Southern Airways Annual Report 1961

Southern
AIRWAYS:
INC.
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THE AIRLINE THAT IS. GROV\IING V\IITH THE SOUTH
Southern
AIRWAY
S INC.
DIRECTORS
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
F. BARTON HARVEY
Ale'x Brown & Sons
Baltimor.e, Md.
FRANK W. HULSE
Southern Airways, Inc.
Birmingham, A la.
ALTON F. IRBY, JR.
Irby-Adams-Cates Co.
Atlanta, Ga.
HENRY P. JOHNSTON
Br1.tnini, Everett, Grantham & Quin Radio & Television Consultant
Vicksburg, Miss. Birmingham, Ala.
GRAYDON HALL
Southern Airways, Inc.
Atlanta, Ga.
G. GUNBY JORDAN
The Jordan Company
Columbus, Ga.
EX ECUTIV E CO M MITTEE
GRAYDON HALL
FRANK W. HULSE
OFFICERS
FRANK W. HULSE
President
IKE F. JONES
Vice President
GRAYDON HALL
Vice President-Sales
W. S. MAGILL, JR.
Vice President-Operations
M. LAMAR MUSE
Vice President-Finance
HENRY P. JOHNSTON
ELTON B. STEPHENS
J. KENNETH COURTENAY
Vice President-
Administrative Services
GEORGE F. ESTEY
Secretary
C. H."D. TARRER
Treasurer
GEORGE F. ATTWOOD
Assistant Vice President-
Facilities and Properties
R. EUGENE ORR
Knight, Orr & Co., Inc.
Jacksonville, Fla.
FRANCIS D. SCHAS
Bullington-Schas & Co.
Memphis, T enn.
ELTON B. STEPHENS
Ebsco Industries, Inc.
Birmingham, A la.
W. B. WHITE, JR.
White, Bradley, A rant, All & Rose
Birmingham, A la.
GEN. RALPH H. WOOTEN
United States A ir Force-R et.
Memphis, Tenn.
W. B. WHITE, JR.
GEORGE M. GROSS
A ssistant Vice President-
Maintenance and Engineering
W. BAYNE GRUBB
Assistant Vice President-
Flight Operations
CECIL A. BEASLEY, JR.
Assistant Secretary
W. B. WHITE, JR.
A ssistant Secretary
GENERAL OFFICES: Atlanta Airport, Atlanta, Georgia
COUNSEL: White, Bradley, Arant, All & Rose, Birmingham, Alabama
Kilpatrick, Ballard & Beasley, Washington, D. C.
AUDITOR: Ernst & Ernst, Atlanta, Georgia
STOCK TRANSFER AGENT: First National Bank of Birmingham, Birmingham, Alabama
ADVERTISING COUNSEL: Harris & Weinstein Associates, Inc., Atlanta, Georgia
TO: SHAREHOLDERS,
EMPLOYEES AND FRIENDS
April 20, 1962
The year 1961 was the best in Southern Airways' history. Profit after taxes
amounted to $204,349 or 70( a hare, a record high. During the year, we also
established new records for revenue, for passengers carried and for cargo handled.
Our system was expanded with the opening of seven new stations bringing the
total to 52 which provide ervice for 61 citi . We added five pressurized Martin-
404 aircraft as a part of our fleet modernization program.
Most of the local service airlines, including Southern Airways, started business
nearly fifteen years ago on an experimental ba is. The importance of this new seg-
ment of the air transportation industry was first recognized nationally in 1955
when the Congress enacted legislation granting permanent status to all 13 local car-
riers. Effective January 1, 1961, the Civil Aeronautics Board established the Class
Mail Rate designed to enable the local carriers to earn reasonable profits. Again,
the importance of our industry was recognized nationally.
The results of our first year of operation under the Class Rate are reported here-
in. Under the new rate philosophy, we will be able to make long-term plans which
were not possible in the past, and we are confident that we will grow and prosper on
a sound financial basis. In the years ahead, we expect to serve even a greater seg-
ment of our Southland as the larger airlines gradually give up many of the cities
presently served. Our operations will also be extended to serve additional cities of
our area as their growth warrants air transportation.
With expanded operations in the years ahead, we are confident tl)at our service
will prove more valuable to the traveling public and that this larger operation
will provide good returns for our investors.
Respectfully yours,
FRANK W. HULSE
President
GENERAL
OFFICES,
SOUTHERN
AIRWAYS, INC.
on May 1, 1962,
will be relocated
in this functional
new building
which is part of
International
Office Park and
faces Southern's
maintenance
facilities at the
Atlanta Airport.
1
2
Southern
Airways
Thirteenth
Annual Report
THE
YEAR
OF
ACHIEVEMENT
EARNINGS: The 1961 earnings of $204,349 represent not only the highest earn-
ings in the history of the Company but mark the resumption of a continuous series
of profitable operations beginning in 1953, broken only by a loss for the year 1960
when service was curtailed for four months by a pilot strike. Net earnings plus
interest charges represent a return of 9.1 % on year end invested capital (stock-
holders' equity plus long term debt).
REVENUES: Like earnings, both commercial revenues received from the cus-
tomer for services performed and public service revenues received from the Govern-
ment for services made available reached new highs in 1961. A 60 % improvement in
commercial revenues together with receipt throughout the year of public service reve-
nues based on the new Class Mail Rates contributed to the improved earning position.
EXPENSES: As a result of more efficient use of flight equipment and continued
vigilant control of ground and indirect expenses, together with a close working re-
lationship between management and employees throughout the year there was an
improvement in unit cost per plane mile flown tota-ling 10.3. This improvement
was made even though five of the larger and faster Martin-404 aircraft were in-
troduced into the fleet during the latter part of the year. Such an introduction of new
equipment is usually accompanied by a period of high costs which were avoided only
by excellent advance planning by all departments concerned.
53.45
4.63
.75
.28
59.11
40.89
100.00
FINANCES: Satisfactory agreements were made during the year with banks,
suppliers and private investors for the Company's first substantial long term financ-
ing which made possible the purchase of the fleet of Martin "aristocrat" aircraft
and related support equipment together with providing the Company for the first time
in its history with adequate working capital.
Southern Airways, Inc., has filed a claim with the Civil Aeronautics Board for
retroactive public service revenues applicable to the open rate period beginning July
1, 1959 and ending December 31, 1960 in the approximate total amount of $600,000,.
of which roughly $200,000 is applicable to the normal operating period and $400,000
to the four month period (June 5 to September 29, 1960) during which operations
were affected by a pilot strike. This claim is presently being processed by the Civil
Aeronautics Board, and every effort will be made to reach a satisfactory settlement
during 1962. This claim is not reflected in financial statements included in this report.
THE 1961 REVENUE DOLLAR
SOURCE DISPOSITION
Passengers ...... $ 5,718,046 51.56 Wages & Salaries .
Cargo Carried _. 494,839 19.23 Materials & Repairs Purchased
Private Charter Flights 79,741 8.94 Services Purchased
Miscellaneous Services 30,526 8.29 Taxes and Insurance (including
$ 6,323,152
$281,073 for benefit of employees) ..
Public Service Revenue . . . . . ..
4,374,136
6.11 Rentals, Advertising &
Other Items (Net) ..
3.96 Depreciation and Amortization
1.91 Retained Earnings .
Total .... $10,697,288 100.00 Total
3
$ 5,515,237
2,056,876
956,504
886,445
654,342
423,535
204,349
$10,697,288
4
TRAFFIC
Passengers carried
Passenger miles flown
(000 omitted) . . . . . . . . . .
Mail ton-miles .....
Express & Freight ton-miles ..
Total revenue ton-miles
Revenue miles .flown
Airports served .....
FINANCIAL
Revenues-
FIVE
YEARS
OF
1961 1960
401,711 260,760
71,300 46,765
290,091 179,054
480,904 288,707
7,603,753 4,953,317
8,212,646 5,669,267
52 45
Commercial ... $ 6,323,152 $3,964,069
Pub I ic service .............. 4,374,136 3,068,190
Total . . . . . . . . . 10,697,288 7,032,259
Expenses-
Salaries & wages . 5,515,237 4,012,249
Depreciation & amortization . 423,535 316,365
Other - (net) .... . .... 4,554,167 3,035,993
Total 10,492,939 7,364,607
Net Profit or (Loss) .. . ....... 204,349 332,348)
Selected Balance Sheet items -
Net working capital . 766,344 504,055)
Property & equipment (net} 2,564,881 1,238,651
Stockholder equity .. $ 901,470 $ 689,140
Shares of common stock
outstanding 288,000 285,244
1959 1958 1957
258,180 . 226,230 216,615
45,583 41,818 38,318
125,109 111,436 115,057
295,662 211,877 132,435
4,793,228 4,333,498 3,919,780
4,809,191 4,076,250 3,901,046
35 33 30
$3,612,590 $3,087,814 $2,494,056
2,525,815 2,373,221 2,152,077
6,138,405 5,461,035 4,646,133
3,376,756 2,893,079 2,544,901
187,682 209,582 179,044
2,552,371 2,211,771 1,888,919
6,116,809 5,314,432 4,612,864
21,596 146,603 33,269
43,917 123,740 ( 28,830)
1,030,008 715,438 623,890
$ 974,195 $ 913,956 $ 731,905
252,400 252,400 252,400
Southern
AIRWAYS INC.
Years ended December 31, 1961, and December 31, 1960
STATEMENT OF INCOME
Year Ended December 31,
1961 1960
OPERATING REVENUES
Passenger and excess baggage
Mail, express, and freight .
Charter . .
Pub I ic service revenue - Note A ..
Other operating revenues - net ..
OPERATING EXPENSES
Flying operations ...
Maintenance ..
TOTAL OPERATING REVENUES
Passenger service ....... .
Aircraft and traffic servicing
Promotion and sales
General and administrative ............. .
Amortization and provision for depreciation
TOTAL OPERATING EXPENSES
OTHER INCOME
OTHER DEDUCTIONS
... $ 5,718,046
494,839
79,741
4,374,136
30,526
$10,697,288
. $ 2,913,497
2,067,213
580,304
2,858,699
730,026
534,314
423,535
$10,107,588
$ 589,700
27,988
$ 617,688
Interest - principally on long-term debt .... $ 126,523
8,283
Miscellaneous ......... .
INCOME-LOSS** BEFORE TAXES ON INCOME
TAXES ON INCOME
Provision for taxes on income or estiniated
$ 134,806
$ 482,882
refundable taxes on income* 278,533
NET INCOME-LOSS** $ 204,349
STATEMENT OF SURPLUS
$3,621,541
306,286
10,095
3,068,190
26,147
$7,032,259
$2,198,369
1,498,766
373,264
2,114,526
622,509
452,138
316,365
$7,575,937
$ 543,678*
8,793
$ 534,885*
. $ 34,292
2,018
$ 36,310
$ 571,195**
238,847*
$ 332,348**
Year Ended December 31,
PAID-IN SURPLUS
Paid-in surplus at beginning of year ...
Add excess of proceeds ($3.55-$4.675 a share in 1961
and $3.55-$4.00 a share in 1960) over par value ($3.00
a share) of Common Stock issued - 2,756 shares in
1961 and 32,844 shares in 1960
EARNED SURPLUS - Notes A, 8, and D
Earned surplus - deficit* at beginning of year .
Net income - loss**
EARNED SURPLUS - DEFICIT* AT END OF YEAR
*I ndicates red figures.
See Notes to Financial Statements.
1961 1960
.. $ 22,536
3,151
$ 25,687
. $192,566*
204,349
$ 11,783
$ 3,122
19,414
$ 22,536
$139,782
332,348**
$192,566*
5
6
YEAR
OF
ACHIE'1EMENT
J
_____________
Sa
_u_
th
_
'lln
_
11 __ ~.
AIRW'AYS: INC.
ASSETS
CURRENT ASSETS
Cash ..
U.S. Treasury bills - at cost and accrued
interest (maturity value $600,000)
Accounts receivable:
United States Government - for mail and
other transportation - Note A . . . . . . . . . . . . . . .....
Airline traffic and other receivables .
BALANCE SHEET December 31, 1961
... $1,007,807
810,876
$ 875,310
592,165
1,818,683
LIABILITIES
CURRENT LIABILITIES
Notes payable
Payments on long-term debt due within one year - Note B ..
Accounts payable
Collections and withholdings as agents ...
Salaries, wages, and vacation pay
Accrued advertising, taxes, and other expenses
Air travel card deposits
Unearned transportation revenue
Estimated federal and state taxes on income - Note D ..
Maintenance and other operating supplies-
principally at average cost, less
allowances of $9,962 for obsolescence
Prepaid expenses ...
255,432
49,767
TOTAL CURRENT LIABILITIES
TOTAL CURRENT ASSETS
INVESTMENTS AND OTHER ASSETS ..................... . .... .
PROPERTY AND EQUIPMENT - on the basis
of cost- Note B
Aircraft and related equipment
Ground property and equipment
Work in progress
Less allowances for depreciation and
maintenance
DEFERRED CHARGES
Unamortized route extension and development costs ..
Unamortized long-term debt expense ............ . .
.. .... $4,076,361
877,561
12,361
$4,966,283
2,401,402
..... $ 182,623
82,471
$3,591,357
55,476
2,564,881
265,094
$6,476,808
LONG-TERM DEBT - Note B
6% notes payable to banks (less $539,700 due
within one year) .
6% notes payable to suppliers (less $117,887
due within one year)
6% subordinated convertible debentures due
December 1, 1975
CAPITAL STOCK AND SURPLUS - Notes A, B, C, and D
Common Stock, par value $3 a share:
Authorized - 1,000,000 shares
Issued - 288,000 shares
Paid-in surplus
Earned surplus
Contingent liabilities - Notes D and F.
See Notes to Financial Statements.
$1,025,325
425,000
1,300,000
$ 864,000
25,687
11,783
$ 5,625
657,587
454,243
904,857
318,590
104,438
65,025
35,648
279,000
$2,825,013
2,750,325
901,470
$6,476,808
7
8
Southern
AIRWAYS: INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1961
NOTE A - The Company operates under the authority of a "Certificate of Public Convenience and Necessity for
Local or Feeder Service" issued by the Civil Aeronautics Board for a period of unlimited duration. Such certificate entitles
the Company to receive mail and public service revenues from the U. S. Government on the basis of rate orders issued
by the Civil Aeronautics Board. During the period of eighteen months ended December 31, 1960, the Company was com-
pensated for public service revenues under a temporary rate which is subject to adjustment by the Civil Aeronautics
Board either upward or downward upon determination by the Board of a final rate for that period. Effective January
1, 1961, the Company, along with other local service carriers, has received public service revenues based on a permanent
class rate order issued by the Civil Aeronautics Board.
NOTE B - 6% notes payable to banks are due in monthly installments of $44,975 to December 1, 1962 with reduced
monthly payments thereafter to September 1, 1966. All aircraft, engines, and related equipment are pledged as collateral
for these notes.
6% notes payable to suppliers are due in quarterly installments of $25,000 (subject to increase or decrease
due to earnings or receipt of r etroactive mail pay) with the remaining balance due April 30, 1964, except that one of
the two suppliers may, at its option, accept shares of Common Stock ( at $4 a share) of the Company for any unpaid
balance at December 31, 1963. The Company has executed to each of these suppliers as collateral second mortgages on
the equipment pledged to the banks. $442,887 'of the remaining balance is subordinated to the notes payable to banks.
6% subordinated convertible debentures due December 1, 1975 consist of one series dated December 1, 1960 in
the amount of $300,000 and an additional series dated July 1, 1961 in the amount of $1,000,000. The $300,000 series is fully
subordinated to all indebtedness of the Company for money borrowed, for acquisition of aircraft or other flight equipment, or
other indebtedness having a maturity date of more than one year, and the $1,000,000 series is fully subordinated to each of
the 6% notes payable described above and any future bank indebtedness of the Company for money borrowed which has a
maturity date of less than five years. Each series of these debentures is convertible into Common Stock of the Company at con-
version rates ranging from $4 to $10 a share at varying dates and is callable by the Company at premiums ranging from 6%
downward.
Each of the agreements relating to notes and debentures places certain restrictions upon, among other things,
(1) net current assets, (2) net worth, (3) redemption of the 6% subordinated debentures, and (4) payments relating to
capital stock, including dividends. As of December 31, 1961, the Company had met all of these requirements and earned
surplus was not restricted.
NOTE C - Restricted options held by officers as of December 31, 1961, for the purchase of Comi;non Stock of the
Company (all of which are presently exercisable) are as follows:
Date Granted Shares
May 2, 1955 9,000
March 4, 1960 9,900
TOTAL 18,900
Option Price
$4.675
4.40
Date of Expiration
May 1, 1965
December 27, 1962
During the year ended December 31, 1961, options were exercised for 1,000 shares at $4.675 and 600 shares at $4.40.
ERNST & ERNST
NOTE D - Representatives of the Internal Revenue Service have
examined the Company's income tax returns for the years 1955 through
1958 and have proposed adjustments, relating principally to depreciation
rates, which the Company is protesting with the Appellate Division of
the Internal Revenue Service. The maximum additional tax, in excess of
the amount provided in the financial statements, which would be due
for these and subsequent years through 1961 amounts to approximately
$85,000 of which approximately $52,000 would be recoverable in years
subsequent to 1961 as a reduction of any taxes otherwise due for such
years.
ATLANTA 3, GA.
Board of Directors
Southern Airways, Inc.
Atlanta, Georgia
We have examined the balance sheet of
Southern .Airways, Inc. as of December 31, 1961,
and t he related statements of income and surplus
for the year then ended . Our examination ~ras
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 . We made a similar examination
of the financial statements for the preceding year.
In our opinion, subject to the effect of any
future retroactive determination of mail compensa-
tion rates as expl ained in Note A to the financial
statemen.s, the accompanying balance sheet and
statements of income and surplus present fairly
the financial position of Southern Airways, Inc. at
December 31, 1961, and the results of its operations
for the year then ended , in conformi ty with generally
accepted accounting principles applied on a basis
consistent with that of the preceding year.
Atlanta, Georgia
April 9, 1962
Certified Public Accountants
NOTE E - The cost to the Company of its employee retirement plans
amounted to $60,887 for the year ended December 31, 1961; however, it is
not possible at this time to determine future annual costs.
NOTE F -Petitions have been filed by the Air Line Pilots Associa-
tion International, a labor union representing certain former employees
of the Company, alleging that the Company has failed to bargain in
good faith. One of these petitions, filed with the Civil Aeronautics Board
in Washington, D. C., requests suspen sion or revocation of the Com-
pany's Certificate of Public Convenience and Necessity. The second
petition, filed with t he Federal District Court in Nashville, Tennessee,
seeks damages in the amount of $1,000,000 and reinstatement of these
former employees. The Company denies these allegations and a tentative
decision has been issued in the Board case and a memorandum decision in
the Court case substantially upholding the position of the Company.
Forty-eight of these former employees have filed individual
actions in the Superior Court of Fulton County, Georgia alleging that the
Company failed to supply the plaintiffs with descriptions of various pen-
sion plans and asking da]Jlages ranging from $50 to $100 a day from vari-
ous dates in August 1960. The Company denies any liability in connection
with these suits.
OPERATIONS
The year 1961 was one in which Southern devoted a great deal of its collective
energy on the planning, training and work necessary to make the first aircraft equip-
ment change since commencing operations. All departments participated from the
initial planning conference in April to the proving flights in October.
The increased mileage flown during the year combined with the step up to
Martin aircraft placed an unprecedented load on the Operations Department. It is
pleasing to note the enthusiasm with which all employees met their responsibilities.
As a result, the overall task was accomplished with a high degree of proficiency at
less than the projected cost.
Southern flight crews have continued the perfect safety record of approxi-
mately 390 million passenger miles since the start of operations in 1949. The present
pilot group has accomplished about 25 o/o of that total. New training programs were
instituted during the year at considerable expense in furtherance of the prime con-
sideration of safety.
Flight Dispatch was expanded to provide continuous around-the-clock service.
By this action flight activities are more efficiently planned and coordinated, thus
better overall performance is obtained . .
The Maintenance and Engineering Department prepared and conducted, with
cooperation from other departments, an excellent training program for all personnel
involved in the operation of the Martin-404. Under this program Company employees
obtained over 25,000 hours of training.
The Martin aircraft were equipped with the latest model weather radar. A
new exterior paint design of simple flowing lines dramatized the trim lines of the
airplane.
A new interior color design was introduced based on the use of contemporary
pastel colors. This interior decor is comparable to interiors found on the newest jet
equipment and presents a cheerful, comfortable atmosphere to 'passengers. The use
of vinyl paints enabled maintenance to easily install this new interior by refinishing
existing material in the airplane. This resulted in improved appearance at minimum
cost. Favorable comments from passengers concerning these improvements have re-
sulted in a decision to accelerate this same interior program for the DC-3 fleet. Shop
and hangar facilities for all purposes were expanded in a program which is still
under way.
All of the programs reflect the progress made and the skills acquired which
have established a good foundation for future growth.
9
10
THE
YEAR
OF
MANAGEMENT DEVELOPMENT
Rapid expansion has created a need for additional managerial talent at all levels of
the organization. Continuing training programs were established for Southern em-
ployees and supervisors which have prepared them for additional responsibilities.
Programs were instituted to keep Southern management personnel and employees up
to date on current employee relation techniques and to maintain standard personnel
policies throughout the Company. Long range management development was assured
by utilizing the cooperative education departments of the Georgia Institute of Tech-
nology and Auburn University.
In addition to the supervisory and employee training programs there was a
continual evaluation of all employees to determine their growth potential and train-
ing needs. This is a continuation of Southern Airways' policy to promote employees
from within.
There has been a realignment of the Company's organizational structure to
include a new department. The Administrative Services Department was created in
1961 to include systems and procedures, economic research and electronic data proc-
essing. J. Kenneth Courtenay will head this new department as Vice President-Ad-
ministrative Services.
Recently the Treasury Department was reorganized and expanded. M. Lamar
Muse was elected Vice President-Finance with full responsibility for the operation of
this department. Mr. Muse, a Certified Public Accountant, has fourteen years of air-
line financial experience and will be a valuable asset to the Company. George F. Estey
continues as Corporate Secretary and C.H. D. Tarrer was promoted from Assistant
Treasurer to Treasurer of the Company.
PERSONNEL
The number of employees increased from 932 at the end of 1960 to 991 at the end of
1961. New procedures and techniques were used to secure the best possible applicants
for new positions in the Company. In addition to normal testing and screening proce-
dures, working agreements were set up with the State Employment Departments to
assist the Company.
Southern Airways' employee benefit program is the finest of the local service
industry. Employee benefits were reviewed and many additions and improvements
took place in 1961. The group insurance plan was broadened to provide additional
coverage for employees and their families.
SERVICE BEGINS FRIDAY, DECEMBER 1
..
_,. '"TI ,a,,11~'
a 'IIDl
SALES & SERVICE
The year 1961 was clearly the most significant in Company history. New records
were set in passengers carried, mail and cargo handled. The most significant, single
advance in the expansion of "Southern Hospitality Service" during 1961 was the
purchase of five Martin-404 aircraft. The acquisition of these fast, 40-passenger,
pressurized, air conditioned planes enabled Southern to upgrade its corporate image
throughout the industry. The planes were christened "Southern aristocrats" and
have been widely acclaimed by travelers.
As a result of improved long line telephone techniques, consolidations of
reservations offices were made which resulted in improved quality of service and de-
creased operating costs through more economical personnel staffing. These new
services permit residents of principal cities to dial a local number but actually talk
to reservations personnel in the central reservations office.
Careful attention has been given to the control of personnel costs through-
out the system. Adjustments are made between stations whenever required to main-
tain adequate staffing in all offices while keeping the overall personnel increases to a
minimum. Seven new stations plus new, larger terminals in Atlanta and Nash ville
were responsible for the bulk of the increase in sales personnel during 1961. Pas-
sengers boarded throughout the ystem increased 53 1/a over 1960 yet sales personnel
increased only 6 % .
Southern Airways continues to lead all local service carriers in Joint Airlines
Military Traffic Offices (J AMTO) revenue. Revenue from these sources amounted
to $608,985 in 1961, an increase of 25 % over 1960.
Great emphasis was given on-time performance during 1961. With splendid
cooperation between ground and flight crews, an enviable record has been estab-
lished. This is another concrete example of the increased dependability of "Southern
Hospitality Service."
Faster passenger check-in procedures, write-your-own-tickets, and group ex-
cursion fares were other sales highlights of 1961.
ADVERTISING
"We've Got Good Connections" ha proven to be a mo t effective advertising slogan,
and has recently been the foundation of the Company's advertising program. Ac-
curately descriptive of the type service Southern provides, it has been recognized
throughout the country by the traveling public and the airline industry as synonymous
with Southern Airways.
. In order to obtain the widest possible recognition of the Company's expanding
services, the advertising budget was distributed among all system cities on the basis
of traffic potential and flight schedules. Southern Airways' advertising appeared in
newspapers, trade and consumer publications, on radio, television and outdoor. The
continuity of themes throughout all phases of the advertising program was stressed,
and careful selection in the placement of all advertising contributed significantly to
the success of the 1961 program. Specialized direct mail programs, including monthly
issues of the company publication "The Southernaire" with new format and new
editorial approach, strengthened efforts to keep the public informed of Southern
Airways' progress.
Southern Airways has always enjoyed a fine relationship with the trunk
carriers in' the exchange of interline business. Indicative of this close relationship
is the joint advertising program between Southern and American, Delta, and Eastern
Air Lines. Newspaper, radio, television, and outdoor advertising was created to sell
the good connections offered by Southern to these carriers, and the excellent increases
in interline traffic reflect the merits of this expanding program.
11
12
THE
YEAR
Although the year 1961 was truly the year of achievement, management is confident
that this will merely be a base upon which to build a bigger and better Southern
Airways in the years ahead.
The laws of economics will force the large airlines to discontinue service in
many communities throughout the South. This applies to some communities pres-
ently served by Southern Airways as well as many others now served by trunk air-
lines only. This will provide the largest source of additional business. In some
instances where the growth of cities of the area will warrant scheduled airline service,
it is anticipated that such cities will be added to routes of the Company.
Management envisions that the strengthening of the present system by these
additional sources of revenue will permit a gradual reduction in public service reve-
nue provided by the Federal Government. Although such revenue is for the direct
benefit of smaller communities, the Company nevertheless is using its best efforts
to reduce dependence upon this source of income.
The modest program begun in 1961 with the addition -of five pressurized
Martin-404 aircraft will be continued until modern equipment is in use on all route
segments that economically support such aircraft. Douglas DC-3 equipment will con-
tinue to serve a number of the smaller communities for some years ahead.
The Civil Aeronautics Board has undertaken a program of liberalized oper-
ating authority for all local airlines. Broadening of this authority will permit
Southern Airways to improve service in many areas.
Occupancy of the new office building will improve operating efficiency to a
substantial degree. Whereas offices are now located in several different buildings, in
some instances three miles apart, the new location will give all offices ready access to
each other. It is-estimated that increased efficiency will more than pay for the added
cost of this facility.
Strengthening in the management team,outlined elsewhere herein, will help all
employees give better service to the public. Management recognizes that the Com-
pany has a most valuable asset in the working force who are eager to do an outstand-
ing job for the traveling public. A continuing program of employee improvement
will always be given high priority by management.
W --'
~
~/ ''WE'VE
GOT GOOD
CONNECTIONS"
DYERSBURG
HATTIESBURG
\
BATON
\
BRISTOL-KINGSPORT-
JOHNSON CITY
SERV ICE TO BE
ANNOUNCED
SERVICE TO
BEG IN JUNE 18
ROUTE EXPANSION AND DEVELOPMENT
During the first half of 1961, seven new stations
were opened, namely: Clarksville, Dyersburg,
Morristown, Union City and Paris in Tennessee
and Corinth and Pascagoula in Mississippi. With
these additions, the Company now seryes 61 cities
through 52 stations and operates 5,290 route miles.
Except for Rockwood, Tennessee, whose airport is
under construction, service has been inaugurated
at all points awarded in the Southeastern Area
Local Service Case.
Substantial new route awards were granted
in the Piedmont Area Local Service Case which
was decided in March of 19e2. Service over these
new routes will be inaugurated June 18, 1962 and
will operate between Atlanta and Columbia, the
state capital, and on to Charleston, South Caro-
lina's principal seaport, and to Myrtle Beach, the
largest recreation area in the state. Myrtle Beach,
Charleston and Columbia will also be connected
with Greenville and Spartanburg. This decision
granted liberalized operating authority that will
permit direct service between these points.
ROUTE OF THE
aristocrats