FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

World Airways, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WLDA)") else Response.Write("(NASDAQ: WLDA)") end if %>
13873 Park Center Road, Suite 490
Herndon, VA 22071-3223
(703) 834-9200
http://www.teaminteract.com/worldair/world.html

UNION CITY, Ca., October 29, 1996/FOOLWIRE/ --- World Airways released third quarter 1996 results last Friday afternoon. The company signaled in September that they expected earnings for the third quarter to exceed analyst expectations and the earnings release they put out is consistent with that guidance. The company announced earnings from continuing operations of $2.9 million or $0.24 per share on revenues from continuing operations of $75.8 million.

For the first nine months, they reported earnings from continuing operations of $13.7 million or $1.14 per share on revenues of $215.5 million.

They finished the quarter with a cash position of $11 million. Cash is tracking very well for them now because the cash requirements for the phase-out of discontinued operations are largely behind them and as they have gone into the full swing of their core business beginning in October, their cash projections are looking pretty good. The $11 million is also the lowest level in the month (end of month) based on their normal cash usage cycle. As far as short term debt, the current maturities were $9.8 million and the long-term obligations were $29.7 million.

In addition, they announced a new 3-year agreement with Malaysia airlines to wet-lease two of their DC-10s through May of 1999 which was an important step in their program to redeploy capacity into their core markets.

The World Airways board considered and approved a share repurchase program to purchase up to 1 million shares (this is 1/3 of the publicly available shares) out of the conviction that World shares are undervalued and that an investment of some of their surplus cash would be producing an attractive rate of return for the company.

Overall they are pleased with the results in the third quarter because it confirms the earning power of the core business even at a time when the bulk of their time and attention was focused on transitioning out of discontinued operations.

OPERATING STATISTICS. They flew just over 9300 block hours which was slightly below the 9900 block hours they flew in the third quarter last year. That reduction was driven primarily by a concentration of heavy maintenance events during the September timeframe. They had to prepare a number of aircraft to be redeployed into their wet-lease operations. That, in turn, led to a reduction of their average daily utilization from 10.3 during Q3 last year to 9.1 this year. They think all of that is best viewed as an investment in redeploying their equipment into the more profitable core business. They are seeing higher utilization levels achieved now as those airplanes get firmly deployed.

The company feels they emerged from the third quarter with a couple of very important strengths. First, they have a strong and growing contract backlog that is concentrated in Southeast Asia which most people in the aviation arena appreciate as the most rapidly growing aviation market in the world. They also enjoyed the largest contract award from the US Air Force of any of the commercial carriers serving the Air Force. They have maintained a very modern, flexible and economically attractive fleet which is now configured with 9 MD-11s and 4 DC-10/30s. They are in the process of disposing of two surplus DC-10 aircraft, which will leave them with a total fleet size of 13 units which is the capacity level that they think matches up very nicely with their plans for 1997.

At this point they are fully focused on the core business. They believe there was one flight last weekend left from discontinued options. But in terms of where their energy is focused and where their assets are deployed, they are now fully deployed in the core business and that leaves them focusing the bulk of their energy now on critical customers in Southeast Asia that they have enjoyed for quite some time as well as beginning to develop new customers looking out toward the latter half of next year where they have some capacity that will be available for sale.

Looking at 1997, they will hold their capacity at 13 wide-body units. The biggest profit lever they have for 1997 is to boost the utilization of their aircraft and their human assets. They will be firming up a plan in the next couple of weeks that will have more aggressive utilization targets than they have ever had and that is really their focus for 1997. For 1998 and 1999, they would consider adding some incremental capacity if the demand for outsourcing services continues to grow at the robust rate it has been growing. But, they don't expect they will be looking to make any decisions about incremental capacity until they are well in to 1997. In a business with high fixed costs, the biggest lever they have is to improve the utilization on their fixed assets.

They expect to generate about 82% of their total volume out of the wet-lease business or providing outsourcing services to major international carriers. That is up substantially from the plan they had in place for 1996. In addition, the flying they will do for the Air Force should generate about 12% of their total volume for next year. Then they are estimating about 6% in passenger charter operations in which they take no load factor risk.

So, all in all, they are looking at close to 95% of their business mix coming from the two segments that have produced the most consistent and most attractive operating economics for them -- outsourcing to international carriers and flying for the US military. These segments are also ones where they either have no fuel risk, have no fuel purchasing responsibility, or indexed fuel with the military. The sales in that area are going quite well. They are now looking at the latter half of 1997 where their key sales challenges are and they don't recall actually being sold that far out for many years, so their overall revenue picture is shaping up quite nicely for next year.

The provision they took in Q2 this year continues to appear adequate to cover the phase-down costs and they are now able to swing the bulk of management's attention around to improving the performance in the core business both through revenue growth and through improvements in the delivery of their product and the costs of delivering that product. The difficult move they announced back in July is progressing on schedule or ahead of schedule and the results they are achieving in the core business are consistent with the expectations they had.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.