Southern Airways Annual Report 1951

~
THIRD EAR OF PROGRESS
Southern Airways
Incorporated

:;;..--?
,- ( ~
Jouthern
Al RWAYS
REPORT TO STOCKHOLDERS, EMPLOYEES AND FRIENDS
~TIONAL i:)AFETY DUNCIL
1951
AVIATION e
SAFETY AWARD
TO
SOUTHERN AIRWAYS. l~C.
in rec09uition.of its corttriburion to ofe}lir9ransporration
hal'in9 operated '2 yean. and,
as of ~~cember 31, 1951
without a passenger or crew fatality in
scheduled passen9er canyin9 fli9hr operations


IKE F. JONES
Vice President
GEORGE F. ESTEY
Secretary - Treasurer
IVAN ALLEN, JR.
Ivan Al I en-Marshal I Co.
Atlanta, Ga.
J. MURREY ATKINS
R. S. Dickson & Co.
Charlotte, N. C.
CECIL A. BEASLEY, JR.
Kilpatrick, Bal lard & Beasley
Washington, D. C.
EDWARD U. BENEKE
The Beneke Corporation
Columbus, Miss.
ALEXANDER J. BRUNINI
MANAGEMENT
OFFICERS
FRANK W. HULSE
President
CECIL A. BEASLEY, JR.
Assistant Secretary
EXECUTIVE COMMITTEE
HUGH W. DAVIS
Vice President - Operations
W. B. WHITE, JR.
Assistant Secretary
FRANK W. HULSE HENRY P. JOHNSTON
IVAN ALLEN, JR. ELTON B. STEPHENS
W. B. WHITE, JR.
DIRECTORS
ROBERT Z. CATES
Arkwright Mills
Spartanburg, S. C.
FRANK W. HULSE
Southern Airways, Inc.
Birmingham, Ala.
ALTON F. IRBY, JR.
A. F. Irby & Co., Inc.
Atlanta, Ga.
HENRY P. JOHNSTON
Birmingham News Company
Birmingham, Ala.
IKE F. JONES
G. GUNBY JORDAN
The Jordan Company
Columbus, Ga.
W. HERBERT SMITH
W. Herbert Smith Co.
Clover, S.C.
ELTON B. STEPHENS
EI ton B. Stephens & Assoc.
Birmingham, Ala.
W. B. WHITE, JR.
White, Bradley, Arant , All & Rose
Birmingham, Ala.
Brunini, Everett, Grantham & Quin
Vicksburg, Miss.
Ga . -Carolina Paper &Supply Co.
Augusta, Ga.
GEN. RALPH H. WOOTEN
Mid-South Chemical Co .
Memphis, Tenn .
GENERAL OFFICES
Municipal Airport
Birmingham, Alabama
Stock Transfer Agent
THE FIRST NATIONAL BANK OF BIRMINGHAM
OPERATIONS HEADQUARTERS
Municipal Airport
Atlanta, Georgia
TO STOCKHOLDERS, EMPLOYEES AND FRIENDS OF SOUTHERN AIRWAYS, INC.
The year 1951 completed another period of substantial development by your Company. Although it is impossible
to document everything that transpired during the year in a report of this nature, I do wish to point out a number of de-
velopments.
We again operated the entire year with a perfect safety record, flying 17,186,342 passenger miles.
Service was established over the entire system that we are authorized to operate.
Night and all-weather operations established at all stations served on our system.
Tupelo, Mississippi opened upon completion of airport Improvements.
Revenue passengers totaled 96,572 as compared to 38,117 for the calendar year 1950.
System load factor was 27.19 as compared to 17.08 for the calendar year 1950.
The fleet of aircraft increased to 10 Douglas DC-3's.
Maintenance facilities expanded to include complete airframe overhaul.
Program started to increase passenger capacity of airplanes from 21 to 24 seats
Overhaul periods on airframe increased, pursuant to CAA authority, to 6,000 hours.
Passenger Service Department es tab I ished.
Improved reservations procedures installed.
Authority granted by the Civil Aeronautics Board to omit landings at stations without traffic.
Straight-in approaches authorized at smaller airports without control towers.
Personnel Deportment established.
Salary increases granted all employees except officers.
Employees recreation program established.
Applications filed with the Civil Aeronautics Boord requesting authority to establish a new route from Columbus,
Georgia, to Mobile, Alabama via Dothan, Alabama, Panama City, Florida and Pensacola, Florido.
Authority sought to serve Gulfport/Biloxi, Mississippi, and additional service to Vicksburg. (Authority to serve
Gulfport/Biloxi by exemption was granted early in 1952. Service was inaugurated there Morch 21, 1952.)
The Southern Airways Certificate Renewal proceeding was started in November, 1951. This will continue through
various procedural steps during the year 1952. Final decision is expected late in 1952 or early in 1953. Your manage-
ment anticipates certificate renewal for a reasonable period of time.
I should like to coll to your attention the audited financial statements prepared by Ernst and Ernst. Since the
Company's claims for retroactive moll pay for pre-operational and developmental costs hove not yet been acted upon
by the Civil Aeronautics Board, no assets ore shown on the balance sheet to cover allowances which will be mode on
these claims. Likewise, the profit and loss statement tokes into account only that portion of retroactive moil pay
actually received during the calendar year 1951. Although the final amount recoverable hos not been determined, it is
believed that the Company's indicated deficit will be offset by retroactive moil payments.
Employees of Southern Airways hove continued to grow in stature. They ore courteous, enthusiastic, and inter-
ested in their Company's growth.
This report was prepared in our own print shop to save printing expense.
Respectfully yours,
Fronk W. Hulse, President
August 9, 1952
AII.IIION
ATLANfA
ALTl1'40tU:
OST ON
U,-,-ALO
CANTON
C:HICAOO
CINC: I NNA,TI
CLl[VCLA.NO
C:OLU M US
OA.YTON
01:N V ltlll
OltTIIIOIT
1[ 1111 1
P'OIII T WOIIITH
(JPIIA.NO IIIA.P'IOS
HOUSTON
I NO I ANAP'OLIS
KALAMA.100
KANSAS C:ITY
LOS ANO CLCS
LOU I SV I LLI[
MCMP'H I S
MILWA.UKltC
M I NNCA .. OLI S
ERNST & ERNST
ACCOUNTANTS AND AUDITORS
SYSTEM SERVICE
ATLANTA
FIRST NATIONAL BANK B L.DG .
DELIV E RY ZONE 3
Board of Directors
Southern Airways, Ince
Birmingham, Alabama
N C W O tlll L CANS
N EW Y Otlll ll.
P'H I LAOC L P'H IA
P' ITT$ U IIIO H
P'Olll' T LANO, MC .
P'AO VI Ol[N C: C
IIICAO I NG
III I C:HMOND
IIIO C:H t:STCIII
ST. LOU I S
S T. P'A UL
SAN AN TONI O
SAN l"AAN CI S CO
SCAT TL E
T O LE D O
WASH I N GTO N
W I NSTON S ALCM
COfttlllCSP' O NOCN T AT
LONDON
CA L C AOOIIICS S
s;111NSTA UOIT " N . Y.
We have examined the balance sheet of Southern Airways,
Inc . as of December 31, 1951, and the related statements ot profit
and loss and surplus-deficit for the year then ended. Our examination
was made in accordance with generally accepted auditing standards,
and accordingly 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 all
temporary adjustments of compensation for transportation of U.S. mail
through the year ended December 31, 1951. Under provisions of the
Civil Aeronautics Act of 1938, as amended, the Civil Aeronautics
Board will determine the final mail compensation rate after ~t has
completed its review of the results of the Company's operations over
a period of time. The effect of such retroactive determination upon
the financial statements of the Company at December 31, 1951 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 accompanying balance sheet and statements of profit and loss and
surplus-deficit present fairly the financial position of Southern
Airways, Ince at December 31, 1951, 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 .
Atlanta, Georgia
Karch 17, 1952
Certified Public Accountants
BALANCE SHEET
SOUTHERN AIRWAYS, Inc.
December 31, 1951
ASSETS LIABILITIES
CURRENT ASSETS
Cash:
Demand deposits
Due from agents
Office and station cash funds
Accounts receivable:
U.S. Government-for transportation of moi I, etc. (Note 8)
Air travel pion, air line traffic and other trade receivables
Inventories - at cost:
Repair parts and shop supplies
Other operating supplies
TOT AL CURRENT ASSETS
INVESTMENTS AND OTHER ASSETS
Investments in affiliates - at cost
Note receivable from Employees' Trust Committee - for purchase
of Company's capital stock through pay roll deductions
Note receivable from officer
Cash surrender value of life insurance (Note C)
Postage and service deposits
PROPERTY AND EQUIPMENT - At cost, less allowances for
depreciation (Note 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 - aircraft engines
DEFERRED CHARGES
Development and preoperating expenses (Note D)
Prepaid insurance, interest, dues, etc.
$124,479.23
666,540.69
113,655.96
3,743.51
$908,419.39
479,975.64
$428,443.75
9,802.97
Unamortized expense in connection with sale of capital stock (Note E)
Overhauled aircraft and engines - unamortized balance
$114 I
532 , 48
10,913.26
4,800.00
$325,119.01
123,256.85
$ 78,965.43
9,219.23
$ 1,101.00
17,558.04
2,698.00
1,000.00
435.00
$438,246.72
6,000.00
$ 7,917.87
49,450.98
2,908.88
54,221.10
$ 130,245.74
448,375.86
88, 184.66
$ 666,806.26

22,792.04
444,246.72
114,498.83
$1,248,343.85
CURRENT LIABILITIES
Notes payable (including portion of long-term debt due
within one year):
Secured (Note C)
For money borrowed
For equipment, supplies, etc.
Unsecured:
For money borrowed
Employees - for unpaid compensation
Accounts payable and accrued expenses:
Bonk overdrafts:
Bank checks outstanding
Less cash on deposit as reported by bank
T rode accounts
For equipment purchased
Pay rol I taxes ol"ld taxes withheld from employees

Interest, taxes, and insurance
Audit and legal fees
Salaries and wages
Rents and landing fees
Employees' accounts for purchase of U.S. savings bonds
Southern Airways Federal Credit Union
Employees' Trust Committee
Advertising and corporate expenses
$270,000.00
211,632.06
$ 50,000.00
105.00
$22,684.04
21,104.98
TOTAL CURRENT LIABILITIES
LONG-TERM DEBT
Notes payable for equipment, supplies, etc:
Secured (Note C) $ 2,375.76
Less payments due within one year 1,187.88
Unsecured
DEFERRED INCOME
Unearned transportation revenue
CAPITAL
Common stock, par value $3.00 per share:
Authorized 250,000 shares
Issued and outstanding 200,000 shares
Earned surplus - deficit*
$481,632.06
50,105.00
$ 1,579.06
266,408.69
13,429.82
61,079.02
71,843.20
9,436.34
68,506.05
11,016.83
163.75
1,286.89
831.95
600.00
$ 1,187.88
109,103.42
$600,000.00
$ 531,737.06
506,181.60
$1,037,918.66
110,291.30
7,101.46
506,967.57* 93,032.43
$1,248,343.85
NOTES TO FINANCIAL STATEMENTS
Note A - The company is engaged in air transportation with
respect to persons, property, and mai I under authority of a
Temporary Certificate of Public Convenience and Necessity
issued by the Civil Aeronautics Board effective February 8,
1949, for a period of three years. Since February 8, 1952, the
Company has continued operations under provisions of the Ad-
ministrative Procedure Act. Since commencement of scheduled
service on June 10, 1949 the Company hos been ondis now be-
ing compensated for the transportation of mail under temporary
rates. These rates are subject to odjustment in a future Civil
Aeronoutics Board proceeding to determine a final moil rate.
Neither the final mai I rote, nor the amount of retroactive od-
justed compensation which the Company will receive thereunder
for the transportation of mail during the term of its temporary
certificate, are determinable at this time.
Note B - Charges to occounts receivable and credits to, i n .
come for the transportation of U.S. Mail have been made on
the basis of odjusted rates applicable through the year 1951.
Such rates ore not final but ore subject to review and possible
further adjustment by the Civil Aeronautics Boord .
Note C - Collateral to the secured notes payable includes
ten aircraft and substantially al I of the related equipment,
hangar building (constructed on land leased until January 11, .
1959 with option of renewal for five years), office furniture
and equipment, automotive equipment, insurance policies for
,000.00 on life of on officer, and leases under which the
pany is lessee of the land on which the hangar building is
ted.
In oddition to the above, certain of these notes are further
secured by guaranty of an officer of the Company.
Note D - Expenses incurred by the Company in connection
with its application to the Civil Aeronautics Boord for author-
ity to engage in air transportation and before actual flying op-
erations amounted to $186,417.26, and these expenses, upon.
approval by the Boord, are subject to recovery after the estob-
1 ishment of a permanent mail rote. Such expenses ore being
amortized over the three year temporary certificate issued by
the Civil Aeronautics Board, as mentioned in Note A, and the
remaining unamortized portion of these expenses, amounting to
$7,917.87, is reflected in the balance sheet under deferred
charges.
Note E - Expenses in connection with the sale of capital
stock ore being amortized over the period covered by the Cer-
tificate of Public Convenience and Necessity, as set forth in
Note A, by charges made directly to earned surplus - deficit. ,
SOUTHERN AIRWAYS, Inc.
STATEMENT OF PROFIT AND LOSS
Year Ended December 31 , 1951
Operating revenues:
Transportation:
Passenger
Motl (Note B)
Express
Excess baggage, etc .
Inc identa I :
Agency services and rents received - joint facilities
Service sales - net
Other
TOT AL OPERATING REVENUES
Operating expenses:
Flying operations - (incl~ding provision for depreciation of aircraft and
other flight equipment $161 , 7 66 .45)
Ground operations
Ground and indirect maintenance
Passenger service
Traffic and sales
Advertising and publ icity
General and administrative - (including provision for depreciation of
ground and other equipment $61,844.91)
Other income:
Dividends received
Interest earned
Sundry
Other deductions:
Amortization of development and preoperating expenses (Note D)
Interest paid
Premium on insurance to secu;e debt
Life insurance expense
Loss on equipment abandoned
Loss on sale of equipment
Mail fines
Sundry
Provision for depreciation of property and equipment included above -
$223 I
611 36
See notes to financial statements.
$1,417,686.79
376,089.49
193,089.62
127,641.27
284,747.79
90,278. 44
259 ,909.09
OPERATING LOSS
$ 1,686.43
506.61
11 .59
$ 74,919. 34
22,384. 21
2,530 .50
1,384.87
60.68
23.70
1,695.00
518.87
NET LOSS
STATEMENT OF EARNED SURPLUS - DEF IC IT
Year Ended December 31 , 1951
Deficit at January l, 1951
Add:
Net loss for the year
Amortization of expenses in connection with sale of capital stock (Note E)
$ 225,178.94
27,556.68
DEFICIT - DECEMBER 31, 1951
See notes to financial statements.
$ 948,026.36
1,626,096.67
28,993.93
18,732.44
2,227.97
1,452.50
46.22
$2,625,576.09
.}
2,749,442.49
$ 123,866.40
2,204.63
$ 121,661.77
103,517.17
$ 225,178. 9~
$ 254,231.95

252,735.62
$ 506,967.57
COMPARATIVE OPERATING STATISTICS
(1st Year: June 1949 through May 1950 - 2nd Year: June 1950 through May 1951 -
3rd Year: June 1951 through May 1952)
Our 1st Yearl Our 2nd Year
I Our 3rd Year
REVENUE PASSENGERS 21,763 59,791 110,525
REVENUE PASSENGER MILES
.. 10,553,071 19,302,027
PASSENGER LOAD FACTOR 11.02% 21.56% 28.08%
MAIL TON MILES 35 I
187 68,773 85,677
EXPRESS TON MILES 31,117 62,225 84,487
_ REYE NUE PLANE MILES 1,530,830 2,270,751 3,216,382
' PERCENT SCHEDULED MILES COMPLETED 94.80% 97.14% 98.93%
PASSENGER TRAFFIC GAINS BY QUARTERS
1949
1950
1951

3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
(By Thousands) 30
SALES ACTIVITIES
During 1951 the Sales Department was reorganized. This department includes
Reservations and Space Control Offices, Tariff and Schedules Department, the
actual Sales Staff and the stations. Five District Traffic Managers are now locat-
ed at strategic points over the system.
Mai I ing I ists, and advertising were supplemented during the year with hun-
dreds of personal cal Is on prospective passengers and old established customers.
Sales activities also included many promotional programs in various cities over
Southern's System, joint advertising programs with other carriers, distribution of
special advertising posters and literature, and participation in numerous civic ac-
tivities in the 31 cities we serve.
These Sales Activities coupled with the successes of other departments in ii
proving performance, passenger service and other phases of operations have resu 1
ed in continued outstanding growth of Southern's business during 1951. Plans for
increased sales effort during 1952 should assure that Southern wi 11 continue to
grow at a rapid rate in passenger, airmail and air-express business.
The picture below was taken in Birmingham in Morch of 1952 at the first 1952
Sales Meeting. In attendance at the Meeting were al I of the Sales Department
Staff, Station Managers, Officers and Department Heads of the company. These
Sales Meetings are scheduled twice yearly and are devoted to stimulation of the
Sales Program and, also, discussion of Sales and Operational problems.

' PROPOSED ROUTES: