          Net income ..........................   $   4,736      $   6,291
                                                    =======        =======
          Income per share of common stock:

          Net income per share of common stock    $    0.33      $    0.43
                                                    =======        =======
          Weighted average number of
           shares outstanding .................      14,464         14,493
                                                    =======        =======
          See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                     THREE MONTHS ENDED MARCH 31, 1996 AND 1997
                                   (In thousands)
                                    (UNAUDITED)

                                                      1996           1997
                                                     ------         ------
        <S>                                         <C>            <C>     
        CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income ............................   $ 4,736        $ 6,291
          Adjustments to reconcile net income to
           net cash provided by operating
           activities:
            Depreciation and amortization .......     2,676          2,853
            Deferred income taxes  ..............     2,700          3,400
            Changes in operating assets
             and liabilities:
              Receivables .......................    17,957         10,141
              Inventories  ......................       950         (2,359)
              Prepaid expenses  .................      (254)           447
              Accounts payable  .................    (2,659)       (20,059)
              Accrued employee compensation .....     1,706           (207)
              Other - net .......................     1,403          2,877
                                                    -------        -------  
            Net Cash Provided by
              Operating Activities  .............    29,215          3,384
                                                    -------        -------
        CASH FLOWS FROM INVESTING ACTIVITIES:
          Capital expenditures  .................    (3,179)        (1,610)
          Change in restricted short-term
             investments - net  .................       194
                                                    -------        ------- 
          Net Cash Used for Investing Activities     (2,985)        (1,610)
                                                    -------        ------- 
        CASH FLOWS FROM FINANCING ACTIVITIES:
          Payment of long-term borrowings .......      (388)        (2,981)
                                                    -------        -------
          Net Cash Used for Financing Activities       (388)        (2,981)
                                                    -------        ------- 
        Net increase (decrease) in cash and 
          cash equivalents ......................    25,842         (1,207)
        Cash and cash equivalents at
          beginning of period ...................    38,524         48,944
                                                    -------        -------
        Cash and cash equivalents at
          end of period .........................  $ 64,366       $ 47,737
                                                    =======        =======
        Supplemental Disclosures of Cash Flow Information:
        Cash paid during the period for:
        Interest ................................  $    176       $  1,058
                                                    =======        ======= 

        Income taxes  ...........................  $    960       $    100
                                                    =======        =======

        See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
        AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

        1.     BASIS OF PRESENTATION

        The  accompanying unaudited consolidated financial statements include
        the accounts  of  Avondale  Industries,  Inc.  and  its  wholly-owned
        subsidiaries  ("Avondale" or the "Company").  In the opinion  of  the
        management  of  the   Company,   all  adjustments  (such  adjustments
        consisting only of a normal recurring  nature)  necessary  for a fair
        presentation  of  the  operating  results  for  the  interim  periods
        presented  have  been  included  in the interim financial statements.
        These interim financial statements should be read in conjunction with
        the December 31, 1996 audited financial  statements and related notes
        filed on Form 10-K for the year ended December  31,  1996  (the "1996
        Form 10-K").

        The  financial  statements  required by Rule 10-01 of Regulation  S-X
        have been reviewed by independent  public  accountants  as  stated in
        their report included herein.

         2. RECEIVABLES

        The  following  information  presents the elements of receivables  at
        December 31, 1996 and March 31, 1997 (in thousands):
<TABLE>
<CAPTION>
                                                       1996       1997
                                                      ------     ------
            <S>                                      <C>       <C>  
            Long-term contracts:
                U.S. Government:
                  Amounts billed  ............       $   859   $    977
                  Unbilled costs and estimated
                   profits on contracts in
                   progress ..................         90,325     82,058
                                                      -------    -------
                  Total ......................         91,184     83,035

                Commercial:
                  Amounts billed .............          7,274      6,707
                  Unbilled costs and estimated
                   profits on contracts in
                   progress ..................         14,681     13,846
                                                      -------    -------
                Total from long-term contracts        113,139    103,588
            Trade and other current receivables         6,000      5,410
                                                      -------    -------  
            Total ............................       $119,139   $108,998
                                                      =======    =======
</TABLE>
        Unbilled costs and estimated profits  on  contracts  in progress were
        not billable to customers at the balance sheet dates under  terms  of
        the respective contracts.

        3.  FINANCING ARRANGEMENTS

        The   Company's   $42.5  million  revolving  credit  agreement  ("the
        agreement")  provides   available   liquidity   for  working  capital
        purposes, capital expenditures and letters of credit.   At  March 31,
        1997,  there  were  approximately  $11.3 million of letters of credit
        issued against the agreement leaving  approximately  $31.2 million of
        liquidity  available  to Avondale for operations and other  purposes.
        There have been no borrowings  in  1997  under  the  agreement.   The
        Company  and its banks agreed to amend its revolving credit agreement
        and increase  the  size  to  $85  million  effective  April 30, 1997.
        Continuing  access to the agreement is conditioned upon  the  Company
        remaining in  compliance  with  the  covenants  which include certain
        financial  ratios.  The Company is currently in compliance  with  the
        covenants contained therein.

         4. COMMITMENTS AND CONTINGENCIES

        Litigation

        As discussed  in  Note  10 of the Company's Annual Report included in
        the 1996 Form 10-K, the Company  was  advised  in  1986 that it was a
        potentially  responsible  party  ("PRP")  with  respect  to   an  oil
        reclamation  site  operated  by  an  unaffiliated  company in Walker,
        Louisiana.  To date, the Company and certain of the  other  PRPs (the
        "Funding  Group")  for  the  site  have funded the site's remediation
        expenses,  PRP identification expenses  and  related  costs  for  the
        participating parties.  As of March 31, 1997 such costs totaled $18.8
        million, of  which the Company has funded approximately $4.0 million.
        Since 1988 the  Funding  Group  filed  petitions  to  add a number of
        companies  as  third-party  defendants  with  regard to the  remedial
        action.  The Funding Group has agreed to settle  with the majority of
        these companies.  All funds collected through these  settlements have
        been  escrowed  to  fund  future  expenses.   At March 31, 1997,  the
        balance of the escrow was $6.2 million, which is  to  be used to fund
        any  ongoing  remediation  expenses.   The Company will not  owe  any
        future  assessments  until  the  balance  in   escrow   is  depleted.
        Additional  settlements  are  being negotiated which may add  to  the
        balance in escrow.

        Additional remedial work scheduled  for  the site includes completion
        of  studies  and  if  required  by  the  results  of  these  studies,
        subsequent remediation.  Following completion  of  any  such required
        additional  remediation, it will be necessary to obtain Environmental
        Protection Agency  approval  to  close  the  site,  which consent may
        require   subsequent  post-closure  activities  such  as  groundwater
        monitoring  and  site maintenance for many years.  The Company is not
        able to estimate the  final  costs  for  any such additional remedial
        work or post-closure costs that may be required; however, the Company
        believes  that  its  proportionate  share  of  expenditures  for  any
        additional  work  will not have a material impact  on  the  Company's
        financial condition.  In  addition,  the members of the Funding Group
        have  entered into a final cost sharing  agreement  under  which  all
        parties  have agreed that there would be no re-allocation of previous
        remediation  costs,  but  that  future  remediation  costs  would  be
        established  by a formula.  Under this agreement, the Company's share
        of future costs is 17.5%.

        In the first quarter  of  1996,  the  Federal  District Court for the
        Western District of Louisiana issued a ruling approving the Company's
        settlement  of  a  class  action  lawsuit involving alleged  personal
        injury and property damage arising  from  the Walker, La. reclamation
        site.   Under  the  terms  of the settlement, the  Company  has  paid
        approximately $6.2 million (including  interest)  into  a  settlement
        fund  and  also agreed to pay up to an additional $6.0 million  (plus
        interest at  8%  per  annum)  if the plaintiffs were  unsuccessful in
        collecting certain claims under  Avondale's  insurance  policies that
        were assigned to the plaintiff class under the settlement  agreement.
        During  the first quarter of 1997, certain remaining parties  to  the
        litigation,   including  Avondale's  insurers,  reached  a  tentative
        settlement pursuant  to  which  Avondale's insurers agreed to pay the
        plaintiffs an amount in excess of  the  $6.0  million (plus interest)
        for  which  Avondale  was  contingently  liable  in  full  and  final
        satisfaction of the plaintiff's claims against Avondale.  If approved
        by the trial court after a fairness review, Avondale will be released
        from  this  contingent  liability. The fairness review by  the  trial
        court is scheduled for the  second  quarter of 1997.  With respect to
        the potential contingent liability of  the  Company to pay additional
        sums  if  the  tentative  settlement is not approved  by  the  court,
        management believes that the  eventual resolution of this matter will
        not  have  a material adverse effect  on  the  Company's  results  of
        operations, financial position or cash flows.

        Furthermore, the Company has initiated litigation against its insurer
        for a declaration  of  coverage  of  the  liability, if any, that may
        arise  in connection with the remediation of  the  site  referred  to
        above. The  court  has  ruled that the insurer has the duty to defend
        the Company, but has not  yet ruled on whether the carrier has a duty
        to indemnify the Company if  any  liability  is  ultimately  assessed
        against it. After consultation with counsel, the Company is unable to
        predict  the  eventual  outcome  of this litigation or the degree  to
        which such potential liability would  be indemnified by its insurance
        carrier.

        In addition to the above, the Company is also named as a defendant in
        numerous  other  lawsuits and proceedings  arising  in  the  ordinary
        course of business, some of which involve substantial damage claims.

        The Company has established  accruals  as  appropriate for certain of
        the matters discussed above.  While the ultimate  outcome of lawsuits
        and  proceedings  against  the  Company  cannot  be  predicted   with
        certainty,   management   believes,   based   on  current  facts  and
        circumstances  and  after  review  with  counsel, that  the  eventual
        resolution of these matters will not have  a  material adverse effect
        on the Company's financial condition.

        Letters of Credit

        In  the  normal  course of its business activities,  the  Company  is
        required to provide  letters  of  credit  to  secure  the  payment of
        workers' compensation obligations, other insurance obligations and to
        provide  a  debt  service  reserve  fund related to $36.3 million  of
        Series 1994 industrial revenue bonds.   Additionally,  under  certain
        contracts the Company may be required to provide letters of credit to
        secure  certain  performance  obligations  of the Company thereunder.
        Outstanding letters of credit relating to these  business  activities
        amounted  to  approximately  $11.3  million  at  March  31,  1997 and
        December 31, 1996.

        5.  RECENT ACCOUNTING PRONOUNCEMENT

        In  February  1997,  the  Financial Accounting Standards Board issued
        Statement of Financial Accounting  Standards Number 128 "Earnings per
        Share" ("SFAS 128") which changes the  method of calculating earnings
        per share ("EPS").  SFAS 128 requires the presentation of "basic" EPS
        and "diluted" EPS on the face of the statement  of operations.  Basic
        EPS  is  computed  by  dividing  the net income available  to  common
        shareholders by the weighted average  shares  of  outstanding  common
        stock.  The calculation of diluted EPS is similar to basic EPS except
        that the denominator includes dilutive common stock equivalents  such
        as  stock  options  and  warrants.   The  statement  is effective for
        financial statements for periods ending after December 31, 1997.  The
        Company will adopt SFAS 128 in the fourth quarter of 1997,  as  early
        adoption  is  not  permitted.   The Company's current EPS calculation
        significantly conforms to basic EPS.   Diluted EPS is not expected to
        be materially different from basic EPS since  potential common shares
        in  the  form  of  common  stock  options  are  not estimated  to  be
        materially dilutive.


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

        The  following  discussion  should  be read in conjunction  with  the
        Company's unaudited consolidated financial statements for the periods
        ended  March  31,  1997  and  1996  and Management's  Discussion  and
        Analysis of Financial Condition and Results  of  Operations  included
        under Item 7 of the Company's Annual Report on Form 10-K for the year
        ended December 31, 1996 (the "1996 Form 10-K").

        Overview

        The trend of improvement in the Company's operating results continued
        in  the  first  quarter  ended  March 31, 1997.  Income before income
        taxes and net income increased by  30% and 33%, respectively, for the
        first quarter of 1997 compared to the same period in the prior year.

        The Company's firm backlog at March  31,  1997 was approximately $1.6
        billion  (including  estimated  contract  escalation)   exclusive  of
        unexercised  options aggregating $1.1 billion held by the  U.S.  Navy
        (the "Navy") for additional ship orders.  During the first quarter of
        1997, the Company  delivered a MHC-51 Class Coastal Minehunter to the
        Navy representing the fourth and final ship in the series constructed
        by the Company.  The  Company  also  delivered  the  second  of  four
        commercial  tankers  which  are  being retrofitted with double-hulled
        forebodies.   Other contracts that  will  be  completed  during  1997
        include the LSD-CV 52, the last of four LSD-CVs constructed under two
        contracts, and the two remaining commercial tankers.

        As previously disclosed,  in  December  1996  a Company-led alliance,
        which  includes  Bath  Iron  Works and Hughes Aircraft  Company,  was
        awarded a $641 million contract  to design and construct the first of
        an  anticipated  12  ships  under the  Navy's  LPD-17  program.   The
        contract award provides for options  exercisable  by the Navy for two
        additional LPD ships to be built by the alliance.  Under the terms of
        an agreement between the alliance members, the Company will build the
        ship  covered  under  the  December 1996 contract, and  if  the  Navy
        exercises the two options, the  Company  would  construct  the second
        while Bath would construct the third of the three LPD-17 ships.  Upon
        the  announcement  of  the  award,  the  unsuccessful bidder filed  a
        protest at which time the U.S. Navy issued  a stop-work order pending
        a review of the protest by the General Accounting Office ("GAO").  On
        April 7, 1997, the GAO denied the protest by the unsuccessful bidder.
        The  Navy  followed  the  GAO decision by cancelling   the  stop-work
        order.   As a result, the Company  immediately  resumed  design  work
        under the contract.

        Results of Operations

        The Company recorded net income for the first quarter of 1997 of $6.3
        million, or  $0.43  per share, compared to $4.7 million, or $0.33 per
        share, for the first quarter of 1996 representing a 33% increase over
        the prior year period.   Income  from operations increased 25% in the
        first quarter of 1997 to $10.3 million  compared  to  $8.3 million in
        the first quarter of 1996.

        The  increase  in  the  Company's  operating  results in the  current
        quarter of 1997 compared to the prior year period  primarily  reflect
        operating  profits  recognized  on  the  contract  to  construct five
        Strategic  Sealift  vessels  and  the  Icebreaker  contract.   Profit
        recognition  on these two contracts was not reflected  in  the  first
        quarter  1996  operating   results   as  contract  progress  was  not
        sufficient to begin profit recognition.   Also  contributing  to  the
        first  quarter  1997  operating  results were profits recorded by the
        Company's  marine  repair,  wholesale   steel   and   modular   steel
        construction operations.

        These  profits  were offset, in part, by a $2.5 million loss recorded
        on the contract to  retrofit  four  single-hulled  commercial tankers
        with new double hulls. This loss resulted primarily  from an increase
        in  the  estimated labor needed to complete the two remaining  double
        hulls.

        Net sales  for  the  first  quarter of 1997 decreased $17 million, or
        11%, to $139.5 million compared  to  $156.5  million  for  the  first
        quarter of 1996.  The decrease in net sales in the current quarter is
        primarily  due  to  a reduction in material costs associated with the
        timing of material commitments  on contracts currently in progress as
        well as a reduction in material costs  on  contracts  that  are  near
        completion.   In  the current quarter, the Company recorded decreased
        net sales on the contracts  to construct the seven T-AOs (the last of
        which was delivered in May 1996),  the  four  MHCs (the last of which
        was  delivered  in  January  1997),  the  LSD-CV 52 (expected  to  be
        delivered in November 1997) and the three LSD-CVs  (the last of which
        was delivered in March 1996).  The Company also recorded  reduced net
        sales  on  the  contract  to  construct  the  forebodies for the four
        double-hulled product carriers as two of the vessels  were  delivered
        in  1996.   The  decreases  noted  above  were  partially  offset  by
        increased  net  sales  recorded  on  the  contracts  to construct the
        Icebreaker and the five Strategic Sealift ships.

        Gross profit for the first quarter of 1997 increased $1.3 million, or
        8%,  compared  to  the  same  period  in 1996.  The increase  is  due
        primarily to profits recognized on the  contracts  to  construct  the
        five  Strategic Sealift vessels and the Icebreaker for the U.S. Navy.
        These incremental  profits were offset, in part, by the loss recorded
        on the commercial contract as discussed above.

        Selling,  general  and  administrative  ("SG&A")  expenses  decreased
        $699,000, or 8%, in  the  first  quarter of 1997 compared to the same
        period in the prior year.  The decrease  in  SG&A  expenses  was  due
        primarily to a decrease in proposal preparation costs recorded in the
        first  quarter  of  1996  in  connection  with the preparation of the
        successful LPD-17 proposal.

        In  February 1997, the Financial Accounting  Standards  Board  issued
        Statement  of Financial Accounting Standards Number 128 "Earnings per
        Share" ("SFAS  128") which changes the method of calculating earnings
        per share ("EPS").  SFAS 128 requires the presentation of "basic" EPS
        and "diluted" EPS  on the face of the statement of operations.  Basic
        EPS  is computed by dividing  the  net  income  available  to  common
        shareholders  by  the  weighted  average shares of outstanding common
        stock.  The calculation of diluted EPS is similar to basic EPS except
        that the denominator includes dilutive  common stock equivalents such
        as  stock  options  and  warrants.  The statement  is  effective  for
        financial statements for periods ending after December 31, 1997.  The
        Company will adopt SFAS 128  in  the fourth quarter of 1997, as early
        adoption  is not permitted.  The Company's  current  EPS  calculation
        significantly  conforms to basic EPS.  Diluted EPS is not expected to
        be materially different  from basic EPS since potential common shares
        in  the  form  of  common stock  options  are  not  estimated  to  be
        materially dilutive.

        Liquidity and Capital Resources

        The Company's cash and  cash  equivalents  totaled  $47.7  million at
        March  31,  1997  as compared to $48.9 million at December 31,  1996.
        The Company's operations generated approximately $3.4 million of cash
        through March 31, 1997.   The  Company's  primary uses of cash in the
        current year consisted of capital expenditures  of  $1.6  million and
        payments on long-term borrowings of $2.98 million.

        The   Company's   $42.5  million  revolving  credit  agreement  ("the
        agreement")  provides   available   liquidity   for  working  capital
        purposes, capital expenditures and letters of credit.   At  March 31,
        1997,  there  were  approximately  $11.3 million of letters of credit
        issued against the agreement leaving  approximately  $31.2 million of
        liquidity  available  to Avondale for operations and other  purposes.
        There  have been no borrowings  in  1997  under  the  agreement.   As
        discussed  below,  the Company amended its revolving credit agreement
        effective April 30,  1997.   Continuing  access  to  the agreement is
        conditioned  upon  the  Company  remaining  in  compliance  with  the
        covenants  which  include  certain financial ratios.  The Company  is
        currently in compliance with  the  covenants  contained therein.  The
        Company  believes that its capital resources will  be  sufficient  to
        finance current and projected operations.

        In order to comply with the terms of the LPD-17 contract, the Company
        will make  significant  capital expenditures, particularly to enhance
        its computer-aided design  and  product  modeling  capabilities.  The
        Company currently has sufficient cash and available  lines  of credit
        to  fund  these capital expenditures.  Nevertheless, the Company  and
        its banks agreed  to  increase  the  size  of  its  revolving  credit
        agreement to $85 million on April 30, 1997.  The increase in the size
        of  the  agreement  is  sufficient  to  allow the Company to fund the
        expenditures on an interim basis with borrowings  under the agreement
        while  preserving  the  current  level  of available liquidity.   The
        amended  agreement  provides  that  the available  credit  under  the
        agreement will be reduced to approximately  $50  million once a long-
        term financing for the LPD-17 expenditures is in place  (as discussed
        below) and, at the same time, the banks will eliminate all collateral
        except  their  second  mortgage  on  the  Company's 900-foot floating
        drydock.   In  addition,  the  amended  agreement  has  extended  the
        expiration  date  until  April  2000.  The Company  is  currently  in
        compliance  with  the covenants contained  in  its  revolving  credit
        agreement.

        The Company, in conjunction  with  the University of New Orleans (the
        "University"),  and  the  University  of  New  Orleans  Research  and
        Technology Foundation (the "Foundation"),  will  construct  a 200,000
        square  foot  building  on  property  currently  owned by the Company
        adjacent to the Company's main shipyard.  In addition,  the  purchase
        of hardware and software will be required in order to comply with the
        LPD-17 contract terms relating to the implementation of the extensive
        three-dimensional ship design and Integrated Product Data Environment
        teaming  technology.   The  initial investment in this new technology
        and  facility,  which will be known  as  the  "UNO/Avondale  Maritime
        Technology Center  of  Excellence,"  is estimated at $40 million, and
        will be financed by the Foundation using  third-party  debt  or lease
        financing  guaranteed by the Company.  The Company will enter into  a
        long-term lease  for  the  Center  requiring  a  nominal annual lease
        payment.   The  Company will provide access to the technology  and  a
        portion of the Center  to  the University for its use in research and
        the   development  of  educational   curricula   related   to   naval
        architecture and marine engineering.

        On May  2,  1997  at  the  request  of  the selling shareholder, the 
        Avondale  Employee  Stock  Ownership  Plan (the "ESOP"), the Company
        withdrew  its  registration  statement  on  Form  S-3 filed with the
        Securities  and  Exchange  Commission on March 17, 1997, relating to 
        three  million  shares  of  the  Company's  common  stock  of  which
        2,946,387  shares  were to be sold by the ESOP and 53,613 were to be
        sold by the Company.


                            PART II - OTHER INFORMATION



        Item 6.  Exhibits and Reports on Form 8-K

                 (a) Exhibits

                      3.1 Articles of Incorporation of the Company(1).

                      3.2 Bylaws of the Company(2).

                       15 Letter re: unaudited interim financial information.

                       27 Financial Data Schedule

                 (b) Reports on Form 8-K:

                          Not applicable.

        _______________

        (1)      Incorporated  by  reference  from  the  Company's  Quarterly
                 Report  on  Form 10-Q for the fiscal quarter ended June  30,
                 1993.

        (2)      Incorporated  by  reference  from  the  Company's  Quarterly
                 Report  on  Form 10-Q for the fiscal quarter ended September
                 30, 1995.


                                     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.



                                              AVONDALE INDUSTRIES, INC.


        Date: May 9, 1997               By:/s/ ALBERT L. BOSSIER, JR.
              -----------                      ----------------------
                                               Albert L. Bossier, Jr.
                                               Chairman, President &
                                                Chief Executive Officer


        Date: May 9, 1997               By:/s/ THOMAS M. KITCHEN
              -----------                      -----------------
                                               Thomas M. Kitchen
                                               Vice President &
                                                Chief Financial Officer
 


                                   EXHIBIT INDEX

        Number                    Description

         3.1    Articles of Incorporation  of the Company(1).

         3.2    Bylaws of the Company(2).

          15    Letter re: unaudited interim financial information.

          27    Financial Data Schedule


                _______________

                (1) Incorporated  by reference from  the  Company's  Quarterly
                    Report on Form 10-Q for the fiscal quarter ended June 30,
                    1993.

                (2) Incorporated by reference from the Company's Quarterly
                    Report on Form 10-Q for the fiscal quarter ended
                    September 30, 1995.