NEW ORLEANS, LA. - Albert L. Bossier, Jr, Chairman and Chief Executive Officer of Avondale Industries, Inc. (NASDAQ/NMS: AVDL), today announced the U.S. Navy has exercised options for the construction of two ships valued at $454.7 million. One award for $291.5 million covers a contract to the alliance headed by Avondale to build the second LPD ship and the Navy's newest and most advanced amphibious assault ship. Avondale serves as the prime contractor for this alliance that includes Bath Iron Works Corporation (a subsidiary of General Dynamics), Raytheon Systems Corporation and Intergraph Corporation. The second award valued at $163.2 million covers the construction by Avondale of the seventh ship in the Strategic Sealift program that was begun in 1993. The contract value of the LPD-18 and the Strategic Sealift ships are $391 million and $227 million, respectively, after considering the long lead material portion of the contracts previously awarded to Avondale in 1998.

Bossier commented, "Each of these awards signal Avondale's successful track record to date on these two significant programs. We are gratified by the progress that is being realized by our comprehensive emphasis on improved quality control procedures coupled with the innovative use of new design and production systems. These awards bring our funded backlog to $2 billion.

"The award for the second ship in the LPD program is a key milestone in this major series of ships that is expected to be the mainstay of the Navy's amphibious forces over the next four decades. The initial ship in the LPD series is in the engineering and design phase. Construction is expected to begin in 1999 with delivery scheduled in 2002. The second ship is planned for delivery in 2003. Both of these ships will be constructed in Avondale's shipyard. We believe that sound execution of the work on these ships will position our team well to remain the contractor for the entire series that is expected to number 12 ships."

Bossier noted, "The award for the seventh ship in the Strategic Sealift program fits well with the utilization of our shipyard capacity for the work scheduled on the LPD series. We delivered the first Strategic Sealift ship earlier this year and expect to complete two more during 1999. Delivery of this seventh ship, which is expected to be the last in this series, is scheduled for 2001."

Avondale Industries, Inc., headquartered in metro New Orleans, designs, builds and overhauls both military and commercial ships.