Southern Airways Annual Report 1950 [Calendar Year]

1949-June Ill 242
.
1
July 1,109
I
Aug 1,476
Sept 1,916
Oct 2,109 REVENUE PASSENGERS
Nov 2,208
Dec 1,605
1st year: June 194 9 thru May 1950
1950-Jan 1,440
- 2nd year: June 1950 thru May 1951
Feb 1,770
Mar 2,126
Apr 2,671
May 3,091
June 3,214
July 3,253
Aug 3,348
Sept 3,370
Oct 4,089
Nov 4,789
Dec 4,892
1951 Jan - 4;a29
Feb 5,442
Mar 7,012
Apr 7,479
May 8,074
- I '
.
' ' I I . I I
. -
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
MANAGEMENT
IKE F. JO E
Vice-President
HUGH W. DA VIS
Vice-President, Operations
ECIL A. BEASLEY, JR.
ssistant Secretaru
FRA KW. H uL E
RTH R M. SPIE ) JR.
J. MURREY TKTN
R. S. Dickson & Co., Inc.
Charlotte, orth Carolina
OFFICERS
FRA KW. HUL E
President
TOM D. EVE
Vice-President, Traffic & Sales
W. B. WHITE, JR.
Assistant Secretary
Executive Committee
ER ETH. Wooo
DIRECTORS
FRA K W. H UL E, President
Southern Airways, Inc.
Birmingham Ala.
GEORGE F. ESTEY
Secretary-Treasurer
F. L. McLEOD
Assistant Treasurer
HE RY P. JOH STON
ELTO B. STEPHE
ARTHUR M. SPIE ' JR. ,
Ass't to the Pres.
CECIL A . BEASLEY, JR. H E RY P. JoH STO r, Exec. Vice-Pres.
Meyer Hotel
Birmingham, labama
Kilpatrick, Ballard & Beasley
Washington, D. C.
Eow ARD U. BE EKE
The Beneke Corporation
Columbu , 1is issippi
ROBERT Z. ATES, President
Arkwright ills
Spartanburg South Carolina
Th Birmingham ews Company
Birmingham, Alabama
IKE F. To ES, Vice-President
Southern Airways, Inc.
Augusta, G orgia
W. HERBERT SMITH
W. Herb rt Smith Company
Clover, South arolina
Stock Transfer Agent
ELTO B. STEPHE s
Elton B. Stephens & A ociates
Birmingham, Alabama
ER EST H. Wooo , President
Lib rty 1otors, Inc.
Birmingham, Alabama
Th First ational Bank of Birmingham
Birmingham, Ala.
GENERAL OFFICES
Municipal Airport
Birmingham, Ala.
OPERATIONS HEADQUARTERS
Municipal ir!)Ort
Atlanta, Ga.
A
MESSAGE FROM
YOUR
PRESIDENT
To give you a full year of op rating tatistics
since our last report, we hav included herein op-
erating statistics for the first six months of 1951.
In addition to giving you comparisons for two
year of operation, this will demonstrate how rap-
idly our busines has de loped in th Missi sippi
Valley area.
19.50 wa the fir t full y ar of operation for your
Company. First and foremost, I wi h to report
that w operated the ntir y ar with a perfect
af ty record. Thi brought u national recognition
by th receipt of an award from th ati nal
Saf ty Council. Dnring the period we flew
10,126,000 pa enger miles and erved 38,117 pas-
s ng rs. 96.92% of all ch dule w r compl t d.
During th year th ivil eronautiq_ Board
reaffirm d its confid nee in your Company b
extending our syst m to serv 10 additional cities,
o that w now er e a total of 31 cities in ejght
states. The award in the o-called i sissippi Val-
ley Case brought our rout mileage up to 2,120
miles. The larger part of this new system wa
inaugurated befor the end of the year, with
the complete activation of the new routes on
January 15, 1951. This award is being con-
tested by an unsuccessful applicant in the
U. S. Court of Appeals. Our counsel is not
concerned ov r this action. Thirteen of the
31 cities where we operate are served by
Southern alon . We are proud of the
fact that we ha e gi en these comnrnni-
tie their first chedul d airline service.
The y ar 1950 brought many new de-
velopments to our area. A number of mili-
tary establishments were announced. 20 of
our 31 cities have military installations.
Among the larger new establishments an-
nounced are the Atomic Energy Plant near
Augusta, Georgia, and the farine Corp Base
near Albany, Georgia. This additional military ac-
tivity plus the establishment of many new industrial
plants throughout our entir area will provide a
tremendous business impetus during the corning
years. As shown by the chart on the inside front
cover, we njoyed increases in pa senger traffic
COMPARATIVE OPERATING STATISTICS
(1st Year: June 1949 thru Moy l 950- 2nd Year: June 1950 thru Moy 1951 )
Our Our Percant
1st Year 2nd Year Increase
REVENUE PASSENGERS 21,763 59,791
I 174.7%
REVENUE PASSENGER MILES 3,665,215 10,553,071 I 187.9%
PASSENGER LOAD FACTOR 11.02% 21.56%
I 95.6%
MAIL TON MILES 35,187 68,773 I 95.4%
EXPRESS TON MILES 31,117 62,225
I
99.9%
REVENUE PLANE MILES 1,530,830 2,270,751 I 48 .3%
PERCENT SCHEDULED MILES COMPLETED 94.80% 97.14%
, _
2.5%
2
during e ery month of the y ar 1950. Starting with
only 1,440 passengers in January, w complet d
the year with .J 892 passengers in December. This
chart also contrasts the passenger business for 1950
with the seven months we operated during 1949,
and the first six month of 1951.
We led the local s rvice industry for the entir
year of 1950 on air-mail carried per mil flown.
A chart showing mail flown is shown on page 3.
The new routes in the Mississippi Valley area
are getting off to an excellent start. !though w
have been in operation for only a few months over
the new system, these new routes ar developing
busin ss at a rate that required a full year of de-
velopment on the original system. I am most opti-
mistic over th future of our new area.
During the course of the year, your director
authorized an increase of the outstanding capital
tock to 200,000 shares. All of this stock has been
sold, and apparently there exi ts a substantial de-
mand for mor.o stock. We have recently received
a $370,000 loan from the Reconstmction Finance
Corporation with the participation of The Mer-
chants _ational Bank of Mobile, Alabama. The pro-
ceeds of this loan were used to liquidate other
loans, to purchase equipment for our expanded
routes and to provide working capital.
During the latter part of 1950 we employed and
trained our first group of stewardesses. Since that
time these young ladies have replaced flight agents
on all of our trips. Public reaction to this change
has been excellent. At the close of the year we
~edesigned our airplane paint scheme to provide
for a white top, which makes the airplane cabin
as much as 10 percent cooler in the summertime.
\iVe have received many compliments on our new
paint job from the traveling public. We have also
i_
nitiated a program of naming our airplanes for
famous Confederate personalities. The company has
rec ived a most favorable public r action to this
program.
Your attention is directed to the Proiit and Loss
Statement on page 8. The indicated loss of
$71,134.55, plus lo ses from operations in 1949, are
exp cted to be recovered, togeth r with a reason-
able profit, when our permanent mail rate is es-
tablish d. It is hoped that this rate will be de-
termin d before the end of 1951. In addition, we
expect to r cov r preoperational and development
costs as outlined in ote D of the audit report.
One of your Company's assets not reflected in
the balance sheet is th present market value of
your fleet of airplanes. Since these airplanes were
acquired, there has been a tremendous increase
in their market value. Several qualified appraisers
have estimated the market value of our fleet to
be in excess of one million dollars.
We hope that you will tell your friends of our
service. Should each of our mor than 700 stock-
holders account for a single new passenger, it
would substantially increase our business. I urge
you to visit or call any of our stations for any air-
line information. Our station managers and their
telephones are listed on page 5.
Our 400 employees are young, energetic, and
enthusiastic over the success of your Company.
Should you have occasion to visit one of our sta-
tions, I hope that you will tell our employees that
you are interested in Southern Airways. This will
make them more conscious of the growing interest
of everyone in Southern, which of course will be
an incentive for them to do a better job.
R sp ctfully yours,
Aug. 7, 1951.
AIR MAIL TABLE
Industry
Position
1
2
3
4
5
A Comparison of Five Local Service Airlines, 1950
SOUTHERN AIRWAYS
Airline "A"
Airline "B"
Airline '~C"
Airline "D"
Pounds Per
Mile Flown
53.2
51.4
41.1
39.1
39.0
Year of
Operation
2nd
5th
4th
4th
3rd
3
Serving 31 Leading Cit
In 8 Southern States ,

1es
BATON RO
ATLANTA
BIRMINGHAM
CHARLOTTE
BATON ROUGE
4
I
MPHIS
- - 0
LEANS
~
Capital
Delta
Eastern
Capital
Delta
Eastern
Capital
Eastern
Piedmont
Eastern
Delta
GREENWOOD
COLUMBUS o
/
HATTIESBURG
JACKSONVILLE
t
CE1C1 PROPOSED ROUTE
CONNECTIONS WITH OTHER AIRllN1
ES
MACON Delta CHARLESTON Delta
Eastern Eastern
Nation&I
JACKSONVILLE Delta ALBANY Eastern
Eastern
National
National VALDOSTA
COLUMBUS Delta
JACKSON Delta Eastern
Chicago & Southern
GREENVILLE Delta
Eastern
MOBILE Capital
Eastern SPARTANBURG Delta
ational Eastern
Offering Scheduled Airline
Service to More Than
3 Million People.
Annual Retail Sales of
Cities Served are
Nearly 4 Billion Dollars.*
0 Sales Management Survey of Buying Power, 1951.
NEW ORLEANS Capital
Chicago & Southern
Delta
Eastern
Mid-Continent
ational
Pan-American
TACA
American
MEMPHIS
Braniff
Capital
Chicago & Southern
Eastern
Ozark
SOUTHERN
AIRWAYS
IS
YOUR
COMPANY
Due to the combined efforts of outhern Airways employees,
stockholders and friends, your company ha. made rapid strides in
the short space of two years.
The Southern Airways manager in or near your city will welcome
any ~ugg stions or help you may give him. It will be especially
helpful if you will refer to the manager the names of any of your
friends who are air travelers or who are potential users of Southern
Airways air mail or air express.
Following is a list of Southern Airway cities, with managers'
narn s and telephone numbers:
City
Albany, Ga.
Athens, Ga.
Atlanta, Ga.
Augusta, Ga.
Baton Rouge, La.
Birmingham, Ala.
Charleston, S. C.
Charlotte, 1 . C.
Clarksdale, Miss.
Columbus, Ga.
Columbus, Miss.
Gadsden, Ala.
Greenville, Miss.
Green ille, S. C.
Greenwood, . C.
Hattiesburg, Miss.
Jack on, Mis .
Jacksonville, Fla.
LaGrange, Ga.
Laur 1, Miss.
Macon, Ga.
Memphis, Tenn.
Mobile, Ala.
Moultrie, Ga.
atchez, Miss.
New Orleans, La.
Spartanburg, S. C.
Tupelo, Miss.
Tuscaloosa, Ala.
Valdosta, Ga.
Vicksburg, Mi
Managel'
W. Fenton
J. B. Giles
\ V. A. Brabson
C. V. Diacetis
0. B. Mathew
J. A. laxham
J. D. Jefford
C. T. Ma hew
T. J. Lathem
A. D. Yawn
A.G. Cowley
J. 0. Lasseter
C. D. Grave
H. E. Kale
J. A. Reckard
L. K. Dailey
C. F. Attwood
L. A. McLaughlin
J. A. ~Iann
J. II. Echols
G. M. Sutton
V. H. Rowley
1 A. McDonald
M . E. eal
J. E. Judd
E. H. Seaman
H. S. Kinnebrew
Geo. Farrar
I. T. Tucker
II. Goodson
L. I. Brook
Phone
3124
4487
CA-7761
2-4821
7-2293
,
59-9646
4-267,'3
.5-8733
1971
7-6568
764
6-5285
40,51
3-0173
9-3191
3716
4-8880
,
5-8108
8614
3440
2-7761
35-4850
7-3637
1140
6963
Kenner 4-2558
3-5532
2-55
8-0251
2851
S50
5
BALANCE S H E E T
S O U T H E R N AIRWAYS
I
I N C
Current Assets
Cash:
Demand Deposits
Due from agents
Office and station cash funds
Accounts receivable:
ASSETS
DECEMBER
$ 97,194.35
8,152.83
4,325.00 $ 109,672. 18
U.S. Government-for transportation of mail, etc.- T
ote B
Other account
$123,270.65
81,630.19 204,900.84
Inventorie -at cost:
Repair parts and shop supplies
Other operating supplies
Materials in transit
Other Assets
Investments in affiliates-at cost
Notes receivable and accrued interest
Postage and service depo its
Property and Equipment- At cost, less
allowances for depreciation- ote C
Hangar ( constructed on leased land )
Aircraft and related equipment
Other equipment
Improvements to rented property
Less allowances for depreciation
Construction in progress-equipment
Non-operating property-air raft engines
Advance payment on equipment purchased
Def erred Charges
Development and preoperating expenses- ote D
Prepaid insurance, interest, dues, etc.
TOTAL CURRE T ASSETS
$121,129.54
526,421.2,5
75,185.46
1,243.14
$723,979.39
2$6,.546.03
-------
$467,433.36
36,743.23
$ 59,378.33
10,395.38
959.06
$ 511.00
6,321.61
400.00
$504,176 .. 59
19.00
271.03
70,732.77
$ 385,305.79
7,2,'32.61
.504,466.62
Unamortized expense in connection with sale of capital stock- ate E
Overhauled aircraft and engines-unamortized balance
$ 81,430.09
41,053.54
30,465.56
,'36,366.92 189,316.11
ote A-The company is engaged in air transportation
with respect to persons, property, and mail under authority
of a Temporary Certificate of Public Convenience and
ecessity issued by the Civil Aeronautics Board effective
February 8, 1949, for a period of three years. Since com-
mencement of scheduled service on June 10, 1949, the
Company has been and is now being compensated for the
transportation of mail under temporary rates. These rates
are subject to adjustment in a future Civil Aeronautics
Board proceeding to determine a final mail rate. either
the final mail rate, nor the amount of retroactive adjusted
compensation which the Company will receive thereunder
for the transportation of mail during the term of its tem-
porary certificate, are determinable at this time.
Note B-Charges to accounts receivable and credits to
income for the transportation of U. S. mail have been made
on the basis of adju. ted rates applicable through the year
6
$1,086,321.13
N O T E S T 0 F I N A N
1950. Such rates are not final but are subject to review
and possible further adjustment by the Civil Aeronautics
Board. During the year 1950, the Company received the
sum of $108,549.26 representing an adjustment of com-
pensation for transportation of U. S. mail during the year
1949. As this amount was determinable prior to the com-
pletion of our examination for the year ended December
31, 1949, it was included in the financial statements for
the year 1949.
Note C-Collateral to the secured notes payable includes
eight aircraft and substantially all of the related equipment,
hangar building ( constructed on land leased until January
11, 1959 with option of renewal for five years), certain
office equipment, Plymouth sedan automobile, insurance
policy for $25,000.00 on life of an officer, and leases under
which the Company is lessee of the land on which the
hangar building is located and is lessor of that building.
3 1 , 1 9 5 0
LIABILITIES
Current liabilities
I
1
otes payabl ( including portion of long-term debt du within
one year ):
Secured- ate C:
For money borrowed
F'or equipment, supplies, etc.
Unsecured:
For equipment, supplies, etc.
Employees-for unpaid compensation
Accounts payable and accrued expenses:
Bank overdraft:
Bank checks outstanding
Less cash on deposit as reported by bank, and cash for deposit
Trade accounts
For equipment purchased
Pay roll taxes and laxes withheld from employee:,
Interest, taxes and insurance
Audit and legal fees
Salaries and wages
Rents and landing fees
$ 69.600.00
206,876.89
$12.5 . .594.36
11, 103.,59
$ 55.0,'3,5.,51
37.62.3.74
$276,476.89
136.697.95
$ 17,409.77
190,18,'3.27
12,141.l l
33,023.54
:32,880.38
12,381.87
4,914.68
.5,741.13
$ 413,174.84
TOTAL CORRE T LIABILITIES
308,675.7.5
$ 721,850.59
Long Term Debt ( Secured )-Note C :
Notes payable-for money borrowed
Less payments due within one year
Notes payable for equipment, supplies, etc.
Less payments due within one year
Deferred Income
Unearned transportation revenue
Capital Stock and Surplus (Deficit)
Common stock, par value $3.00 per share:
Authorized 250,000 shares
Issued and outstanding 198,166 2/ 3 shares
Common stock ( old issue), par value $1.00 per share:
Outstanding 5,500 shares ( entitled upon surrender to l ,8,'.33 1/ 3
shares of $3.00 par value common stock)
Earned surplus- deficit"
Contingent Liability - ate F.
See notes to finan cial statement.
C I A L STATEMENTS
In addition to the above. certain of these notes arc
further secured by guaranty of an officer of the Company,
and by pledge of certain shares of stock in another cor-
poration owned by this officer.
1 ote D-Expenses incurred by the Company in connec-
tion with its application to the Civil Aeronautics Board
for authority to engage in air transportation and before
actual flying operations amounted to $185,010.14, and
the e e penses, upon approval by the Board, are subject
to recovery after the establishment of a permanent mail
rate. Such expenses are being amortized over the life of the
temporary certificate issued by the Civil Aeronautics Board.
as mentioned in Note A, and the remaining unamortized
portion of these expenses, amounting to $81,430.09, is
reflected in the balance sheet under deferred charges.
ote E-Expenses in connection with the sale of capital
stock are being amortized over the period covered by the
, 80,950.00
69,600.00
$ ,'3,56,'.3.64
1,187.88
$594,500.00
5,500.00
$ 11,350.00
2,375.76
S600,000.00
254,231.95
13,72.5.76
4,976.7:3
:345,768.05
$1,086,321.13
Certificate of Public Convenience and ecessitv, as set
forth in Note A, by charges made directly to earned surplus-
deficit.
ote F - The Company is contingently liable in the amount
of $34,500.00 for the repurchase from a bank of a note of
the Employees Trust Committee of Southern Airways, Inc.
If the Company is required to repurchase the note, it is
entitled to the related collateral, which, at December 31,
1950, consisted of employees' notes having balances aggre-
gating $42,000.00 and 24,000 shares of stock of the Com-
pany.
At the date of the balance sheet the Company, together
with others, was co-defendant in a pending lawsuit brought
hy an individual for damages claimed, the actual liability
for which, if any, cannot be determined until final decision
by the courts.
7
8
SOUTHERN AIRWAYS,
I
Statement of Profit and Loss
INC.
Year Ended December 31, 1950
Op rating re enu
Transportation :
Passenger
Mail-Note B
Expre
E c ss baggag , etc.
In id ntal :
Rent recei ed- joint facilities
rvice sal s-n t
$ 252,237.09
1,374,062.70
14,670.46
6,369.57
5,100.00
1,926.73
TOTAL OPERATL G REVE1 UES $1,654,366.55
Operating expenses:
Flying operations
Ground operations
Ground and indirect maintcnanc '
Passenger service
Traffic and sales
dv rtising and publicity
eneral and aclrninistrati c
0 th r income:
OPERA TI1 G PROFIT
Insurance collected in excess of carrying amounts
of equipment damag d
Profit on sale of equipment
Interest earned :
U. S. Government securities
Other
Sundry
Other deductions:
Amortization of development and pr operating expenses-
Note D
Intere t paid
Pr mium on insurance to s cur debt
Life insurance expense
Loss of securities sold
Sundry
Statement of Earned Surplus - Deficit
1 ET LOS
$858,387.47
267,214.99
ll.'3,118.93
.54,233.-
55
1.51,479.40
.55,528.64
145,.565.82
$ 8,305.56
189.25
2.252.26
201.61
216.58
$ 63,979.26
18.721.46
4,173.80
374.87
364.45
523.72
Year Ended December 31, 19 50
Deficit at January 1, 1950
Add :
et los for the year
Amortization of expenses in connection with
sale of capital stock
DEFICIT - DECEMBER 31, 1950
See notes to financial statem ents
$ 71,134.55
18,680.79
$
1,64,5,528.80
8,837.75
11,165.26
$ 20,003.01
91,137.56
$ 71.134.55
$ 164,416.61
89,815.34
$ 254,231.95
Atlanta , Georgia
March 16 , 1951
AUDITORS REPORT
-'TLA.N1A
BALTIMORC
BIR M INGMAM
BUF",.ALO
COLUM B US
O.-.lLAS
OA'Y'TON
OElPJt:R
0El'R 01T"
roRT WOATM
GR"N.0 RAPIDS
INOIANAPOLtS
K.-..L .-. '"AZOO
KANSAS crtY
LOUISVILLC
""C.MPMIS
Ml~WAUM.CC
MINNE.APOLIS
ERNST & ERNST
A CC OUNTANTS AND AUDITORS
SYSTEM SERVICE
ATLA N TA
I RST "'AT tQNAL SANK BLO G
OELIVE.RV ZONE 3
Board of Directors
Southern Airways, Inc.
Birmingham, Alabama
NCW CAL.CANS
PMILACCLPMI A
PORTLAND, MC
PROVIOC,.CE
!llt~i::
COARE:SPONOCNT AT
lONOON
CABLE AOORC~S
Ct:PJSTAUO"t ' N .._
We have examined the balance sheet of Southern Airways,
Inc . as of December 31, 1950, and the related statements of profit and
loss and surplus-deficit for the year then ended . Our examination was
made in accordance with ~enerally accepted auditing standards, and ac-
cordingly included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
The Company has included in its financial statements a11
temporary adjustments of compensation for transportation of U.S . m
ail
through the year ended December 31, 1950 . Under provisions of the
Civil Aeronautics Act of 1938, as amended , the Civil Aeronautics Board
will determine the final mail compensatiqn rate after it has reviewed
the results of the Company's operations over a period of time . The
erfect of such retroactive determination upon the financial state-
ments of the Company at December 31, 1950 cannot be anticipated at this
date .
In our opinion, subject to the effect of retroactive mail
compensation rates as commented upon in the preceding paragraph, the ac-
companying balance sheet and statements of profit and loss and surplus-
deficit present fairly the financial position of Southern Airways, Inc .
at December 31 , 1950, and the results of its operations for the year then
ended , in conformity with generally accepted accounting principles applied
on a basis consistent with that of the preceding year .
Certified Public Accountants
The South's
Local
Service
Airline