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, 1998

        [    ]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, 1998

        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, 1998
        --------------------------------------- ------------------------------
        Common stock, par value $1.00 per share       14,493,211 shares
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
<PAGE>
                                       INDEX


                                                                  Page No.

        Part I. Financial Information

            Item 1.  Financial Statements

                Independent Accountants' Report                           1

                Consolidated Balance Sheets -
                March 31, 1998 and December 31, 1997                      2

                Consolidated Statements of Operations -
                Three Months Ended March 31, 1998 and 1997                4

                Consolidated Statements of Cash Flows -
                Three Months Ended March 31, 1998 and 1997                5

                Notes to Consolidated Financial Statements                6

            Item 2.  Management's Discussion and Analysis of
                     Financial Condition and Results of Operations       10

        Part II. Other Information                                       14

            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  March  31,  1998  and  for the three-month
        periods  ended  March 31, 1998 and 1997.  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, 1997, 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  20,  1998,  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,  1997  is  fairly  stated,  in  all material
        respects, in relation to the consolidated balance sheet from which it
        has been derived.


        /S/ DELOITTE & TOUCHE LLP
        DELOITTE & TOUCHE LLP
        New Orleans, Louisiana

        April 22, 1998
<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)


                                                                 March 31,         December 31,
                                                                    1998               1997
                                                                 ---------          ---------
        <S>                                                      <C>                <C>
        ASSETS
        Current Assets:
          Cash and cash equivalents........................      $ 101,060          $  81,752
          Receivables (Note 2):
            Accounts receivable............................         19,369             13,162
            Contracts in progress..........................         74,951             88,584
          Inventories:
            Goods held for sale............................         10,704             14,915
            Materials and supplies.........................          8,660              8,311
          Deferred tax assets..............................         18,728             23,253
          Prepaid expenses.................................          4,451              2,891
                                                                 ---------          ---------
            Total current assets...........................        237,923            232,868
                                                                 ---------          ---------
        Property, Plant and Equipment:

          Land.............................................          7,989              7,843
          Buildings and improvements.......................         56,231             55,917
          Machinery and equipment..........................        204,629            200,777
                                                                 ---------          ---------
            Total..........................................        268,849            264,537

          Less accumulated depreciation....................       (136,565)          (134,481)
                                                                 ---------          ---------
            Property, plant and equipment - net............        132,284            130,056
                                                                 ---------          ---------          
        Goodwill - net.....................................          5,258              5,357
        Other assets.......................................          7,270              7,334
                                                                 ---------          ---------
            Total assets...................................      $ 382,735          $ 375,615
                                                                 =========          =========
        See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
                                    (UNAUDITED)

                                                                 March 31,         December 31,
                                                                    1998               1997
                                                                 ---------          ---------
        <S>                                                      <C>                <C>
        LIABILITIES AND SHAREHOLDERS' EQUITY
        Current Liabilities:
          Current portion of long-term debt................      $   3,047          $   3,047
          Accounts payable.................................         54,461             59,548
          Accrued employee compensation....................         15,916             13,198
          Other............................................         14,780             11,851
                                                                 ---------          ---------
            Total current liabilities......................         88,204             87,644

        Long-term debt.....................................         50,838             51,819

        Deferred income taxes..............................         13,400             13,400

        Other liabilities and deferred credits.............         13,939             13,775
                                                                 ---------          ---------
          Total liabilities................................        166,381            166,638
                                                                 ---------          ---------
        Commitments and contingencies (Note 5)

        Shareholders' Equity:
          Common stock, $1.00 par value,
            authorized 30,000,000 shares; issued -
            15,956,227 shares in 1998 and 1997.............         15,956             15,956
          Additional paid-in capital.......................        374,173            374,173
          Accumulated deficit..............................       (161,919)          (169,296)
                                                                 ---------          ---------
            Total..........................................        228,210            220,833

          Treasury stock (common: 1,463,016 shares
            in 1998 and 1997) at cost......................        (11,856)           (11,856)
                                                                 ---------          ---------
          Total shareholders' equity.......................        216,354            208,977
                                                                 ---------          ---------
          Total liabilities and shareholders' equity.......      $ 382,735          $ 375,615
                                                                 =========          =========
        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,
                                                                    1998               1997
                                                                 ---------          ---------
          <S>                                                    <C>           <C>
          Net sales........................................      $ 184,625          $ 139,513

          Cost of sales....................................        164,497            120,880
                                                                 ---------          ---------
          Gross profit.....................................         20,128             18,633

          Selling, general and administrative expenses.....          8,313              8,334
                                                                 ---------          ---------
          Income from operations...........................         11,815             10,299

          Interest expense.................................         (1,137)            (1,217)

          Other - net......................................          1,224                609
                                                                 ---------          ---------
          Income before income taxes.......................         11,902              9,691

          Income taxes.....................................          4,525              3,400
                                                                 ---------          ---------
          Net income.......................................      $   7,377          $   6,291
                                                                 =========          =========
          Income per share of common stock (Note 4):

          Net income per share of common stock - basic.....      $    0.51          $    0.43
                                                                 =========          =========
          Weighted average number of
            shares outstanding - basic.....................         14,493             14,483
                                                                 =========          =========

          Net income per share of common stock - diluted...      $    0.51          $    0.43
                                                                 =========          =========
          Weighted average number of
            shares outstanding - diluted...................         14,575             14,500
                                                                 =========          =========
          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, 1998 AND 1997
                                   (In thousands)
                                    (UNAUDITED)

                                                                    1998               1997
                                                                 ---------          ---------
        <S>                                                      <C>                <C>                
        CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income.......................................      $   7,377          $   6,291
          Adjustments to reconcile net income to net cash
            provided by operating activities:
            Depreciation and amortization..................          2,183              2,853
            Deferred income taxes..........................          4,525              3,400
            Changes in operating assets and liabilities:
              Receivables..................................          7,426             10,141
              Inventories..................................          3,862             (2,359)
              Prepaid expenses and other assets............         (1,496)             1,050
              Accounts payable.............................         (5,087)           (20,059)
              Accrued employee compensation
                and other liabilities......................          5,811              1,776
              Other - net..................................            -                  291
                                                                 ---------          ---------
            Net Cash Provided by
              Operating Activities.........................         24,601              3,384
                                                                 ---------          ---------
        CASH FLOWS FROM INVESTING ACTIVITIES:
          Capital expenditures.............................         (4,312)            (1,610)
                                                                 ---------          ---------
          Net Cash Used for Investing Activities...........         (4,312)            (1,610)
                                                                 ---------          ---------
        CASH FLOWS FROM FINANCING ACTIVITIES:
          Payment of long-term borrowings..................           (981)            (2,981)
                                                                 ---------          ---------
          Net Cash Used for Financing Activities...........           (981)            (2,981)
                                                                 ---------          ---------
        Net increase (decrease) in cash
          and cash equivalents.............................         19,308             (1,207)
        Cash and cash equivalents at beginning of period...         81,752             48,944
                                                                 ---------          ---------
        Cash and cash equivalents at end of period.........      $ 101,060          $  47,737
                                                                 =========          =========
        Supplemental Disclosures of Cash Flow Information:
        Cash paid during the period for:
        Interest...........................................      $     776          $   1,058
                                                                 =========          =========

        Income taxes.......................................      $   1,300          $     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, 1997 audited financial  statements and related notes
        filed on Form 10-K for the year ended December  31,  1997  (the "1997
        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
        March 31, 1998 and December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
                                                                    1998               1997
                                                                 ---------          ---------
            <S>                                                  <C>                <C>
            Long-term contracts:
              U.S. Government:
                Amounts billed.............................      $   3,481          $     967
                Unbilled costs, including retentions, and
                  estimated profits on contracts in
                  progress.................................         65,403             80,041
                                                                 ---------          ---------
                  Total....................................         68,884             81,008

              Commercial:
                Amounts billed.............................          6,288              4,180
                Unbilled costs, including retentions, and
                  estimated profits on contracts in
                  progress.................................          9,548              8,543
                                                                 ---------          ---------
              Total from long-term contracts...............         84,720             93,731
            Trade and other current receivables............          9,600              8,015
                                                                 ---------          ---------
            Total..........................................      $  94,320          $ 101,746
                                                                 =========          =========
</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.
<PAGE>
        3.  FINANCING ARRANGEMENTS

        The   Company's   $65   million   revolving  credit  agreement  ("the
        agreement") provides liquidity for  working capital purposes, capital
        expenditures and letters of credit.   At  March  31, 1998, there were
        approximately $11.3 million of letters of credit issued  against  the
        agreement  leaving approximately $53.7 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 contained therein.   At
        March 31, 1998, the Company  is  currently  in  compliance  with such
        covenants.

        4.EARNINGS PER SHARE

        In  accordance  with  Statement  of  Financial  Accounting  Standards
        Number 128, "Earnings  Per  Share", the Company changed its method of
        calculating earnings per share ("EPS") during 1997.   The  number  of
        weighted average shares outstanding for "basic"  EPS  was  14,493,211
        and 14,482,799 for the three months  ended  March  31, 1998 and 1997,
        respectively.  The number of weighted average shares  outstanding for
        "diluted"  EPS  was  14,575,258  and 14,499,510 for the three  months
        ended  March  31,  1998 and 1997, respectively.   The  difference  in
        weighted average shares outstanding of 82,047 and 16,711 for 1998 and
        1997, respectively, relate to stock appreciation rights and options.

        5.COMMITMENTS AND CONTINGENCIES

        Litigation

        As  discussed in Note  9  of  the  Notes  to  Consolidated  Financial
        Statements included in the 1997 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, 1998 such  costs
        totaled approximately $19.0 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 are
        placed in  escrow  to  fund  future expenses.  At March 31, 1998, the
        balance of the escrow was $8.5  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.  There
        are additional settlements being  negotiated  which should 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  impact  on the Company's
        financial statements. In addition, the Company and other  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 will not exceed 17.5%.

        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 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.
<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  the  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 2007 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  March  31,  1998, the
        Foundation had incurred $21.7 million of cost to construct and  equip
        the Center.  In connection with its non-binding commitment, the State
        appropriated  and  paid  $3.8  million  during 1997, representing the
        first installment to the Foundation.

        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 $35.4 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,  1998 and
        December 31, 1997.


        6. RECENT ACCOUNTING PRONOUNCEMENTS

        During   1997,   the  Financial  Accounting  Standards  Board  issued
        Statement of Financial  Accounting  Standards Number 131 "Disclosures
        about  Segments  of  an  Enterprise and Related  Information"  ("SFAS
        131").  SFAS 131 establishes  standards  for  disclosure of operating
        segments, products, services, geographic areas  and  major customers.
        The  Company  is  required  to  adopt this standard for fiscal  1998.
        Management believes that the implementation of SFAS 131 will not have
        a  material impact on the presentation  of  the  Company's  financial
        statements but may require additional disclosure.
<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  March  31,  1998  and  1997  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, 1997 (the "1997 Form 10-K").

        Overview

        The trend of improvement in the Company's operating results continued
        in the first quarter  ended  March  31, 1998.  Income from operations
        and net income increased by 15% and 17%, respectively,  for the first
        quarter of 1998 compared to the same period in the prior year.

        The Company's firm backlog at March 31,  1998  was approximately $1.7
        billion  (including  estimated  contract  escalation)   exclusive  of
        unexercised  options aggregating approximately $1.1 billion  held  by
        the U.S. Navy  (the "Navy") (including estimated contract escalation)
        and approximately  $500  million  held  by  a commercial customer for
        additional  ship  orders.   In February 1998, the  Navy  exercised  a
        portion of its option for a seventh Strategic Sealift vessel relating
        to approximately $24 million  for  long  lead  time  materials.   The
        balance  of  this  option is exercisable by the Navy during the first
        quarter of 1999.  During  the  first  quarter  of  1998,  the Company
        delivered the LSD-CV 52 to the Navy representing the fourth and final
        ship  of  this  class constructed by the Company under two contracts.
        Other ships expected  to  be  completed during 1998 include the first
        two of a contract to construct six Strategic Sealift ships.
<PAGE>
        As previously disclosed, in December  1996  the  Navy awarded, and in
        April  1997 the General Accounting Office affirmed,  a  $641  million
        contract  to  a  Company-led alliance, which includes Bath Iron Works
        ("Bath") and Raytheon  Company  ("Raytheon"), 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  class   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  class ships to be built under  the  initial  contract.
        Raytheon is responsible  for  total ship integration and the alliance
        is  using  an  advanced three-dimensional  ship  design  and  product
        modeling technology  for  the design and manufacture of the ship.  As
        the  prime contractor under  the  LPD-17  contract,  the  Company  is
        required  to  report in its financial statements as sales and cost of
        sales the entire  contract  amount  for  each  vessel  in  the LPD-17
        program  constructed  by  the  alliance.   Under  the  subcontracting
        agreements  entered  into  between the Company and each of  Bath  and
        Raytheon, the award fees that can be earned under the LPD-17 contract
        are distributable among the  alliance  members  in proportion to each
        member's  performance  and participation in the construction  of  the
        vessel for which the award  was  granted.   To  the  extent  that the
        Company's revenues include costs incurred and award fees paid  to the
        other  alliance members, such revenues will be recorded with no gross
        profit margin.

        Results of Operations

        The Company recorded net income for the first quarter of 1998 of $7.4
        million,  or  $0.51  per  share  basic  and diluted, compared to $6.3
        million, or $0.43 per share basic and diluted,  for the first quarter
        of 1997.  Income from operations increased 15% in  the  first quarter
        of  1998  to  $11.8 million compared with $10.3 million in the  first
        quarter of 1997.

        The improvement  in  the  Company's  operating  results for the first
        three  months  of  1998  compared to the prior year period  primarily
        reflect operating profits  recognized  on  the contracts to construct
        the six Strategic Sealift ships, the Icebreaker  and  the  LSD-CV 52.
        Also  contributing  to the first quarter 1998 operating results  were
        profits  recorded  by  the   Company's   wholesale   steel,   modular
        construction and marine repair operations.
<PAGE>
        Net  sales for the first quarter of 1998 increased $45.1 million,  or
        32%, to  $184.6  million  compared  to  $139.5  million for the first
        quarter of 1997.  The increase in net sales in the current quarter is
        primarily a result of increased costs associated  with  contracts  in
        the  initial  stages of construction.  The Company recorded increased
        net sales on the  contracts  to  construct  the six Strategic Sealift
        ships (the last two of which are expected to  be  delivered in 2000),
        the two 125,000 DWT double-hulled crude oil carriers  (both  of which
        are  scheduled  for delivery in 2000) and the LPD-17 (expected to  be
        delivered in 2002).   These  contracts  are  in the initial stages of
        construction resulting in significant engineering design and material
        acquisition costs.  The increases noted above  were  partially offset
        by decreased net sales recorded on the contracts that  are at or near
        completion.  The Company recorded decreased net sales on the contract
        to  retrofit  four  single-hulled commercial tankers with new  double
        hulls (the last of which  was  delivered  in  September 1997) and the
        contracts to construct the LSD-CV 52 (delivered  in  February  1998),
        the  100  river  hopper  barges  (the  last of which was delivered in
        November  1997) and the four coastal MHCs  (the  last  of  which  was
        delivered in January 1997).

        Gross profit for the first quarter of 1998 increased $1.5 million, or
        8%, compared to the same period in 1997 while the gross profit margin
        decreased approximately 2.5%.  The decrease in gross profit margin is
        primarily attributable  to  the  fact  that  the  LPD-17  and the two
        double-hulled  crude  oil  carriers  are  in  the  initial stages  of
        contract  performance which result in significant engineering  design
        and  material   acquisition  costs  recorded  as  net  sales  without
        corresponding gross  profit  margins.   The  Company  does  not begin
        profit   recognition  until  final  results  can  be  estimated  with
        reasonable accuracy.  Refer to the 1997 Form 10-K for a discussion of
        the Company's  policies  and  procedures for revenue recognition.  In
        addition, the Company includes  costs incurred and award fees paid to
        other members of the alliance in the LPD-17 program as sales and cost
        of sales with no gross profit margin.

        Selling, general and administrative  ("SG&A")  and  interest expenses
        were consistent with the same period of prior year.   The improvement
        in  other  income,  which  doubled to approximately $1.2 million,  is
        primarily attributable to an  increase  in  interest income resulting
        from  significantly  higher cash and cash equivalents  available  for
        investment during the first quarter of 1998.

        During  1997,  the  Financial   Accounting   Standards  Board  issued
        Statement of Financial Accounting Standards Number  131  "Disclosures
        about  Segments  of  an  Enterprise  and  Related Information" ("SFAS
        131").  SFAS 131 establishes standards for  disclosure  of  operating
        segments,  products,  services, geographic areas and major customers.
        The Company is required  to  adopt  this  standard  for  fiscal 1998.
        Management believes that the implementation of SFAS 131 will not have
        a  material  impact  on  the  presentation of the Company's financial
        statements but may require additional disclosure.
<PAGE>
        In  accordance  with the U.S. Securities  and  Exchange  Commission's
        Staff Legal Bulletin No. 5, the Company has assessed both the cost of
        addressing  and the  costs  or  the  consequences  of  incomplete  or
        untimely resolution of the Year 2000 issue and has determined that it
        is not material  to  the  Company's business, operations or financial
        condition.

        In  addition,  the  Company  is   in   the   process   of  initiating
        communications with its significant suppliers and large  customers to
        determine  the  extent  to  which the Company is vulnerable to  those
        third parties' failure to remediate  their own Year 2000 issues.  The
        Company can give no assurance that the  systems of other companies on
        which the Company relies will be converted on time or that failure to
        convert by another company would not have  a  material adverse effect
        on the Company.

        Liquidity and Capital Resources

        The  Company's cash and cash equivalents totaled  $101.1  million  at
        March  31,  1998  as  compared to $81.8 million at December 31, 1997.
        The Company's operations  generated  approximately  $24.6  million of
        cash during the quarter ended March 31, 1998.  The Company's  primary
        uses of cash in the current year consisted of capital expenditures of
        $4.3  million  and  payments on long-term borrowings of approximately
        $981,000.

        The  Company's  $65  million   revolving   credit   agreement   ("the
        agreement")  provides liquidity for working capital purposes, capital
        expenditures and  letters  of  credit.  At March 31, 1998, there were
        approximately $11.3 million of letters  of  credit issued against the
        agreement leaving approximately $53.7 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  contained  therein.   At
        March 31, 1998,  the  Company  was in compliance with such covenants.
        The Company believes that its capital resources will be sufficient to
        finance current and projected operations.
<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
        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  and  located
        adjacent  to  the Company's main shipyard.  This facility is expected
        to be completed  during  the second quarter of 1998.  The initial $40
        million investment in this new technology and facility, which will be
        known as the "UNO/Avondale  Maritime Technology Center of Excellence"
        (the "Center"), 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.
        During the remainder of 1998, the Company expects to spend additional
        amounts in order to complete the customization of the design software
        to comply with the LPD-17 requirements.

        The  Foundation  is  the  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 2007 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
        March 31, 1998, the Foundation  had incurred $21.7 million of cost to
        construct and equip the Center.   Also,  as  of  March  31, 1998, the
        State has 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,
        including its ability to replenish its backlog by securing additional
        contracts  from  the  U.S.  Navy,  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(2).

                     10.3 Employee Benefit Plans

                           (g) The  Amended  and  Restated Avondale  Services
                               Corporation Executive Group Insurance Benefits
                               Plan and Summary Plan  Description  specifying
                               the excess insurance benefits provided  to the
                               Company's executive officers and certain other
                               key  personnel,  and a summary description  of
                               health, accidental  death  and  dismemberment,
                               disability  and  life insurance benefits  made
                               available  to  employees   dated  October  14,
                               1997(2) as amended by Amendment  No.  1  dated
                               March 23, 1998.

                     10.4 Employment Agreements

                           (a) Employment Agreement dated March 23, 1998,  by
                               and between the Company and Albert L. Bossier,
                               Jr. the term of which extends through December
                               31, 2000.

                           (b) Employment  Agreement dated March 23, 1998, by
                               and between the  Company and Thomas M. Kitchen
                               the term of which extends through December 31,
                               2000.

                           (c) Employment Agreement  dated March 23, 1998, by
                               and between the Company  and Kenneth B. Dupont
                               the term of which extends through December 31,
                               2000.

                           (d) Amended   and  Restated  Change   of   Control
                               Agreement  dated  January  19,  1996,  by  and
                               between the  Company  and  Albert  L. Bossier,
                               Jr.(3)  as  amended  by Amendment No. 1  dated
                               March 23, 1998.

                           (e) Amended   and  Restated  Change   of   Control
                               Agreement  dated  January  19,  1996,  by  and
                               between the  Company  and Thomas M. Kitchen(3)
                               as amended by Amendment  No. 1 dated March 23,
                               1998.
<PAGE>
                           (f) Amended   and  Restated  Change   of   Control
                               Agreement  dated  January  19,  1996,  by  and
                               between the  Company  and Kenneth B. Dupont(3)
                               as amended by Amendment  No. 1 dated March 23,
                               1998.

                           (h) Employment Agreement dated  March  5, 1998, by
                               and between the Company and R. Dean Church the
                               term  of  which  extends through December  31,
                               2000.

                           (I) Employment Agreement  dated March 23, 1998, by
                               and between the Company  and Thomas H. Doussan
                               the term of which extends through December 31,
                               2000.

                           (j) Employment Agreement dated  March 23, 1998, by
                               and between the Company and Ronald  J. McAlear
                               the term of which extends through December 31,
                               2000.

                           (k) Employment Agreement dated March 23,  1998, by
                               and between the Company and Edmund C. Mortimer
                               the term of which extends through December 31,
                               2000.

                           (l) Change  of  Control  Agreement dated March  5,
                               1998, by and between the  Company  and R. Dean
                               Church.

                           (m) Change  of  Control Agreement dated March  23,
                               1998, by and between the Company and Thomas H.
                               Doussan.

                           (n) Change of Control  Agreement  dated  March 23,
                               1998, by and between the Company and Ronald J.
                               McAlear.

                           (o) Change  of  Control Agreement dated March  23,
                               1998, by and between the Company and Edmund C.
                               Mortimer.

                       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>
        (2)      Incorporated  by  reference from the Company's Annual Report
                 on Form 10-K for the fiscal year ended December 31, 1997.

        (3)      Incorporated  by  reference  from  the  Company's  Quarterly
                 Report on Form 10-Q  for  the fiscal quarter ended March 31,
                 1996.

<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: May 4, 1998                By: /s/  ALBERT L. BOSSIER, JR.
              -----------                    ---------------------------
                                                  Albert L. Bossier, Jr.
                                                  Chairman, President &
                                                   Chief Executive Officer





        Date: May 4, 1998                By: /s/ THOMAS M. KITCHEN
              -----------                    ---------------------
                                                 Thomas M. Kitchen
                                                 Corporate 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(2).

        10.3     Employee Benefit Plans

                 (g) The  Amended  and Restated Avondale Services Corporation
                     Executive Group Insurance Benefits Plan and Summary Plan
                     Description specifying  the  excess  insurance  benefits
                     provided to the Company's executive officers and certain
                     other  key  personnel,  and  a  summary  description  of
                     health,  accidental  death and dismemberment, disability
                     and life insurance benefits  made available to employees
                     dated October 14, 1997(2) as amended  by Amendment No. 1
                     dated March 23, 1998.

        10.4     Employment Agreements

                 (a) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Albert L. Bossier,  Jr. the term
                     of which extends through December 31, 2000.

                 (b) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Thomas M.  Kitchen  the  term of
                     which extends through December 31, 2000.

                 (c) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Kenneth B. Dupont  the  term  of
                     which extends through December 31, 2000.

                 (d) Amended  and Restated  Change of Control Agreement dated
                     January  19, 1996, by and between the Company and Albert
                     L. Bossier,  Jr.(3)  as amended by Amendment No. 1 dated
                     March 23, 1998.

                 (e) Amended  and Restated  Change of Control Agreement dated
                     January 19, 1996, by and  between the Company and Thomas
                     M. Kitchen(3) as amended by  Amendment No. 1 dated March
                     23, 1998.

                 (f) Amended  and Restated Change of  Control Agreement dated
                     January 19, 1996, by and between the Company and Kenneth
                     B. Dupont(3) as amended by Amendment  No.  1 dated March
                     23, 1998.

                 (h) Employment  Agreement  dated  March  5,  1998,  by   and
                     between the Company and R. Dean Church the term of which
                     extends through December 31, 2000.
<PAGE>
                 (i) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Thomas  H.  Doussan  the term of
                     which extends through December 31, 2000.

                 (j) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Ronald J.  McAlear  the  term of
                     which extends through December 31, 2000.

                 (k) Employment  Agreement  dated  March  23,  1998,  by  and
                     between the Company and Edmund C. Mortimer  the  term of
                     which extends through December 31, 2000.

                 (l) Change of Control  Agreement dated March 5, 1998, by and
                     between the Company and R. Dean Church.

                 (m) Change of Control Agreement dated March 23, 1998, by and
                     between the Company and Thomas H. Doussan.

                 (n) Change of Control Agreement dated March 23, 1998, by and
                     between the Company and Ronald J. McAlear.

                 (o) Change of Control Agreement dated March 23, 1998, by and
                     between the Company and Edmund C. Mortimer.

        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 Annual Report on
            Form 10-K for the fiscal year ended December 31, 1997.

        (3) Incorporated by  reference from the Company's Quarterly Report on
            Form 10-Q for the fiscal quarter ended March 31, 1996.