AVONDALE INDUSTRIES, INC.
                              MANAGEMENT INCENTIVE PLAN


          1.   Purpose.   The purpose of the Management Incentive Plan (the
               "Plan") is to  advance the interests of Avondale Industries,
               Inc. (the "Company")  by  providing an annual incentive cash
               bonus to be paid to key employees  based  on the achievement
               of pre-established objective Company performance goals.

          2.   Administration.  The Compensation Committee  of the Board of
               Directors  of  the  Company  (the  "Committee")  shall  have
               authority  to  administer  the Plan in all respects and,  in
               particular, shall have authority to:

               (a)  Determine who will participate in the Plan;

               (b)  Establish performance goals;

               (c)  Establish regulations for  the  administration  of  the
                    Plan  and  make all determinations deemed necessary for
                    the administration of the Plan; and

               (d)  Determine whether  and to what extent performance goals
                    have been met and the amount of the bonus to be paid to
                    each participant.

          3.   Incentive  Bonus.   Each  key  employee  designated  by  the
               Committee as a participant  in the Plan shall be eligible to
               be  paid  a  cash  bonus  equal  to   a  percentage  of  the
               participant's annual salary.  The exact amount of the annual
               bonus shall be calculated according to  a  formula  for  the
               year  established  by the Committee based on the achievement
               of annual performance  goals as of November 30.  The formula
               is based upon the Company's  actual operating profit through
               November plus forecasted operating  profit  for December and
               upon changes in the Company's composite labor rate, man hour
               estimates  at  completion,  direct  material  estimates   at
               completion  and  projected  profit  estimates at completion.
               For  future  years,  the  Committee may establish  different
               performance goals and formulas for calculation of the bonus.

          4.   Payment of Incentive Bonus.   As  soon  as practicable after
               November 30, the Committee shall apply that  year's formula,
               determine the amount of the incentive bonuses  and  pay  the
               incentive   bonuses.   Prior  to  payment,  the  Committee's
               application  of  the  formula   shall  be  reviewed  by  the
               Company's outside accountants.

          5.   Termination  of Employment.  In the  event  a  participant's
               employment with  the  Company  is terminated for any reason,
               including disability or death, prior  to  November  30  of a
               year  in  which the Plan is in effect, the participant shall
               not receive an incentive bonus for that year.

          6.   Assignments  and Transfers.  The participant may not assign,
               encumber or transfer  his  rights  and  interests  under the
               Plan.
          7.   Amendment and Termination.  The Committee may amend, suspend
               or terminate the Plan at any time and no participant  in the
               Plan has any vested rights to any benefits hereunder.

          8.   Withholding  of  Taxes.   The  Company shall deduct from the
               amount of any incentive bonus paid  hereunder any federal or
               state taxes required to be withheld.

          9.   Term of Plan.  The Plan shall consist of individual calendar
               year Plans, commencing effective January  1,  1995  and each
               consecutive January 1 thereafter during the continuation  of
               the  Plan.   The Plan shall continue until terminated by the
               Committee.

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