When I talked to the CEO, CFO, and treasurer for World Airways (NASDAQ:WLDA) a few months ago, the big issue was profitability. That's less of an issue today because the company raised third-quarter earnings guidance from $5 to $7 million to -- get this -- $11 to $13 million.

Does this word picture make sense? A profitable airline (already hard to picture?), working on its third straight year of profitability (really?), raises its earnings guidance by 100%. Is this really an airline? Yes, it is.

Wall Street has been trading this stock for a there-must-be-trouble multiple of under 10 times earnings. In the "I don't get no respect" world of Rodney Dangerfield, World was the poster child for airlines.

Although World transports passengers as a charter carrier, it is selling for one-third the earnings multiple of Motley Fool Stock Advisor recommendation JetBlue (NASDAQ:JBLU) and perennial best-run-airline candidate Southwest Airlines (NYSE:LUV).

Even when compared to air couriers, which it also is, the comparisons look out of balance, too. Small carrier Air T (NASDAQ:AIRT) sells for 18 times earnings, and giants FedEx (NYSE:FDX) and United Parcel (NYSE:UPS) sell for three times the multiple of World.

World's world was turbulent in 1999 when it was aggressively reorganizing to reduce its cost structure. One result is warrants, options, and 8% convertible debentures that could swell the number of shares outstanding by 100% (11.6 million shares) -- and the company recently announced that warrants are being exercised.

But those dilutive shares are a double-edged sword. They were issued in order to sweeten financing deals that helped the company reach its current pinnacle of success. In the case of options and warrants, they also put cash back in the company's coffers when they are exercised.

But consider too that if every dilutive share were issued, today's low-end earnings guidance would produce quarterly operating income of $0.47 a share -- a princely sum for a stock that closed at $4.07 a share yesterday. That earnings news has propelled the stock up more than 30% today.

The concern investors will need to deal with is that 80% of World's 2004 business came from the U.S. Air Force. When the couriering of troops to war zones around the world ends, business activity will fall to a much lower level. When it does, though, World will have a greatly improved balance sheet to work with while it rebalances its business.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.