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 September 30, 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 September 30, 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 September 30, 1997
             Common stock, par
              value $1.00 per share       14,493,211  shares
<PAGE>
                      AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES

                                        INDEX


             Page No.

             Part I. Financial Information

                 Item 1.  Financial Statements

                     Independent Accountants' Report   

                     Consolidated Balance Sheets -
                     September 30, 1997 and December 31, 1996   

                     Consolidated Statements of Operations -
                     Quarters  and  Nine  Months Ended September 30, 1997
                     and 1996
                     
                     Consolidated Statements of Cash Flows -
                     Nine Months Ended September 30, 1997 and 1996   

                     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


<PAGE>
                 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
                 September  30,  1997 and for the three-month  and  nine-
                 month periods ended  September 30, 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
                 November 4, 1997

<PAGE>
                 PART I - FINANCIAL INFORMATION

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


                                                  September 30,    December 31,
                                                      1997             1996
                                                      ----             ----
             <S>                                    <C>            <C>
             ASSETS
             Current Assets:
              Cash and cash equivalents.........    $  66,142      $  48,944
              Receivables (Note 2):
               Accounts receivable..............       11,623         14,133
               Contracts in progress............       98,041        105,006
              Inventories:
               Goods held for sale..............       14,717         13,184
               Materials and supplies...........        7,590          8,601
              Deferred tax assets...............       17,962         30,157
              Prepaid expenses..................        3,977          2,465
                                                      -------        -------
               Total current assets.............      220,052        222,490
                                                      -------        -------

             Property, Plant and Equipment:
              Land..............................        7,890          7,984
              Construction in progress..........        6,820          6,934
              Buildings and improvements........       55,014         52,664
              Machinery and equipment...........      188,767        187,029
                                                      -------        -------
               Total ...........................      258,491        254,611

              Less accumulated depreciation.....     (133,454)      (127,009)
                                                      -------        -------
               Property, plant and
                 equipment - net................      125,037        127,602
                                                      -------        -------

             Goodwill - net.....................        5,456          8,073
             Other assets.......................        3,980          4,707
                                                      -------        -------
               Total assets.....................    $ 354,525      $ 362,872
                                                      =======        =======

             See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                              AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS
                                     (In thousands, except share data)
                                                 (UNAUDITED)


                                                  September 30,    December 31,
                                                      1997             1996
                                                      ----             ----     
             <S>                                    <C>            <C>
             LIABILITIES AND SHAREHOLDERS' EQUITY
             Current Liabilities:
              Current portion of long-term debt.    $   3,047      $   4,957
              Accounts payable .................       44,591         73,589
              Accrued employee compensation ....       17,185         11,919
              Other ............................       15,445         12,550
                                                      -------        ------- 
               Total current liabilities........       80,268        103,015

             Long-term debt.....................       51,819         54,866

             Deferred income taxes..............        7,011         10,300

             Other liabilities and
              deferred credits..................       13,692         12,838
                                                      -------        -------
              Total liabilities.................      152,790        181,019
                                                      -------        -------
             Commitments and contingencies (Note 4)

             Shareholders' Equity:
              Common stock, $1.00 par value,
               authorized 30,000,000 shares;
               issued - 15,956,227 shares in 1997
               and 15,927,191 shares in 1996....       15,956         15,927
             Additional paid-in capital.........      374,173        373,911
             Accumulated deficit ...............     (176,538)      (196,129)
                                                      -------        -------
             Total..............................      213,591        193,709
                                                   
             Treasury stock (common: 1,463,016
              shares in 1997 and 1996) at cost..     ( 11,856)      ( 11,856)
                                                      -------        -------
             Total shareholders' equity.........      201,735        181,853
                                                      -------        -------
             Total..............................    $ 354,525      $ 362,872
                                                      =======        =======
 
             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)



                                         Quarters               Nine Months
                                   Ended September 30,      Ended September 30, 
                                    1997        1996         1997        1996
                                    ----        ----         ----        ---- 
         <S>                     <C>         <C>          <C>         <C>

         Net sales...........    $ 159,217   $ 148,384    $ 444,522   $ 457,457

         Cost of sales.......      139,547     129,336      386,718     402,957
                                   -------     -------      -------     ------- 
         Gross profit........       19,670      19,048       57,804      54,500

         Selling, general and
          administrative expenses    8,720       9,811       25,689      28,136
                                   -------     -------      -------     ------- 
         Income from operations     10,950       9,237       32,115      26,364

         Interest expense....      ( 1,235)    ( 1,144)     ( 3,647)    ( 3,792)

         Other - net.........          905         719        2,223       2,066
                                   -------     -------      -------     -------
         Income before
          income taxes.......       10,620       8,812       30,691      24,638

         Income tax
          provision (Note 5).      ( 3,700)    ( 3,200)     (11,100)         -
                                   -------     -------      -------     -------
         Net income..........    $   6,920   $   5,612    $  19,591   $  24,638
                                   =======     =======      =======     =======

         Net income per share of
          common stock (Note 6)  $    0.48   $    0.39    $    1.35   $    1.70
                                   =======     =======      =======     ======= 

        Weighted average number
         of shares outstanding      14,493      14,464       14,493      14,464
                                   =======     =======      =======     ======= 

        See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                               AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                              NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                              (In thousands)
                                                (UNAUDITED)


                                                          1997          1996   
                                                         ------        ------ 
             <S>                                        <C>         <C>
             CASH FLOWS FROM OPERATING ACTIVITIES:
              Net income............................    $  19,591   $  24,638
              Adjustments to reconcile net income
               to net cash provided by operating
               activities:
               Depreciation and amortization........        8,558       8,063
               Deferred income taxes................       11,100          -
               Changes in operating assets
                and liabilities:
                Receivables.........................        9,475       4,577
                Inventories.........................         (522)     (3,397)
                Prepaid expenses and other assets...         (785)     (1,256)
                Accounts payable....................      (28,998)     (4,179)
                Accrued employee compensation
                 and other liabilities..............        9,015       1,932
                Other - net.........................          403        (168)
                                                          -------     -------
              Net Cash Provided by
               Operating Activities.................       27,837      30,210 
                                                          -------     -------
 
             CASH FLOWS FROM INVESTING ACTIVITIES:
              Capital expenditures..................       (5,686)    (11,179)
              Proceeds from sale of assets..........            4         455
              Other - net...........................          -           383
                                                          -------     ------- 
              Net Cash Used for Investing Activities       (5,682)    (10,341)
                                                          -------     -------
             CASH FLOWS FROM FINANCING ACTIVITIES:
              Payment of long-term borrowings.......       (4,957)     (5,832)
                                                          -------     -------
              Net Cash Used for Financing Activities       (4,957)     (5,832)
                                                          -------     -------
             Net increase in cash and cash equivalents     17,198      14,037
             Cash and cash equivalents at beginning
              of period.............................       48,944      38,524
                                                          -------     -------
             Cash and cash equivalents at end of period $  66,142   $  52,561
                                                          =======     ======= 

             Supplemental Disclosures of Cash Flow Information:
             Cash paid during the period for:
             Interest................................   $   3,509   $   3,536
                                                          =======     =======

             Income taxes...........................    $   1,200   $   1,560
                                                          =======     =======

             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 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.

             Certain  reclassifications of  prior year  amounts have been
             made to  conform to the current  year  presentation.   These
             reclassifications  were  made  for comparative purposes only
             and have no effect on net income as previously reported.

             2.  RECEIVABLES

             The   following   information   presents   the  elements  of
             receivables at September 30, 1997 and December  31, 1996 (in
             thousands):
<TABLE>
<CAPTION>
                                                            1997         1996  
                                                         ---------    ---------
              <S>                                        <C>           <C>     
              Long-term contracts:
               U.S. Government:
                Amounts billed.......................    $     483     $     859
                Unbilled costs, including retentions,
                 and estimated profits on contracts
                 in progress.........................       84,236        90,325
                                                         ---------     ---------
                    Total............................       84,719        91,184

               Commercial:
                Amounts billed.......................        3,399         7,274
                Unbilled costs, including retentions,
                 and estimated profits on contracts
                 in progress ........................       13,805        14,681
                                                         ---------     ---------
               Total from long-term contracts........      101,923       113,139
              Trade and other current receivables....        7,741         6,000
                                                         ---------     ---------
              Total..................................    $ 109,664     $ 119,139
                                                         =========     =========
</TABLE>
<PAGE>
             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  maintains a revolving  credit agreement  ("the
             agreement")  to  provide  available  liquidity  for  working
             capital  purposes,   capital  expenditures  and  letters  of 
             credit.   Upon  the  completion  by  the  Foundation  of its 
             financing for the Center (as discussed in Note 4 below), the
             agreement  was  reduced by its terms from $85 million to $50
             million.  The agreement expires in April 2000.  At September
             30,  1997,   there   were  approximately  $11.3  million  of
             letters   of  credit  issued  against  the agreement leaving
             approximately  $38.7  million  of  liquidity   available  to
             Avondale for operations and other purposes.  There have been
             no  borrowings  in 1997 under  the  agreement.    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.

             In October 1997, the Company and its bank group amended  the
             revolving  credit  agreement  to  increase  the  size of the
             facility  to  $65  million, release all collateral including
             its second mortgage  on  the  Company's 900-foot drydock and
             grant  the  Company  additional  flexibility  to  repurchase
             shares if authorized by the Board of Directors.

             4.  COMMITMENTS AND CONTINGENCIES

             Litigation

             As discussed in Note 10 of the Company's  Annual  Report  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 September 30, 1997 such costs  totaled  $18.8 million,
             of which the Company has funded approximately $4.0  million.
             Since 1988, the Funding Group has filed petitions to  add  a
             number of companies as third-party defendants with regard to
             the  remedial  action  and  has  agreed  to  settle with the
             majority  of  these companies.  All funds collected  through
             these  settlements   have   been  escrowed  to  fund  future
             expenses.  At September 30, 1997,  the balance of the escrow
             was $8.0 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.
<PAGE>
             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   adverse  impact  on  the  Company's  consolidated
             financial statements.   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%.

             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
             consolidated financial statements.

             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. Outstanding letters of  credit  relating  to
             these business  activities  amounted  to approximately $11.3
             million at September 30, 1997 and December 31, 1996.
<PAGE>
             Guarantee

             Pursuant  to  agreements  related to the University  of  New
             Orleans  ("UNO")/Avondale  Maritime   Technology  Center  of
             Excellence  ("the  Center"),  the  Company   has  agreed  to
             guarantee indebtedness with a principal amount not to exceed
             $40 million expected to be incurred by the UNO  Research and
             Technology   Foundation,   Inc.   (the   "Foundation")   for
             construction   of   the  facility  and  the  acquisition  of
             technology.  Under  the  terms  of  a  Cooperative  Endeavor
             Agreement,  the  State   of  Louisiana  made  a  non-binding
             commitment to appropriate  $40  million,  plus  interest, in
             installments  over  a  period  from  1997  through 2008  for
             donation  to  the  Foundation  for  purposes of funding  the
             Center.   Avondale  and  the  Foundation   anticipate   that
             appropriations  by  the  State will  be  sufficient  for the
             Foundation to service its debt.  However,  if   the  State's
             appropriations  are insufficient, Avondale  will  ultimately
             be  required to repay the debt.   The Company's guarantee is
             unsecured.   As  of September 30, 1997, the  Foundation  had
             incurred $12.4 million  of  cost  to construct and equip the
             Center.

             5.  INCOME TAXES

             The Company provides for income taxes  based  on the maximum
             statutory  rate  for  U.S.  corporations.  The provision  in
             1996, however, was offset by  certain adjustments related to
             deferred income taxes.  During  the  second quarter of 1996,
             the  deferred  tax  valuation  allowance decreased  by  $9.0
             million  based  on  current  evaluations  of  the  Company's
             expectations of the likelihood of future taxable income that
             would permit the utilization of its net operating loss carry
             forwards.   The $9.0 million for  1996  was  recorded  as  a
             reduction of  income tax expense.  Such benefit in the prior
             year  recognized   for   financial  reporting  purposes  the
             availability of net operating  loss carry forwards to offset
             estimated future earnings.  During 1997, no such benefit was
             recorded.

             6.  RECENT ACCOUNTING PRONOUNCEMENTS

             In February 1997, the Financial  Accounting  Standards Board
             ("FASB") 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.   The
             statement is effective for  financial statements for periods
             ending after December 15, 1997.  The Company will adopt SFAS
             128 in the fourth quarter of  1997, as early adoption is not
             permitted.  Had the provisions of SFAS 128 been in effect as
             of September 30, 1997, basic EPS  and diluted EPS would have
             been  equivalent  to  EPS  as  reported   in  the  Company's
             Consolidated Statements of Operations for 1997  and  1996 as
             presented herein.
<PAGE>
             In  June  1997,  the  FASB  issued  Statement  of  Financial
             Accounting   Standards  No.  130,  "Reporting  Comprehensive
             Income" ("SFAS 130").  SFAS 130 requires that all items that
             are required to  be recognized under accounting standards as
             components  of  comprehensive   income   be  reported  in  a
             financial  statement  that  is  displayed  with   the   same
             prominence  as  other financial statements.  The Company has
             not determined the  impact  that  the  adoption  of this new
             accounting standard will have on its consolidated  financial
             statements.  The Company will adopt this accounting standard
             January 1, 1998, as required.
<PAGE>
             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 September  30,  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  Company  continued  its  trend  of improvement  in  its
             operating results compared to the same  periods in the prior
             year.  Income from operations increased by 19% for the third
             quarter of 1997 and by 22% for the first nine months of 1997
             compared  to the same periods in the prior  year.   Further,
             income before  income  taxes  increased  21%  for  the third
             quarter  of  1997 and 25% for the first nine months of  1997
             over the same periods in 1996.

             The Company's  firm  backlog  at  September  30,  1997,  was
             approximately  $1.8  billion  (including  estimated contract
             escalation)  exclusive  of  unexercised options  aggregating
             $1.9 billion for additional ship  orders.   During the first
             nine  months of 1997, the Company delivered a  MHC-51  Class
             Coastal  Minehunter to the Navy, representing the fourth and
             final Minehunter  constructed  by the Company, and the final
             three  vessels  in  a contract to retrofit  four  commercial
             tankers with double-hulled  forebodies.  The  LSD-CV 52, the
             last  of  four  LSD-CVs constructed under two contracts,  is
             scheduled to be completed during the fourth quarter of 1997.

             As previously disclosed,  in  December  1996  a  Company-led
             alliance, which includes Bath Iron Works ("Bath") 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-17 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 to be built
             under the initial contract.   Work  on  the detail design of
             the LPD-17 is currently underway.

             In June 1997, the Company announced that  it  signed  a $332
             million  contract  for  the  construction of two 125,000 DWT
             crude oil carriers for the Jones  Act trade to be built with
             double hulls in compliance with the  Oil  Pollution  Act  of
             1990.  The contract also provides options exercisable by the
             customer  for  three additional ships.  Detail design of the
             ships has begun  with  construction  scheduled  to  start in
             December  of  1997.  Delivery of the first ship is scheduled
             for the first quarter of 2000.
<PAGE>
             Results of Operations

             The Company recorded  net  income  of $6.9 million, or $0.48
             per share, for the third quarter of  1997  compared  to $5.6
             million, or $0.39 per share, for the third quarter of  1996.
             For the first nine months of 1997, the Company recorded  net
             income  of  $19.6  million,  or $1.35 per share, compared to
             $24.6 million, or $1.70 per share  for  the  same  period in
             1996.  Net income for the first nine months of 1996 included
             an  income tax benefit of $9.0 million, or $0.62 per  share,
             which  recognized,  for  financial  reporting  purposes, the
             benefit   of  certain  net  operating  loss  carry  forwards
             available to  offset  estimated future earnings.  No similar
             benefit was recorded in 1997.

             Income from operations for the quarter and nine months ended
             September 30, 1997 increased  by  $1.7  million, or 19%, and
             $5.8 million, or 22%, respectively, compared  to  the  prior
             year  periods.   The Company's operating income in the third
             quarter and first  nine  months  of  1997  primarily reflect
             operating profits recognized on the contracts  to  construct
             five Strategic Sealift vessels, the Icebreaker and the  LSD-
             CV 52.  Profit recognition did not begin until September  of
             1996  for the Sealift and January of 1997 for the Icebreaker
             as contract  progress  was  not  sufficient  to begin profit
             recognition until that time.  Also contributing  to the 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 losses  recorded  on
             two commercial  marine  construction  contracts.  During the
             first   and  third  quarters  of  1997,  Avondale   recorded
             additional   losses   of  $2.5  million  and  $1.8  million,
             respectively, on the contract to retrofit four single-hulled
             commercial tankers with  new double-hulls (the last of which
             was delivered in September  1997).   Also,  during the third
             quarter  of  1997,  the Company recorded an additional  $1.5
             million  loss  on the contract  to  construct  river  hopper
             barges (the last  of  which  is  expected to be completed in
             November   1997).   The  losses  resulted   primarily   from
             increases in  the  estimated  labor needed to complete these
             contracts.

             Net  sales for the third quarter  of  1997  increased  $10.8
             million, or 7%, to $159.2 million compared to $148.4 million
             for the  third  quarter  of 1996.  The increase in net sales
             for the third quarter of 1997  is  primarily  a result of an
             increase  in  production activity on contracts currently  in
             progress.   In  the  third  quarter  of  1997,  the  Company
             recorded increased  net  sales on the contracts to construct
             the five Strategic Sealift Ships, the LPD-17, the Icebreaker
             and  the  two  double-hulled   crude  oil  carriers.   These
             increases  were  partially offset  by  decreased  net  sales
             recorded on the contracts  to  construct  the  four  double-
             hulled product tankers, the seven T-AOs, the LSD-CV 52,  the
             four MHCs, the three LSD-CVs and the river hopper barges.
<PAGE>
             Net  sales  for  the  nine  months ended September 30, 1997,
             decreased $12.9 million, or 3%,  to  $444.5 million compared
             to $457.5 million for the same period  in  the  prior  year.
             The  decrease in net sales for the first nine months of 1997
             is due  primarily  to  a  reduction  in  production activity
             associated  with  contracts that are at or near  completion.
             The Company recorded decreased net sales on the contracts to
             construct the four  doubled-hulled product tankers (the last
             of which was delivered  in  September 1997), the seven T-AOs
             (the last of which was delivered  in January 1997), the LSD-
             CV 52 (expected to be completed during the fourth quarter of
             1997), the three LSD-CVs (the last of which was delivered in
             May 1996) and the river hopper barges  (the last of which is
             expected to be completed in November 1997).  These decreases
             were  offset  by increased net sales recorded  on  contracts
             currently in progress as noted in the preceding paragraph.

             Gross profit for  the third quarter and first nine months of
             1997 increased $622,000,  or  3%,  and  $3.3 million, or 6%,
             respectively,  compared to the same periods  in  1996.   The
             increases are due  primarily  to  profits  recognized on the
             contracts to construct the five Strategic Sealift  ships and
             the  Icebreaker.  These incremental profits were offset,  in
             part, by the losses discussed above.

             Selling,   general   and  administrative  ("SG&A")  expenses
             decreased $1.1 million, or 11%, in the third quarter of 1997
             and $2.4 million, or 9%,  for  the first nine months of 1997
             compared  to  the  same  periods in  the  prior  year.   The
             decrease in SG&A expenses was due primarily to a decrease in
             proposal preparation costs  recorded  in  1996 in connection
             with the preparation of the successful LPD-17 proposal.

             In February 1997, the Financial Accounting  Standards  Board
             ("FASB")  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.   The
             statement is effective for financial  statements for periods
             ending after December 15, 1997.  The Company will adopt SFAS
             128 in the fourth quarter of 1997, as early  adoption is not
             permitted.  Had the provisions of SFAS 128 been in effect as
             of September 30, 1997, basic EPS and diluted EPS  would have
             been   equivalent  to  EPS  as  reported  in  the  Company's
             Consolidated  Statements  of Operations for 1997 and 1996 as
             presented elsewhere in this Form 10-Q.

             In  June  1997,  the  FASB  issued  Statement  of  Financial
             Accounting  Standards  No.  130,   "Reporting  Comprehensive
             Income" ("SFAS 130").  The Company has  not  determined  the
             impact  that  the  adoption  of this new accounting standard
             will  have on its consolidated  financial  statements.   The
             Company will adopt this accounting standard January 1, 1998,
             as required.   Refer  to Note 6 of the Notes to Consolidated
             Financial Statements, contained elsewhere in this Form 10-Q,
             for a discussion of SFAS 130.
<PAGE>
             Liquidity and Capital Resources

             The  Company's  cash  and  cash  equivalents  totaled  $66.1
             million at September 30,  1997  as compared to $48.9 million
             at  December 31, 1996.  The Company's  operations  generated
             approximately  $27.8  million  of  cash  for the nine months
             ended  September  30, 1997.  The Company's primary  uses  of
             cash in the current  year  consisted of capital expenditures
             of $5.7 million and payments on long-term borrowings of $5.0
             million.

             The  Company  maintains  a revolving credit  agreement ("the
             agreement")  to  provide  available  liquidity  for  working
             capital  purposes,   capital  expenditures  and  letters  of
             credit.   Upon  the  completion  by  the  Foundation  of its
             financing for the Center (as discussed below), the agreement
             was  reduced by  its terms from $85 million  to $50 million.
             The  agreement  expires  in  April 2000.  At  September  30,
             1997,  there were approximately  $11.3  million  of  letters
             of credit issued against the agreement leaving approximately
             $38.7  million   of   liquidity  available  to Avondale  for
             operations   and   other   purposes.  There   have  been  no
             borrowings under the agreement since its inception in  1994.
             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 October 1997, the Company and  its bank group amended the
             revolving  credit  agreement to increase  the  size  of  the
             facility to $65 million,  release  all  collateral including
             its  second mortgage on the Company's 900-foot  drydock  and
             grant  the  Company  additional  flexibility  to  repurchase
             shares if authorized by the Board of Directors.
<PAGE>
             In  order  to  comply with the terms of the LPD-17 contract,
             the  Company  was   required  to  make  significant  capital
             improvements, including  enhancing its computer-aided design
             and product modeling capabilities.  As a result, the Company
             teamed with the University  of New Orleans (the "University"
             or  "UNO"),  the  University of  New  Orleans  Research  and
             Technology Foundation,  Inc.  (the  "Foundation"),  and  the
             State of Louisiana in a cooperative effort.  Pursuant to the
             terms  of  various  agreements, the Foundation is purchasing
             hardware and software  required  to  implement the extensive
             three-dimensional  ship design and Integrated  Product  Data
             Environment teaming technology and is constructing a 200,000
             square foot building  on property, donated to the University
             by the Company, adjacent to the Company's main shipyard. The
             initial  investment in this  new  technology  and  facility,
             which will be known as the "UNO/Avondale Maritime Technology
             Center of  Excellence"  (the  "Center"), is estimated at $40
             million and is being financed by the Foundation using third-
             party debt and lease financing  both of which are guaranteed
             by  the Company. The Company has entered  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.

             The Foundation  is  the nominal borrower on all indebtedness
             incurred to construct and equip the Center.  Under the terms
             of a Cooperative Endeavor  Agreement, the State of Louisiana
             made a non-binding commitment  to  appropriate  $40 million,
             plus  interest,  in  installments  over  a period from  1997
             through 2008 for donation to the Foundation  for purposes of
             funding the Center.  Avondale and the Foundation  anticipate
             that   appropriations   by   the   State  will be sufficient
             for  the  Foundation  to  service its debt.  However, if the
             State's   appropriations  are  insufficient,  Avondale  will
             ultimately  be  required  to  repay the debt.  The Company's
             guarantee  is  unsecured.   As  of  September  30, 1997, the
             Foundation  had incurred $12.4 million of cost to  construct
             and equip  the Center.  Also, as of September 30, 1997,  the
             State had appropriated and paid  $3.8  million, representing
             the  first  installment  to the Foundation, pursuant to  the
             terms of the Cooperative Endeavor Agreement.

<PAGE>
             *Cautionary   Statement   for  Purposes  of   "Safe  Harbor"
             Provisions  of the Private  Securities Litigation Reform Act
             of 1995

             Certain  statements,  other  than  statements  of historical
             fact,  contained in this Quarterly Report on Form  10-Q  are
             forward-looking   statements   as  defined  in  the  Private
             Securities Litigation Reform Act  of  1995.   These forward-
             looking statements are generally accompanied by  such  terms
             and   phrases   as  "anticipates,"  "estimates,"  "expects,"
             "believes," "should,"  "projects"  or "scheduled" or similar
             statements.   Although   the  Company  believes   that   the
             expectations reflected in  such  forward-looking  statements
             are   reasonable,   it  can  give  no  assurance  that  such
             expectations will prove  to  have  been  correct.  Important
             factors  that  could cause the Company's results  to  differ
             materially from  the  results  discussed  in  such  forward-
             looking  statements  include the Company's reliance on  U.S.
             Navy contracts, profit  recognition on government contracts,
             the  importance  of  obtaining   commercial  contracts,  the
             Company's ability to complete its  contracts within its cost
             estimates, intense competition for government and commercial
             contracts,  and labor, regulatory and  other  risks  in  the
             shipbuilding   and   marine  construction  industries.   All
             forward-looking statements  in  this Form 10-Q are expressly
             qualified in their entirety by the  cautionary statements in
             this paragraph.

<PAGE>
                             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, as amended on August 4,
                           1997.

                       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.


<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.



                                              AVONDALE INDUSTRIES, INC.


             Date:  November 12, 1997       By:/s/ ALBERT L. BOSSIER, JR.
                    -----------------          --------------------------
                                               Albert L. Bossier, Jr.
                                               Chairman, President &
                                                Chief Executive Officer




             Date:  November 12, 1997       By:/s/ THOMAS M. KITCHEN
                    -----------------          --------------------------
                                               Thomas M. Kitchen
                                               Vice President &
                                               Chief Financial Officer
        


<PAGE>
                                    EXHIBIT INDEX


   Number                    Description
   ------    ---------------------------------------------------

     3.1     Articles of Incorporation of the Company(1) .

     3.2     Bylaws of the Company, as amended on August 4, 1997

      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.
<PAGE>