The company that owns passenger and freighter airline World Airways said it lost $7.5 million in the second quarter as its military business suffered, down from a net gain of $5.5 million in the 2005 period, but projected a strong third quarter.

World Air Holdings also owns North American Airways. Both airline units get most of their revenue from military passenger flights, and handle other specialized passenger business. In addition, its biggest airline, World Airways, operates seven freighters - five MD-11s and two DC-10s - for cargo customers including Taiwan's EVA Air and Air Canada.

The company said that with World Airways military flights in penalty status for much of the quarter after it fell in on-time performance, total revenue was up just $4.8 million from the 2005 quarter and it suffered an operating loss.

But the penalty has been lifted, and World Air said third-quarter revenue should be nearly $235 million and put operating income as high as $10 million.

World Air also said it was buying back as much as 9 percent of its stock over the next month, and would soon apply to have its shares again listed on a major exchange after coming current in financial reports.

John D. Boyd