Southern Airways, Inc. 
ANNUAL 
REPORT 
60.z~ P/a{J(N w.11/2 t/2e g;ut/2 /oz- 10 Great ~ars I 
  Pictorial Highlights---1949-1959 
FIRST FLIGHT- June 10, 1949 FIRST AIR EXPRESS - June 10, 1949 
FIRST CLASS MAIL BY AIR - December, 1953 FIRST SYSTEM SALES MEETING - August, 1950 
FIFTH ANNIVERSARY - June, 1954 
  
Frank W. Hulse 
President 
*C. M. Britt 
Vice President-Sales 
C. H. D. Tarrer 
Assistant Treasurer 
*Resigned February 28, 1959. 
Southern Airways, Inc. 
Management 
OFFICERS 
Ike F. Jones 
Vice Presid ent 
**Graydon Hall 
Vice President-Sales 
Cecil A. Beasley, Jr. 
Assistant Secretary 
**A ssumes o ffice May 1, 1959. 
EXECUTIVE COMMITTEE 
W. S. Magill 
Vice President-Operations 
George F. Estey 
Secretary-Treasurer 
W. B. White, Jr. 
Assistant Secretary 
Frank W. Hulse Henry P. Johnston W. B. White, Jr. 
Ivan Allen, Jr. Elton B. Stephens 
Ivan Allen, Jr. 
Ivan Allen Co. 
Atlanta, Ga. 
J. Murrey Atkins 
R. S. Dickson & Co. 
Charlotte, N. C. 
 Cecil A. Beasley, Jr. 
Kilpatrick, Ballard & Beasley 
Washington, D. C. 
Edward U. Beneke 
The Beneke Corporation 
Columbus, Miss. 
Alexander J. Brunini 
Bruini, Everett, Grantham & Quin 
Vicksburg, Miss. 
DIRECTORS 
Frank W. Hulse 
Southern Airways, Inc. 
Birmingham, Ala. 
Alton F. Irby, Jr. 
A. F. Irby & Co., Inc. 
Atlanta, Ga. 
Henry P. Johnston 
Radio & TV Consultant 
Birmingham, Ala. 
R. Eugene Orr 
Knight, Orr & Co., Inc. 
Jacksonville, Fla. 
W. Herbert Smith 
W. Herbert Smith Co. 
Clover, S. C. 
Elton B. Stephens 
Ebsco Industries, Inc. 
Birmingham, Ala. 
Ike F. Jones W. B. White, Jr. 
Ga.-Carolina Paper & Sup. Co. 
Augusta, Ga. 
G. Gunby Jordan 
The Jordan Company 
Columbus, Ga. 
STOCK TRANSFER AGENT 
The First National Bank of Birmingham 
Birmingham, Alabama 
White, Bradley, Arant, All & Rose 
Birmingham, Ala. 
Gen. Ralph H. Wooten 
Chemical Fire & Casualty Ins. Co. 
Memphis, Tenn. 
Executive O ffice: Brown-Marx Building, Birmingham, Ala bam a G e neral Offices: Atlanta Airport, Atla nta, Georgia . 
  President's Report 
To Shareholders, Employees and Friends: 
It is a pleasure to report that the calendar year 1958 was the most profitable of your 
Company's history. Earnings were $146,602, after taxes, or 58 per share. Establishment of 
a pe1manent mail rate by the Civil Aeronautics Boar.cl, retroactive to A,pril 6, 1956, converted 
previously r ported losses for 1956 and 1957 into profits and, in fact, resulted in your 
Company showing a profit for each of the past six consecutive years. The deficit of $143,190 
previously reported to you as of December 31, 1957 was converted to a surplus of $118,186 
as of December 31, 1958. Total income of $5,461,000 in 1958 was an all-time high and exceeded 
the previous year by some $815,000, an increase of 18% . 
The year 1959 is our tenth anniversary year and, as you will see from this report, our 
prngress has been substantial since the first scheduled flight on June 10, 1949. We plan an 
extensive program, with events continuing during the entire year, to celebrate the anniversary 
and to promote the use of your Company's services. Our progress has already received 
substantial public and official recognition. For example, the Chairman of the Civil Aeronautics 
Board, the Honorable James R. Durfee, made a special trip to Athens, Georgia to be principal 
speaker at our tenth anniversary sales meeting in February. 
This report includes pictorial presentations on the inside front and back covers which 
highlight certain of your Company's operations and progress during its first ten years. 
In addition to achieving good financial results in 1958, the Company operated success- 
fully in other areas. Again we will be recognized by the National Safety Council for having 
continued our perfect safety record since the beginning of our 0peration. Through 1958 we 
have flown some 237,250,000 passenger miles with a perfect safety record. This distance, it is 
interesting to note, approximates ten thousand trips around the world at the equator. 
Air freight service, inaugurated at the end of 1957, has come to provide .an im,portant 
new source of revenue. We developed in 1958 total freight and express revenues of $101,000, 
an amount more than double that obtained in 1957. 
Added service during 1958 consisted of a new route between Atlanta, Georgia and 
Memphis, Tennessee, via Huntsville, Alabama (Redstone Arsenal), and a new route between 
Eglin Air Force Base, Florida (Ft. Walton Beach) and New Orleans, Louisiana, and service 
to Anniston, Alabama ( Fort McClellan). These additions were made after the Department of 
Defense petitioned the Civil Aeronautics Board to e:x,pedite service at these points in the 
interest of National Defense. Greenwood, Mississippi was added by an exemption order. The 
Civil Aeronautics Board also awarded your Company a new route from Memphis, Tennessee 
to New Orleans, Louisiana, via University-Oxford, Greenwood and Jackson, Mississi,ppi and 
Bogalusa, Louisiana during 1958 in a decisi,on in the proceeding known as the South Central 
Area Local Service Case, which will become effective May 19, 1959. Service over this route 
will be inaugurated shortly after that date. The Civil Aeronautics Board Hearing Examiner, 
who conducted the Southeastern Area Local Service Case, 1ecommended Southern for a number 
of new routes. If these recommendations are adopted by the Board, your Company will be 
awarded eight additional new cities. This will result in a large increase in mileage. Officers of 
your Company will testify at a hearing starting April 6, 1959, in the Piedmont Area Local 
Service Case which involves several route extensions and improvements for our system. 
In 1958 we paid off all outstanding bank loans. A new bank credit of $400,000 has 
recently been arranged with the Chase Manhattan Bank and a group of other participating 
institutions. These include the Union Planters National Bank of Mem.phis, the -Merchants 
  Southern Airways, Inc. 
National Bank of Mobile, and the Trust Company of Georgia of Atlanta. This credit will be 
used to pay for flight equipment (including our 17th DC-3), for radio and ground equipment 
purchases and to supply working capital. 
The ten percent Federal trans,portation tax, imposed during World War II, constitutes 
a real detriment to the use of our services by the trnveling public. The principal competition 
of Southern Airways is the private automobile, which is not subject to this tax. During the 
current session of Congress, the repeal of this tax would in our opinion result in an increase 
of total revenues and earnings. 
Although our commercial revenues have increased very substantially, we are still 
dependent upon subsidy and will be for some time to come. For this reason the Civil Aero- 
nautics Board's mail rate policy is of utmost importance to your Company. In this connection, 
the Board has recently announced that a new mail rate policy for the Local Service Airlines 
will be established on July 1, 1959, or as soon thereafter as possible. 
It is believed that this new program will eliminate long periods of uncertain financial 
results under tempornry mail rates. For the first time Local Service Airlines will be able 
to formulate plans on a stable long range basis. We will assume further responsibility 
through more freedom in managerial judgment and in return we will be provided the incentive 
of a greater return on the stockholders' investment. 
Casey M. Britt, who served for some five years as Vice President of Sales, resigned 
on March 1, 1959 to accept employment outside the airline industry. Graydon Hall, presently 
Assistant Vice President of Eastern Airlines, and a thirteen year veteran of the airline 
industry, will assume duties as Vice President of Sales on May 1, 1959. 
During the past several months we have test flown three new airplanes in our 
continued search for suitable equipment to replace the time-honored DC-3. We are confident 
that, as a result of {oute improvements and additional routes which will be awarded to your 
Company in current Civil Aeronautics Board cases, we will be in a position in the near future 
to use new aircraft over portions of our system. 
More than one-half of our 550 employees have spent in excess of five years in the service 
of your Company. During the calendar year 1959, 63 of our employees will complete their 
tenth year of service. A great deal of the success of this organization can be attributed to our 
devoted, loyal employees and I should like to pay tribute to their untiring efforts in helping 
develop Southern Airways. 
Respectfully yours, 
P resident 
A,pril 3, 1959 
  Financial Statements 
Balance Sheet 
December 31, 1958 
CURRENT ASSETS 
Cash 
Accounts receivable: 
ASSETS 
United States Government-for mail and other transportation 
Airline traffic and other receivables 
Claim for income tax refund, arising from carry-back of prior 
year operating loss 
Maintenance and other operating supplies-at average cost 
Prepaid aircraft engine overhaul, insurance, and other expenses 
TOTAL CURRENT ASSETS 
INVESTMENTS AND OTHER ASSETS 
PROPERTY AND EQUIPMENT-on the basis of cost-Note B 
Hangar ( located on leased land} 
Aircraft and related equipment 
Other equipment 
Improvements to rented property 
Work in progress 
Less allowances for depreciation and overhaul 
DEFERRED CHARGES 
Unamortized route extension and development costs 
LIABILITIES 
CURRENT LIABILITIES 
Notes payable for aircraft purchased-Note B 
Accounts payable 
Airline traffic and other collections and withholdings as agents 
Salaries, wages, and vacation pay 
Accrued advertising, taxes, and other expenses 
Air travel card deposits 
Unearned transportation revenue 
Federal and state taxes on income-estimated 
Less payment made on declaration of estimated federal tax 
TOTAL CURRENT LIABILITIES 
CAPITAL STOCK AND SURPLUS-Notes B, C, D, and E 
Common Stock, par value $3.00 a share: 
Authorized-400,000 shares 
Issued and outstanding-252,400 shares 
Installment payments by employees for purchase of stock 
Paid-in surplus 
Earned surplus 
.See Notes to Financial Statements. 
$ 288,585.24 
501,366.05 
$ 140,491 . I 6 
1,525, I 13.31 
282,265.18 
57,692.67 
70,090.00 
$2,075,652.32 
1,360,214.10 
$ 250,000.00 
45,000.00 
$ 757,200.00 
35,447.87 
3,121 .78 
118,186.05 
$ 288,723.89 
789,951.29 
3,421.35 
115,164.69 
139,188.53 
$1,336,449.75 
25,556.99 
715,438.22 
49,220.64 
$2, 126,665.60 
$ 15 I ,500.00 
222,301 .22 
356,510.00 
156,722.51 
33,027.51 
46,750.00 
40,898.66 
205,000.00 
$1,212,709.90 
913,955.70 
$2, 126,665.60 
  Southern Airways, Inc. 
Statement of Income 
Period of three years ended December 31, 1958 
OPERA TING REVENUES 
Passenger 
Mail ( principally subsidy from U. S. Government)-Note A 
Express, freight, and excess baggage 
Charter 
Service sales and other revenues-net 
TOTAL OPERATING REVENUES 
OPERATING EXPENSES 
Flying operations 
Ground and indirect expenses 
General and administrative 
TOTAL OPERATING EXPENSES 
OTHER INCOME 
OTHER DEDUCTIONS 
Interest expense 
Miscellaneous 
INCOME-LOSS* BEFORE TAXES ON INCOME 
TAXES ON INCOME 
Provision for federal and state taxes ( or income tax 
credits*), exclusive of portion applicable to special 
items shown below 
NET INCOME-LOSS* 
SPECIAL ITEMS (CREDIT-CHARGE*) 
Gain (loss*) on sale of aircraft and related transactions 
Less applicable effect on income taxes (credit*) 
NET INCOME AND SPECIAL ITEMS 
Provision for depreciation and amortization of property 
and overhaul of aircra~ included above 
*Indicates red figures. 
1956 
$1 ,950,077.23 
1,823,635.06 
75,806.04 
100,886.19 
8,433.80 
$3,958,838.32 
$1,739,309.12 
1,980,49.0.76 
244,626.22 
$3,964,426. 10 
$ 5,587.78* 
11,350.40 
$ 5,762.62 
$ 13,044.50 
5,867.89 
$ 18.912.39 
$ 13, 149.77* 
7,422.82* 
$ 5,726.95* 
$ 32,956.48 
17,882.37 
$ 15,074.11 
$ 9,347.16 
$ 181 ,728.82 
Statement of Surplus 
1957 
$2,257,122.77 
2,252,993.80 
71,009.83 
50,234.25 
14,772.50 
$4,646,133.15 
$1,375,368.88 
2,897,875.13 
273,544.88 
$4,546,788.89 
$ 99,344.26 
4,044.63 
$ 103,388.89 
$ 8,497.41 
1,765.86 
$ 10,263.27 
$ 93,125.62 
59,856.52 
$ 33,269.10 
$ -0- 
-0- 
$ -0- 
$ 33,269.10 
$ 210,641.28 
Period of t hree years ended December 31 , 1958 
PAID-IN SURPLUS 
Balance January I, 1956, and December 31, 1958 
( no change during the period) 
EARNED SURPLUS 
Deficit* at beginning of year 
Net income and special items 
1956 
$ 3,121.78 
$ 71,033.02* 
9,347.16 
$ 
$ 
1957 
3,121.78 
61,685.86* 
33,269.10 
1958 
$2,799,424.24 
2,473,589.20 
127.424.58 
36.851.76 
23,745.20 
$5,461,034.98 
$1,504,496.15 
3,283,878.73 
301,938.43 
$5,090,313.31 
$ 
$ 
$ 
$ 370,721.67 
1,749.23 
$ 372,470.90 
$ 12,804.99 
3,274.70 
$ 16,079.69 
356,391.21 
192,375.00 
164,016.21 
$ 37,413.40* 
20,000.00 
$ 17,413.40* 
146,602.81 
$ 247,577.58 
1958 
$ 3,121.78 
$ 28,416.76* 
146,602.81 
SURPLUS (DEFICIT*) AT END OF YEAR $ 61,685.86* $ 28,416,76* $ 118,186.05 
====== 
See Notes fo Financial Statements. 
  Notes to Financial Statements 
December 31, 1958 
Note A-The Company is engaged in air transportation with respect to persons, property, and mail under 
authority of a Permanent Certificate of Public Convenience and Necessity issued by the Civil Aeronautics Board 
effective January 24, 1956. On October 2, 1958, the Civil Aeronautics Board issued an order fixing permanent rates 
for the transportation of mail (subsidy) for the period since April 6, 1956. 
The amounts previously reported on statements of income for the years 1956 and 1957 have been changed 
to allocate to the appropriate year, the effect of these new permanent rates, the adjustment of certain expense 
accruals related thereto, and the applicable effect on taxes on income. These changes are summarized as follows: 
AS PREVIOUSLY REPORTED 
Add (deduct): 
Allocation of 1958 transactions affecting income of 
prior years: 
Final determination of permanent mail rate 
Adjustment of certain related expense accruals 
Allocation of items reported in prior years as Special 
Items: 
Retroactive increase in temporary mail rate 
Adjustment of certain related expense accruals 
Restoration of over-provision for income taxes of 
the year 1955 
Applicable income tax effect of the foregoing alloca- 
tions 
AS ADJUSTED 
Earned-Surplus 
Deficit* at 
January I, 1956 
$ 80,411.88* $ 
-0- 
-0- 
-0- 
4,040.00 
5,338.86 
-0- 
$ 71,033.02* $ 
Net Income (Losses**) and 
Special Items 
Year Ended Year Ended 
Dec. 31, 1956 Dec. 31, 1957 
5,039.75** $ 57,739.04** 
(50,505.96) 
-0- 
61,013.30 
15,939.12 
-0- 
( 12,059.55) 
224,121.80 
18,785.94 
(61,013.30) 
(19,979.12) 
(5,338.86) 
(65,568.32) 
9,347.16 $ 33,269.10 
Note B-The notes payable for aircraft purchased were paid on January 19, 1959. 
On January 17, 1959, the Company entered into a loan agreement with a bank providing for (I) a maximum 
loan of $400,000.00, to be drawn any time prior to May 31, 1959; (2) the total amount borrowed to be evidenced 
by a 51/.i % long-term note dated June 15, 1959, payable in monthly installments of $15,000.00 for the first 14 months, 
with reduced monthly payments thereafter. As a part of this arrangement, the Company has executed a chattel 
mortgage on all aircraft, engines, and related parts and flight equipment and has agreed, among other things, (I) to 
maintain net current assets of $475,000.00 (computed without regard to the unpaid balance of the loan) or 10% of 
operating expenses for the preceding twelve-month period ( exclusive of depreciation) whichever is greater, and 
( 2) to pay no dividends or other payments relating to capital stock while the loan remains unpaid. 
Note C-At December 31, 1958, restricted options to purchase 20,000 shares of Common Stock of the Com- 
pany were held by officers; one option for I 0,000 shares at $6.05 a share expires May I, 1960, and options for the 
other 10,000 shares at $4.671 
/i a share expire on May I, 1965. These options were granted in 1955 and none has been 
exercised. 
Note D-ln January, 1958, the Company's employees completed subscription to 31,000 shares of the Com- 
pany's $3.00 par value Common Stock offered to such employees in December, 1957, at $3.25 a share, the subscrip- 
tion price plus interest to be collected through pay roll deductions over a thirty-six month period. Upon completion 
of collection for these subscriptions, the Common Stock account will be credited with the par value of the subscribed 
shares, and the balance of the proceeds will be credited to paid-in surplus. 
Note E-ln an examination of the Company's federal income tax returns for the years 1955 and 1956, now in 
progress, the representative of the Internal Revenue Service has indicated adjustments which would result in addi- 
tional taxes of approximately $47,000.00. The Company is contesting these adjustments and no provision has been 
made for any additional tax pending final settlement. 
Note F-During the year 1956 the Company adopted employee retirement plans for a major portion of its 
employees. Estimated future annual cost of the plans, including the cost of funding the past service benefits over a 
period of twenty years, on the basis of present employment, is approximately $80,000.00. The Company has also 
agreed to an additional plan to become effective on June I, 1959, under which annual cost will be increased by 
approximately $15,000.00 for the first year. 
  Accountants' Report 
ERNST & ERNST 
FIRST NATIONAL BANK BUILDING 
ACCOUNTANTS - AUDITORS 
MANAGEMENT SERVICE:S 
ATLANTA 3, GA. 
OF'FICCS IN PRINCIPAL CITIES 
ASSOCIATES IN FOREIGN COUNTRIES 
Board of Directors 
Southern Airways, Inc. 
Birmingham, Alabama 
We have examined the financial statements of Southern 
Airways, Inc. for the period of three years ended December 31, 1958. 
Our examination was made in accordance with generally accepted audit- 
ing standards, and accordingly included such tests of the accounting 
records and such other auditing procedures as we considered necessary 
in the circumstances. 
In our opinion, the accompanying balance sheet and 
statements of income and earned surplus present fairly the financial 
position of Southern Airways, Inc. at December 31, 1958, and the 
results of its operations for the period of three years then ended, 
in conformity with generally accepted accounting principles applied 
on a consistent basis. 
Atlanta, Georgia 
March 19, 1959 
Certified Public Accountants 
  Southern Airways, Inc. 
10 Years of Progress 
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 
NON-MAIL REVENUE 
PER REVENUE PLANE MILE 
 
AVERAGE REVENUE PASSENGERS 
PER REVENUE PLANE MILE 
AVERAGE REVENUE TONS 
PER REVENUE PLANE MILE 
REVENUE SC 
PLANE MILE 
73c 
10.23 
1.06 
4,041,246 
10TH 
YEAR 
  . 
Pictorial Highlights---1949-1959 
PERMANENT CERTIFICATION - December, 1955 AIRFREIGHT SERVICE - December, 1957 
~ 
MILLIONTH PASSENGER -August, 1957 FIRST TEN-YEAR ScRVICE AWARD - January, 1959 
SYSTEM SALES CONFERENCE- February, 1959