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 June 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 June 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 June 30, 1997
        Common stock, par value $1.00 per share       14,493,211 shares


                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES

                                       INDEX


                                                                  Page No.

         Part I. Financial Information

            Item 1.  Financial Statements

                Independent Accountants' Report 

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

                Consolidated Statements of Operations -
                Quarters and Six Months Ended June 30, 1997 and 1996 

                Consolidated Statements of Cash Flows -
                Six Months Ended June 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 4.  Submission of Matters to a Vote of Security Holders

            Item 6. Exhibits and Reports on Form 8-K


            INDEPENDENT ACCOUNTANTS' REPORT

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

            We  have reviewed the condensed consolidated financial statements
            of Avondale  Industries,  Inc. and subsidiaries, as listed in the
            accompanying index, as of June  30,  1997 and for the three-month
            and  six-month  periods  ended  June 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
            July 29, 1997


                           PART I - FINANCIAL INFORMATION

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

                                                   June 30,     December 31,
                                                     1997           1996
                                                     ----           ----
        <S>                                       <C>             <C>
        ASSETS
        Current Assets:
          Cash and cash equivalents  ............ $ 55,392        $ 48,944
          Receivables (Note 2):
            Accounts receivable .................    9,936          14,133
            Contracts in progress  ..............   98,560         105,006
          Inventories:
            Goods held for sale .................   15,098          13,184
            Materials and supplies  .............    8,957           8,601
          Deferred tax assets   .................   21,757          30,157
          Prepaid expenses  .....................    2,833           2,465
                                                   -------         -------
            Total current assets ................  212,533         222,490
                                                   -------         -------
        Property, Plant and Equipment:
          Land ..................................    7,984           7,984
          Construction in progress  .............    6,214           6,934
          Buildings and improvements ............   52,730          52,664
          Machinery and equipment  ..............  190,685         187,029
                                                   -------         -------
            Total ...............................  257,613         254,611

          Less accumulated depreciation.......... (132,151)       (127,009)
                                                   -------         -------
            Property, plant and equipment - net..  125,462         127,602
                                                   -------         -------
        Goodwill - net ..........................    7,791           8,073
        Other assets ............................    4,037           4,707
                                                   -------         ------- 
            Total assets ........................$ 349,823       $ 362,872
                                                   =======         =======

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

                                                   June 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 ......................   46,989         73,589
          Accrued employee compensation..........   12,279         11,630
          Other .................................   16,736         12,839
                                                   -------        -------
            Total current liabilities............   79,051        103,015

        Long-term debt...........................   52,800         54,866

        Deferred income taxes ...................    9,300         10,300

        Other liabilities and deferred credits ..   13,857         12,838
                                                   -------        -------
          Total liabilities .....................  155,008        181,019
                                                   -------        -------
        Commitments and contingencies (Note 4)

        Shareholders' Equity (Note 5):
          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 ................... (183,458)      (196,129)
                                                   -------        -------
            Total ...............................  206,671        193,709

          Treasury stock (common: 1,463,016
          shares in 1997 and 1996) at cost.......  (11,856)       (11,856)
                                                   -------        -------
          Total shareholders' equity  ...........  194,815        181,853
                                                   -------        ------- 
          Total .................................$ 349,823      $ 362,872
                                                   =======        =======

        See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
                     AVONDALE INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
                                    (UNAUDITED)

                                       Quarters               Six Months
                                       Ended June 30,         Ended June 30,
                                       1997     1996          1997     1996
                                       ----     ----          ----     ----
           <S>                       <C>       <C>         <C>       <C>                   
           Net sales                 $145,792  $152,577    $285,305  $309,073

           Cost of sales              126,291   134,411     247,171   273,621
                                      -------   -------     -------   -------
           Gross profit                19,501    18,166      38,134    35,452

           Selling, general and
            administrative expenses     8,635     9,292      16,969    18,325
                                      -------   -------     -------   -------
           Income from operations      10,866     8,874      21,165    17,127

           Interest expense            (1,195)   (1,262)     (2,412)   (2,648)

           Other - net                    709       778       1,318     1,347
                                      -------   -------     -------   -------
           Income before
             income taxes              10,380     8,390      20,071    15,826

           Income tax (provision)
             benefit (Note 6)          (4,000)    5,900      (7,400)    3,200
                                      -------   -------     -------   -------
           Net income                $  6,380  $ 14,290    $ 12,671  $ 19,026
                                      =======   =======     =======   =======
           Net income per share of
             common stock (Note 7)   $   0.44  $   0.99    $   0.87  $   1.32
                                      =======   =======     =======   =======
           Weighted average number
             of shares outstanding     14,493    14,464      14,493    14,464
                                      =======   =======     =======   =======

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


                                                            1997         1996
                                                            ----         ----
           <S>                                           <C>          <C>
           CASH FLOWS FROM OPERATING ACTIVITIES:
            Net income                                   $ 12,671     $ 19,026
            Adjustments to reconcile net income
             to net cash provided by operating
             activities:
             Depreciation and amortization                  5,716        5,436
             Deferred income taxes                          7,400       (3,200)
             Changes in operating assets and
              liabilities:
              Receivables                                  10,643        9,519
              Inventories                                  (2,270)         313
              Prepaid expenses and other assets               302          375
              Accounts payable                            (26,600)      (3,660)
              Accrued employee compensation and
               other liabilities                            5,565        3,562
              Other - net                                     303          490
                                                          -------      -------
            Net Cash Provided by
              Operating Activities                         13,730       31,861
                                                          -------      -------

           CASH FLOWS FROM INVESTING ACTIVITIES:
            Capital expenditures                           (3,306)      (7,523)
            Other - net                                       -            383
                                                          -------      -------
            Net Cash Used for Investing Activities         (3,306)      (7,140)
                                                          -------      -------  

           CASH FLOWS FROM FINANCING ACTIVITIES:
            Payment of long-term borrowings                (3,976)      (4,851)
                                                          -------      -------
            Net Cash Used for Financing Activities         (3,976)      (4,851)
                                                          -------      -------

           Net increase in cash and cash equivalents        6,448       19,870
           Cash and cash equivalents at
            beginning of period                            48,944       38,524
                                                          -------      -------
           Cash and cash equivalents at end of period    $ 55,392     $ 58,394
                                                          =======      =======
           Supplemental Disclosures of Cash Flow
            Information:
           Cash paid during the period for:
           Interest                                      $  2,666     $  2,698
                                                          =======      ======= 

           Income taxes                                  $    700     $  1,360
                                                          =======      =======

           See Notes to Consolidated Financial Statements.
</TABLE>

           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.

           2.RECEIVABLES

           The following information presents the elements of receivables
           at June 30, 1997 and December 31, 1996 (in thousands):
<TABLE>
<CAPTION> 
                                                      1997         1996
                                                      ----         ----
            <S>                                   <C>          <C>
            Long-term contracts:
                U.S. Government:
                  Amounts billed                  $    541     $    859
                  Unbilled costs, including 
                  retentions, and estimated 
                  profits on contracts in
                  progress                          83,272       90,325
                                                   -------      -------  
                  Total                             83,813       91,184

                Commercial:
                  Amounts billed                     3,511        7,274
                 Unbilled costs, including
                 retentions, and estimated
                 profits on contracts in
                 progress                           15,288       14,681
                                                   -------      -------

                Total from long-term contracts     102,612      113,139
            Trade and other current receivables      5,884        6,000
                                                   -------      -------
            Total                                 $108,496     $119,139
                                                   =======      ======= 
</TABLE>

        Unbilled  costs  and  estimated profits on contracts in progress were
        not billable to customers  at  the balance sheet dates under terms of
        the respective contracts.

        3.  FINANCING ARRANGEMENTS

        The  Company's  $85  million  revolving   credit  agreement  provides
        available   liquidity   for   working   capital   purposes,   capital
        expenditures  and  letters of credit.  At June 30, 1997,  there  were
        approximately $11.3  million  of letters of credit issued against the
        agreement leaving approximately  $73.7 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.

         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 June 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  June  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.

        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.

        As  previously  disclosed,  during  the  first  quarter  of 1997, the
        Company reached a tentative settlement with certain remaining parties
        to  litigation involving alleged personal injury and property  damage
        arising  from  the  Walker,  La.  reclamation site.  After a fairness
        review held on April 18, 1997, the  trial  court  issued  an order on
        June  4,  1997  which  approved  the  tentative settlement and, as  a
        result, released the Company from its contingent liability.

        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.   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 June 30, 1997 and December
        31, 1996.

        Guarantee

        Pursuant   to   agreements   related  to  the  UNO/Avondale  Maritime
        Technology Center of Excellence,  the Company has agreed to guarantee
        an estimated $40 million of indebtedness  expected to be incurred for
        construction of the facility and the acquisition of technology.

        5.  SHAREHOLDERS' EQUITY

        On May 23, 1997, the shareholders approved  adoption  of the Avondale
        Industries,  Inc. 1997 Stock Incentive Plan (the "Plan").   The  Plan
        provides for the  award  of various incentives to directors, officers
        and key employees.  Incentives  granted under the Plan may be granted
        in any one or a combination of the  following  forms:   (a) incentive
        stock options and non-qualified stock options; (b) stock appreciation
        rights; (c) restricted stock; and (d) performance shares.   The  Plan
        is  administered  by  the  compensation  committee  of  the  Board of
        Directors which has the authority to award incentives under the Plan,
        to  interpret  the  Plan  and  to establish any rules and regulations
        relating to the Plan.  A total of 1,430,000 shares of common stock of
        the Company are reserved for issuance under the Plan.

        6.  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.

        7.  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.  Basic  EPS  is computed by dividing the net
        income  available  to common shareholders  by  the  weighted  average
        shares of outstanding  common  stock.  The calculation of diluted EPS
        is similar to basic EPS except that the denominator includes dilutive
        common stock equivalents such as  stock  options  and  warrants.  The
        statement  is  effective for financial statements for periods  ending
        after December 15,  1997.   The  Company  will  adopt SFAS 128 in the
        fourth  quarter  of  1997, as early adoption is not  permitted.   The
        Company's current EPS  calculation  significantly  conforms  to basic
        EPS.   Diluted  EPS  is  not expected to be materially different from
        basic EPS since potential  common  shares in the form of common stock
        options are not estimated to be materially dilutive.

        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.  This statement  does  not
        require a specific  format  for that financial statement but requires
        that  an entity display an amount  representing  total  comprehensive
        income for the period in that financial statement.  SFAS 130 requires
        that an  entity classify items of other comprehensive income by their
        nature in  a  financial  statement.  For example, other comprehensive
        income may include foreign  currency items, minimum pension liability
        adjustments, and unrealized gains  and  losses on certain investments
        in debt and equity securities.  In addition,  the accumulated balance
        of  other  comprehensive  income  must be displayed  separately  from
        retained  earnings  and  additional paid-in  capital  in  the  equity
        section of a statement of  financial  position.   Reclassification of
        financial  statements for earlier periods, provided  for  comparative
        purposes, is  required.   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.


        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 June 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 22% for the second quarter of 1997 and by 24%
        for the first six months of 1997 compared to the same periods  in the
        prior  year.   Further,  income before income taxes increased 24% for
        the second quarter of 1997  and  27% for the first six months of 1997
        over the same periods in 1996.

        The Company's firm backlog at June  30,  1997  was approximately $1.9
        billion  (including  estimated  contract  escalation)   exclusive  of
        unexercised  options  aggregating  $1.9  billion for additional  ship
        orders.  During the first six 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.  The Company  also
        delivered the  second  and third of four commercial tankers which are
        being  retrofitted with double-hulled  forebodies.   Other  contracts
        scheduled to be completed during 1997 include the LSD-CV 52, the last
        of four  LSD-CVs  constructed  under  two  contracts,  and the fourth
        commercial tanker.

        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.   Upon  the  announcement  of  the
        award, the unsuccessful bidder filed a protest at which time the U.S.
        Navy  issued a stop-work order pending a review of the protest by the
        General  Accounting Office ("GAO").  On April 7, 1997, the GAO denied
        the protest  by  the  unsuccessful bidder.  The Navy followed the GAO
        decision by canceling the  stop-work order.  As a result, the Company
        immediately resumed design work under the contract.

        In June 1997, the Company announced  that  it  signed  a $332 million
        contract  with  ARCO Marine, Inc. of Long Beach, California  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 ARCO 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.

        Results of Operations

        The Company recorded net income of $6.4 million,  or $0.44 per share,
        for  the second quarter of 1997 compared to $14.3 million,  or  $0.99
        per share,  for the second quarter of 1996.  For the first six months
        of 1997, the  Company  recorded net income of $12.7 million, or $0.87
        per share, compared to $19.0 million, or $1.32 per share for the same
        period in 1996.  Net income  for  the  second  quarter  and first six
        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 six months ended June 30,
        1997 increased by $2.0 million,  or  22%,  and  $4.0 million, or 24%,
        respectively, compared to the prior year periods.   The  increase  in
        the  Company's  operating results in the second quarter and first six
        months of 1997 primarily  reflect operating profits recognized on the
        contract  to  construct  five   Strategic  Sealift  vessels  and  the
        Icebreaker contract.  Profit recognition  on  these two contracts was
        not reflected in the operating results of the same periods in 1996 as
        contract  progress  was  not sufficient to begin profit  recognition.
        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 a $2.5 million loss  recorded
        in the first quarter of 1997 on the contract to retrofit four single-
        hulled commercial  tankers  with new double hulls. This loss resulted
        primarily from an increase in  the estimated labor needed to complete
        the two remaining double hulls.

        Net sales for the second quarter  of  1997 decreased $6.8 million, or
        4%,  to  $145.8 million compared to $152.6  million  for  the  second
        quarter of  1996  while  net  sales  for the first six months of 1997
        reflected a decrease of $23.8 million,  or  8%,  compared to the same
        period in the prior year.  The decrease in net sales  in  the current
        periods  is primarily due to a reduction in material costs associated
        with the timing  of  material  commitments  on contracts currently in
        progress as well as a reduction in material costs  on  contracts that
        are near completion.  In the second quarter and six months ended June
        30,  1997, the Company recorded decreased net sales on the  contracts
        to construct  the seven T-AOs (the last of which was delivered in May
        1996), the four  MHCs  (the  last  of  which was delivered in January
        1997), the LSD-CV 52 (expected to be delivered  in November 1997) and
        the three LSD-CVs (the last of which was delivered  in  March  1996).
        The  Company  also  recorded  reduced  net  sales  on the contract to
        construct the forebodies for the four double-hulled  product carriers
        as  two  of the vessels were delivered in 1996.  The decreases  noted
        above were  partially  offset  by increased net sales recorded on the
        contracts to construct the Icebreaker  and the five Strategic Sealift
        ships.

        Gross profit for the second quarter and  first  six  months  of  1997
        increased   $1.3   million,   or   7%,  and   $2.7  million,  or  8%,
        respectively, compared to the same periods  in 1996.  The increase is
        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 loss discussed above.

        Selling,  general  and  administrative  ("SG&A")  expenses  decreased
        $657,000,  or 7%, in the second quarter of 1997 and $1.4 million,  or
        7%, for the  first six 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.  Basic EPS is computed by dividing  the  net
        income  available  to  common  shareholders  by  the weighted average
        shares of outstanding common stock.  The calculation  of  diluted EPS
        is similar to basic EPS except that the denominator includes dilutive
        common  stock  equivalents  such as stock options and warrants.   The
        statement is effective for financial  statements  for  periods ending
        after  December  15,  1997.  The Company will adopt SFAS 128  in  the
        fourth quarter of 1997,  as  early  adoption  is  not permitted.  The
        Company's  current  EPS calculation significantly conforms  to  basic
        EPS.  Diluted EPS is  not  expected  to  be materially different from
        basic EPS since potential common shares in  the  form of common stock
        options are not estimated to be materially dilutive.

        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 7 of the Notes to  Consolidated
        Financial  Statements,  contained  elsewhere in this Form 10-Q, for a
        discussion of SFAS 130.

        Liquidity and Capital Resources

        The Company's cash and cash equivalents totaled $55.4 million at June
        30, 1997 as compared to $48.9 million  at  December  31,  1996.   The
        Company's  operations  generated  approximately $13.7 million of cash
        through June 30, 1997.  The Company's  primary  uses  of  cash in the
        current period consisted of capital expenditures of $3.3 million  and
        payments on long-term borrowings of $4.0 million.

        As   discussed  below,  the  Company  amended  its  revolving  credit
        agreement  ("the  agreement")  effective  April  30,  1997.   The $85
        million  agreement  provides  available liquidity for working capital
        purposes, capital expenditures  and  letters  of credit.  At June 30,
        1997,  there were approximately $11.3 million of  letters  of  credit
        issued against  the  agreement leaving approximately $73.7 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 order to comply with the terms of the LPD-17 contract, the Company
        is required to make significant capital expenditures, particularly to
        enhance its computer-aided design and product modeling  capabilities.
        The  Company  currently  has  sufficient cash and available lines  of
        credit to fund these capital expenditures.  Nevertheless, the Company
        and its banks agreed to increase  the  size  of  its revolving credit
        agreement to $85 million on April 30, 1997.  The increase in the size
        of  the  agreement  is sufficient to allow the Company  to  fund  the
        expenditures on an interim  basis with borrowings under the agreement
        while  preserving the current  level  of  available  liquidity.   The
        amended  agreement  provides  that  the  available  credit  under the
        agreement  will be reduced to approximately $50 million once a  long-
        term financing  for the LPD-17 expenditures is in place (as discussed
        below) and, at the same time, the banks will eliminate all collateral
        except their second  mortgage  on  the  Company's  900-foot  floating
        drydock.   In  addition,  the  amended  agreement  has  extended  the
        expiration date until April 2000.

        In  order to fund the expenditures required to comply with the LPD-17
        contract,  the Company teamed with the University of New Orleans (the
        "University"),  the University of New Orleans Research and Technology
        Foundation (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 constructing a 200,000 square
        foot building on property, donated to the  Foundation 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  will  be financed by the
        Foundation  using third-party debt or lease financing  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.


                                    PART II - OTHER INFORMATION

        Item 4.  Submission of Matters to a Vote of Security Holders

                 At  the  Annual  Meeting  of  the shareholders  of  Avondale
                 Industries, Inc. held on May 23,  1997, 12,158,485 shares of
                 the 14,493,211 shares outstanding were  present in person or
                 by proxy at the meeting.  The voting tabulation follows:

                 (a) The election of the following to the Board of Directors:

                     Albert L. Bossier, Jr., 11,028,015 votes  for, 1,130,470
                     votes  withheld  and Hugh A. Thompson, 11,041,457  votes
                     for, 1,117,028 votes withheld.

                     The following is a  list  of  each  other director whose
                     term  of  office  as  a  director  continued  after  the
                     meeting:

                     Anthony J. Correro, III, Francis R.  Donovan, Kenneth B.
                     Dupont, William A. Harmeyer and Thomas M. Kitchen.

                 (b) A proposal to approve the Avondale Industries, Inc. 1997
                     Stock Incentive Plan:  9,396,427 for, 1,410,636 against,
                     177,639 abstained and 1,173,783 broker nonvotes.

                 (c) A proposal to urge the Board of Directors  to redeem the
                     rights  issued  under the Shareholder Protection  Rights
                     Plan: 5,508,143 against, 5,401,258 for, 75,301 abstained
                     and 1,173,783 broker nonvotes.

                 (d) A proposal to urge  the  Board of Directors to implement
                     confidential voting by shareholders:  5,470,364 against,
                     5,446,739  for,  67,599 abstained and 1,173,783   broker
                     nonvotes.

                 (e) A proposal related  to  declassification of the Board of
                     Directors:  5,860,661  against,  5,039,350  for,  84,591
                     abstained and 1,173,883 broker nonvotes.

                 The directors were elected by  plurality vote, proposals (d)
                 and (e) required the affirmative  vote  of  80% of the total
                 outstanding Common Stock and proposals (b) and  (c) required
                 the  approval  of  a majority of the shares of Common  Stock
                 present or represented at the Annual Meeting.

        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(l) Avondale Industries, Inc. 1997 Stock Incentive Plan
                          adopted May 23, 1997.

                  10.7(e) Sub-lease agreement  dated  May  16,  1997,  by and
                          between  the  Company  and  the  University  of New
                          Orleans  Research  and  Technology Foundation, Inc.
                          (without exhibits).

                  10.8(g) Cooperative Endeavor Agreement  dated May 16, 1997,
                          by and among the Company, the State  of  Louisiana,
                          Board  of Supervisors of Louisiana State University
                          and Agricultural  and  Mechanical College acting on
                          behalf of the University  of  New  Orleans, and the
                          University  of New Orleans Research and  Technology
                          Foundation, Inc.

                   10.10  Amended  and Restated  Revolving  Credit  Agreement
                          dated January  29,  1997, effective April 30, 1997,
                          among Avondale Industries,  Inc., various financial
                          institutions signatory thereto  (the  "Banks")  and
                          Bank   of   America   National  Trust  and  Savings
                          Association as the Agent  for  the  Banks  (without
                          exhibits and schedules).

                      15  Letter re: unaudited interim financial information.

                      27  Financial Data Schedule

             (b) Reports on Form 8-K:

                          Not applicable.

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

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


                                     SIGNATURES


        Pursuant to the requirements  of the Securities Exchange Act of 1934,
        the registrant has duly caused this report to be signed on its behalf
        by the undersigned thereunto duly authorized.



                                              AVONDALE INDUSTRIES, INC.

        Date:  August 14, 1997              By:/s/ ALBERT L. BOSSIER, JR.
               ---------------                 -------------------------- 
                                               Albert L. Bossier, Jr.
                                               Chairman, President &
                                                Chief Executive Officer



        Date:  August 14, 1997              By:/s/ THOMAS M. KITCHEN 
               ---------------                 --------------------- 
                                               Thomas M. Kitchen
                                               Vice President &
                                                Chief Financial Officer



                                   EXHIBIT INDEX

         Number                   Description


           3.1  Articles of Incorporation of the Company(1).

           3.2  Bylaws of the Company(2).

        10.3(l) Avondale Industries, Inc. 1997  Stock  Incentive Plan adopted
                May 23, 1997.

        10.7(e) Sub-lease agreement dated May 16, 1997,  by  and  between the
                Company  and  the  University  of  New  Orleans Research  and
                Technology Foundation, Inc.  (without exhibits).

        10.8(g) Cooperative Endeavor Agreement dated May  16,  1997,  by  and
                among   the   Company,  the  State  of  Louisiana,  Board  of
                Supervisors of  Louisiana  State  University and Agricultural
                and Mechanical College acting on behalf  of the University of
                New Orleans, and the University of New Orleans  Research  and
                Technology Foundation, Inc.

        10.10   Amended and Restated Revolving Credit Agreement dated January
                29,   1997,   effective   April   30,  1997,  among  Avondale
                Industries,  Inc., various financial  institutions  signatory
                thereto (the "Banks")  and Bank of America National Trust and
                Savings  Association as the  Agent  for  the  Banks  (without
                exhibits and schedules).

        15      Letter re: unaudited interim financial information.

        27      Financial Data Schedule


                _______________

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

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