Southern Airways Annual Report 1965

I
Southern
Airways
Moves
Up
ANNUAL REPORT SOUTHERN AIRWAYS, INC. 1965
TO STOCKHOLDERS,
CUSTOMERS,
AND FRIENDS:
The year 1965 was our fifth consecutive year of
record earnings and traffic. Profit after taxes was
$937,975 or $1 .40 per share on the 670,000 shares
outstanding at year end. This was an increase of 39%
over the 1964 profit of $675,628. Operating profit
was 61% higher than in 1964 primarily as a result of
a 25% increase in commercial revenue and only a
15% increase in operating expenses. Profit on the
sale of equipment during 1965 amounted to $26,940
contrasted with $100,188 for the prior year.
We flew a record 866,648 passengers in 1965
which represented an 18% increase over 1964. Pas-
senger miles increased 14% to 163,484,000. The in-
crease in passengers combined with a minor fare
adjustment resulted in a 25% increase in passenger
revenue. Cargo revenue increased 32% over 1964
while revenue from charter operations increased
25%. Operating expenses increased primarily as a
result of a 14% increase in available seat miles and
a 12% increase in payroll costs.
Of particular importance during the year was the
analysis and selection of new short range jet equip-
ment. Since traffic growth requires newer and larger
equipment, a complete study of the airplane most
suited to our needs was undertaken as a company-
wide project. After many thousand man hours of
study, it was decided that the Douglas DC-9 was best
for Southern. Before actually placing the order for
new equipment, a detailed analysis of the proposed
jet operation was presented to the Company's Board
of Directors and informally to the Civil Aeronautics
Board. After these submissions, management placed
orders for three jets with the Douglas Aircraft Com-
pany for delivery in January, February, and March of
1967. Options were taken on three additional planes.
Initial schedules will be flown on March 1, 1967, and
it is anticipated that by April 23, 1967 some eighteen
of our principal cities will be receiving Southern Air-
ways jet service. This new flight equipment will enable us to substantially improve
service for the public and afford a greater earnings opportunity for your Company.
The total cost of the three DC-9's and related spares will be approximately $11,000,000.
Long-term bank loans in the amount of $8,000,000 have been arranged. Remaining
funds will be provided from cash on hand and operating cash flow to the date of de-
livery.
During the year we continued to upgrade the caliber of service on the system by
placing four additional 40-passenger, pressurized Martin 404's in service. This increased
our aircraft fleet to twenty-four Martins. During January 1966 the twenty-fifth Martin
was acquired and is presently being modified for scheduled service. Fourteen DC-3's
are still owned by the Company.
On October 31, 1965 our system was modified by the addition of Dothan, Ala-
bama as an intermediate point between Panama City, Florida and Montgomery, Ala-
bama on the Panama City-Memphis route. Early in February of 1966, the final pro-
cedural steps in the important Huntsville-New Orleans Nonstop Service Case were
completed, and a decision is expected shortly. A favorable decision in this pending
route case would materially improve your Company's earnings potential. Eastern Air
Lines withdrew from an agreement that would have transferred six Georgia and Florida
points from their system to Southern Airways. Your management is confident, how-
ever, that we will ultimately be granted operating rights throughout the State of Florida.
At the time of this writing, we had in excess of 2500 stockholders in forty-one states
and four foreign countries. Your Directors have unanimously voted in favor of a 3-
for-2 stock split that will be submitted for stockholders' approval at the Company's
Annual Meeting on May 2, 1966. We hope the stockholders will ratify this action. In
addition your Directors have recommended a 20% increase in the common stock cash
dividend.
Looking toward 1966 and beyond, we see continued opportunities for healthy
growth and correspondingly good earnings. The impact of the jet airplane on the
airline industry is evident in the strong position of most of the carriers, and it is cer-
tainly your management's intention to use this new tool to the fullest advantage. Dur-
ing the past five years your Company has doubled its size in terms of customers served
and increased its earnings over four times. Your management will strive to better this
record during the years ahead.
Much credLt for the success of 1965 goes to our 1200 employees who have worked
diligently to serve the public. Management takes this opportunity to thank each and
every one of them for the devotion to duty and loyalty to Southern. In addition, I
would like to thank our stockholders, customers, and friends for helping make 1965
another record year.
March 15, 1966
Respectfully yours,
Frank W. Hulse
President
naNetus
AUGUST 24, 1965
*
,,
INCREASED,
FASTER SERVICE
~ .. _ South m Airw11y1t, Inc. and importance o t is jet-
'""" ordered lhmf' Oougla.s exparurion by Southern will
'De 9 jet aitcraft for d~liv- be felt throug out all 61
' f"Y in early 1967, repre1tent- cities we 11erve. Aa additional
~ nc an ex.pendittll'tl o( ovrr jet aircraft are received,
I ll million, accordin1 to an Southern will update i
the
C-9 J
OR .. CAST:
e
Soud1crn Jet
PRICE 5
JET EllVl("
E BEGINS
EAltJJY IN 1967
TO EIGIITEEN CITIES
Jet Aervice wilf begin int eSpring oft 967 to an initial
18 o( the 6fJ cities in eight Southeastern states served
by Southern, bringing incrt"ased faster service for air
travelers, mail and cargo. 9 of these eighteen citi
fi t et airline service. Six of
2
rways;
Inc
EXECUTIVE
DIRECTORS COMMITTEE
Cecil A. Beasley, Jr. Sartain Lanier Frank W. Hulse
Ballard & Beasley Oxford Manufacturing
Washington, D. C. Co., Inc. Henry P. Johnston
Edward U. Beneke Atlanta, Georgia
W. B. White, Jr.
The Beneke Corporation R. Eugene Orr
Columbus, Mississippi Knight, Orr & Company, Inc.
Alexander J. Brunini Jacksonville, Florida OFFICERS
Brunini, Everett, Grantham G. Frank Purvis
& Quin Pan American Life
Vicksburg, Mississippi Insurance Co. Frank W. Hulse
Graydon Hall New Orleans, Louisiana President
Southern Airways, Inc. Francis D. Schas W. S. Magill, Jr.
Atlanta, Georgia Bullington-Schas & Co. Vice-President-Operations
F. Barton Harvey, Jr. Memphis, Tennessee George M . Gross
Alex Brown & Sons Elton B. Stephens Vice-President-
Baltimore, Maryland
EBSCO Industries, Inc. Maintenance and
Frank W. Hulse Birmingham, Alabama Engineering
Southern Airways, Inc.
Richard A. Trippeer W. Bayne Grubb
Birmingham, Alabama Assistant Vice-President-
Trippeer Organizations, Inc.
Alton F. Irby, Jr. Memphis, Tennessee Flight Operations
Irby-Adams-Cates Co.
W. B. White, Jr. Thomas F. Grojean
Atlanta, Georgia
Bradley, Arant, Rose & Treasurer
Henry P. Johnston White Ray W. Burden
Radio & Television Birmingham, Alabama Assistant Treasurer
Consultant
Gen. Ralph H. Wooten Mrs. Mary C. Hayes
Birmingham, Alabama
(Honorary Director) Assistant Secretary
G. Gunby Jordan United States Air Force,
The Jordan Company Retired Cecil A. Beasley, Jr.
Columbus, Georgia Memphis, Tennessee Assistant Secretary
GENERAL OFFICES
Atlanta Airport, Atlanta, Georgia
Graydon Hall
Elton B. Stephens
Graydon Hall
Vice-President-Sales
J. Kenneth Courtenay
Vice-President-Adm.
Services and Secretary
Ike F. Jones
Vice-President
Thomas A. Wiley, Jr.
Assistant Vice-President-
Sales
George F. Attwood
Assistant Vice-President-
Properties
Everett L. Martin
Assistant Vice-President-
Personnel
W. B. White, Jr.
Assistant Secretary
COUNSEL: Bradley, Arant, Rose & White, Birmingham, Alabama
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
HIGHLIGHTS
1965
Passengers ...................... 866,648
Passenger miles (000) ............. 163,484
Avg. passenger load .............. 15.4
Passenger load factor ............. 43.6%
Commercial revenues (000) ....... $14,688
Operating income (000) .......... $ 1,875
Net income (000) ................ $ 938
Stockholders' equity (000) ......... $ 4,280
Common shares outstanding ...... 670,000
Book value per share ............. $ 6.39
Net income per share ............ $ 1.40
Many
Happy
Returns
Increase
1964 (Decrease)
735,231 18%
142,990 14
14.5 6
44.0% (1)
$11,728 25
$ 1,164 61
$ 676 39
$ 3,466 23
668,223
$ 5.19 23
$ 1.01 39
4
ASSETS
Dec. 31, 1965
CURRENT ASSETS
Cash ...... .................. ....................... $ 1,817,155
Certificates of Deposit and U. S. Government
Securities - at cost and accrued interest ........... . 1,900,994
Accounts receivable:
U. S. Government - for transportation
and pub I ic service - Note A .................... $ 1,070,610
1,629,793
$ 2,700,403
Airline traffic and other receivables .. ... .. ... .... . .
Maintenance and other operating supplies -
principally at average cost, less allowances
of $143,107 in 1965 and $120,261 in 1964 for
obsolescence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,966
Prep a id expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,767
Total Current Assets$ 7,089,285
INVESTMENTS AND OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,339
PROPERTY AND EQUIPMENT - Note B
Ground
Flight Property
Equipment and Equipment
Cost :
1965 ................ $8,077,526
1964 . . . . . . . . . . . . . . . . 6,721,572
Less allowances for
depreciation and
maintenance :
1965 .. .. ........ .... 3,200,786
1964 . . . . . . . . . . . . . . . . 2,720,020
Deposit on new equipment - Note E
DEFERRED CHARGES
$1,729,783
1,434,263
965,240
812,233
$ 9,807,309
4,166,026
$ 5,641,283
150,000
$ 5,791,283
Unamortized route extension and development costs ...... $ 40,700
Unamortized long-term debt expense . . . . . . . . . . . . . . . . . . . 17,642
- - - - -
$ 58,342
$12,968,249
BALANCE SHEET
Dec. 31, 1964
$1,970,663
247,986
$ 991,157
1,315,962
$2,307,119
492,469
165,733
$5,183,970
14,363
$8,155,835
3,532,253
$4,623,582
-0-
$4,623,582
$ 40,373
15,010
$ 55,383
$9,877,298
LIABILITIES
Dec. 31, 1965
CURRENT LIABILITIES
Accounts payable and accrued expenses:
Trade accounts ........ . ........................ $ 896,345
Collections and withholding as agents . . . . . . . . . . . . . 1,310,987
Salaries, wages, and vacation pay . . . . . . . . . . . . . . . . . 492,250
Accrued taxes, advertising, and other expenses ..... . 302,679
$ 3,002,261
Unearned transportation revenue ..................... . 35,125
Air travel plan deposits .......................... .. .. . 105,400
Estimated federal and state taxes on income ............ . 715,530
550,000
Current maturities of long-term debt- Note B ........... ____ _
Total Current Liabilities $ 4,408,316
LONG-TERM DEBT (exclusive of current maturities) - Note B.. . . . . . 4,280,000
STOCKHOLDERS' EQUITY - Notes A, B, and C
Common Stock, par value $3 a share:
Authorized -1 ,000,000 shares
Issued - 670,000 shares in 1965
and 668,223 shares in 1964 . . . . . . . . . . . . . . . . . . . . . $ 2,010,000
Other paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525,246
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,744,687
$ 4,279,933
$12,968,249
See Notes to Financial Statements.
Dec. 31, 1964
$ 525,760
1,244,899
443,142
198,829
$2,412,630
28,350
99,450
315,011
722,500
$3,577,941
2,832,950
$2,004,669
521,026
940,712
$3,466,407
$9,877,298
5
6
ways;
Inc
STATEMENT OF INCOME
Years ended December 31, 1965, and December 31, 1964
OPERATING REVENUES 1965
Passenger and excess baggage ................... $12,723,017
Mail, express, and freight . . . . . . . . . . . . . . . . . . . . . . . 1,160,467
Public service revenue- Note A . . . . . . . . . . . . . . . . 5,199,185
Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,663
Other operating revenues - net . . . . . . . . . . . . . . . . . 297,315
$19,887,647
OPERA Tl NG EXPENSES
Flying operations .............................. $ 5,385,499
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,037,161
Aircraft and traffic se rvicing . . . . . . . . . . . . . . . . . . . . 4,798,675
Passenger service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 822)71
Promotion and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,395,025
General and administrative . . . . . . . . . . . . . . . . . . . . . . 879,776
Amortization and provision for depreciation 693,686
OTHER DEDUCTIONS AND INCOME
$18,012,193
$ 1,875,454
Interest on long-term debt ...................... $ 213,779
52,660
Other income, less miscellaneous deductions ..... .
TAXES ON I NCO ME
PROFIT FROM DISPOSAL OF PROPERTY
Less applicable income taxes ..... .... .......... .
$ 161 ,119
$ 1,714,335
803,300
$ 911 ,035
26,940
NET INCOME $ 937,975
SPECIAL ITEM
Applicable to prior years . . . . . . . . . . . . . . . . . . . . . . . -0-
- - - -
NET INCOME LESS SPECIAL ITEM $ 937,975
See Notes to Financial Statements.
1964
$10,213,754
881,615
5,106,762
402,769
230,553
$16,835,453
$ 4,633,024
3,315,060
4,344,337
765,623
1,187,755
851,997
573,183
$15,670,979
$ 1,164,474
$ 169,426
5,392
$ 164,034
$ 1,000,440
425,000
$ 575,440
100,188
$ 675,628
109,986
$ 565,642
STATEMENT OF
STOCKHOLDERS' EQUITY
Year ended December 31, 1965
Common Stock $3 par value
No. of
Other
paid-in
capital
Retained
earnings
Shares
Balance at January 1, 1965 668,223
Net income ............................. .
Cash dividends paid ($0.20 per share) ....... .
Exercise of stock options - Note C ........ . 1,777
Balance at December 31, 1965 .............. 670,000
( ) Indicates red figures
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 1965
Note- A- The Company has received public service revenues
since 1961 under a permanent Class Rate which provides for
the downward adjustment of such revenues when stipulated
returns on investment are exceeded. Public service revenues
received during 1965 and 1964 have been reduced $570,000
and $350,000, respectively, to reflect management's estimate
of the Company's earnings in excess of stipulated returns on
investment for those years. These reductions, as well as public
service revenues received during the eighteen month period
ended December 31, 1960 under temporary rate orders, are
subject to adjustment either upward or downward upon final
determination by the Civil Aeronautics Board.
Note B - Long-term debt at December 31, 1965 (for which all
aircraft, engines, and related equipment are pledged as col-
lateral) consists of 5% notes payable to banks, including
$2,000,000 due April 29, ~966 which is classified as long-term
debt as all of the present notes to banks will be made a part
of the Company's new financing arrangements in connection
with the acquisition of three DC-9 jet aircraft and related
spares (Note E). The Company has commitments from various
banks to borrow an additional $8,000,000, which together
with the present notes, will be under a revolving-credit agree-
ment up to the date of delivery of the last DC-9 or June 30,
1967, whichever is earlier; and thereafter the total amount of
outstanding notes will become a term-loan repayable in
quarterly installments extending through October 1, 1975. The
agreements relating to the present notes outstanding place
certain requirements and restrictions upon, among other
things, (1) net current assets, (2) net worth, (3) capital expendi-
Amount
$2,004,669
5,331
$2,010,000
$521,026
4,220
$525,246
$ 940,712
937,975
(134,000)
$1,744,687
Total
$3,466,407
937,975
(134,000)
9,551
$4,279,933
tures, and (4) payments relating to capital stock, including
dividends. As of December 31, 1965 the Company has met
all of these requirements and approximately $535,000 of
retained earnings was free of such restrictions.
Note C- In accordance with a Stock Option Plan adopted
by the Board of Directors during 1965, options have been
granted to officers for the purchase of 27,000 shares of Com-
mon Stock of the Company at a price of $15.25 per share,
exercisable 1h each year beginning in October 1967. An
additional 3,000 shares of the Common Stock of the Com-
pany have been reserved for options which may be granted
under the Plan. The Plan is to be submitted to the stock-
holders for ratification at their 1966 Annual Meeting.
Options granted during 1964 for the purchase of 1,777 shares
of Common Stock of the Company at $5.37 a share were
exercised during the year and options for a remaining 1,753
were cancelled.
On February 2, 1966 the Board of Directors recommended to
the stockholders an increase in the authorized Common
Stock of the Company to 2,000,000 shares and a three for
two stock split which would reduce the par value from $3 to
$2 per share.
Note D - The cost to the Company of its employee retire-
ment plans amounted to $565,872 for the year ended Decem-
ber 31, 1965 and the unfunded past service liability at that
date totaled approximately $670,000.
Note E-At December 31, 1965, the Company had on order
three DC-9 jet aircraft and related spares scheduled for de-
livery in the first quarter of 1967, which represents a commit-
ment of approximately $10,300,000 in excess of the related
deposit.
7
8
ERNST & ERNST
ATLANTA , GA 30303
Board of Directors
Southern Airways, Inc.
Atlanta, Georgia
We have examined the financial statements of
Southern Airways, Inc. for the year ended December
31, 1965. Our examination was made in accordance
with generally accepted auditing standards, and
accordingly included such tests of the accounting
records and such other auditing procedures as we
considered necessary in the circumstances . We made
a similar examination of the financial statements
for the preceding year .
In our opinion, subject to the effect of any
future retroactive determination of public service
revenues as explained in Note A to the financial
statements , the accompanying balance sheet and
statements of income and stockholders' equity
present fairly the financial position of Southern
Airways, Inc. at December 31 , 1965 , and the
results of its operations for the year then ended ,
in conformity with generally accepted accounting
principles applied on a basis consistent with that
of the preceding year. It is also our opinion
that the accompanying statement of source and
application of funds presents fairly the
information therein shown .
Atlanta, Georgia
February 4, 1966
STATEMENT OF SOURCE
AND APPLICATION OF FUNDS
Year ended December 31 , 1965
FUNDS PROVIDED BY
Net income .. . . . .. . . . .. . .......................... . ....... .
Add items not requiring the outlay of funds :
Provision for depreciation . . .................. . .. .. ...... .
Amortization of deferred charges . . . . .............. . .. . .. . .
Increase in long-term debt . .......... . ..... . ............... . .
Exercise of stock options .................................... .
FUNDS APPLIED TO
Net increase in property and equipment ........ . ........... . .. .
Payment of cash dividends ($.20 per share) .................. . .. .
Deposit on DC-9 jet aircraft - Note E ......... .
................ .
Increases in:
Deferred charges ......... . ..... .... .................. . . . .
Investments and other assets .. . ...... . ..................... .
EXCESS OF FUNDS PROVIDED OVER FUNDS APPLIED,
represented by an increase in working capital .................. .
See Notes to Financial Statements.
$937,975
646,144
33,843
$ 36,802
14,976
$1,617,962
1,447,050
9,551
$1,663,845
134,000
150,000
51,778
$3,074,563
1,999,623
$1,074,940
600
400
0
$7.00
6.00
5.00
4.00
3.00
2.00
0
SOUTHERN AIRWAYS
MOVES UP
i :st "b ti,
. .,1,,. I Al !WAYS, INC.
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1961
J
......
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1961 1964 1965
BOOK VALUE PER SHARE
Al \ . lNAl ,S~\IE
-1
- --i
M<IC<>tc~,;,:.,y -
i
j ,
! 676
1964
ll.GENl
tH
t N~
) rs
LL
1965
NET INCOME
(000)
$5,000
. 4,000
3,000
2,000
1,000
0
<.O
O')
ex:,
1961 1962 1963 1964 1965
STOCKHOLDERS' EQUITY
(000)
200,000
150,000
100,000
50,000
0
~
U")
M
""1"
U")-
O')
0
0
CV')
...... -
r--
PASSENGER MILES FLOWN
(000)
9
10
"Southern Airways will enter the Jet Age". These dramatic
words, spoken on August 24, 1965 by President Hulse during
a system-wide news conference, heralded a new era for the
South's Local Service Airline. This is considered the single
most significant announcement made by Southern Airways
during its 17 year history.
Ten years ago, in 1955, Southern Airways received its
permanent certification from the Civil Aeronautics Board.
During that year, 169,000 passengers flew some 28,100,000
passenger miles. During 1965, the tenth anniversary of per-
manent certification, over 866,000 passengers flew 163,484,-
000 passenger miles. Southern Airways flew five times as
many passengers during 1965 as in 1955.
While the growth of the Company has been very gratifying
during this period, we have every reason to believe a new
and challenging future lies ahead. The Douglas DC-9 twin
jet will bring jet service to cities throughout the South that
have never experienced this convenience before. Of the 18
cities in which Southern Airways will introduce jet schedules,
nine of these cities will be receiving their first jet airline
service and six of these cities are served exclusively by Sou-
thern Airways. We are confident that the original three DC-
9's will expand into a fleet of twin jets covering the majority
of our routes, bringing faster, more convenient schedules
to communities throughout the South. In addition, the avail-
ability of this service will play an important part in the con-
tinued development and growth of the South.
COMMUNITY GROWTH-Illustrative of the important con-
tribution which the local airlines make to the smaller com-
munities is the incentive they offer to commercial and in-
dustrial establishments to locate new plants and offices in
those cities. There have been many occasions where indus-
tries have chosen to locate in a community on our system in
preference to some other community, solely because of the
availability of dependable scheduled air transportation. In a
selected group of cities served by Southern having between
10,000 and 25,000 population in 1950, the population in-
crease of these cities during the ten years to 1960, was 62%.
1965 ...
President Hulse and Donald W. Douglas, Sr., Chairman of Douglas
Aircraft Co., at the signing of $11 million contract for 3 DC-9 Jets.
A similar group of cities in our area, but these without air
transportation, were selected and during the comparable
period, their population increased only 21%.
TRAINING-A successful company, in order to continue a
success, must have qualified employees, well trained, with
adequate facilities in order that they may do their job prop-
erly. To insure Southern's continued success during 1965,
our Training Department conducted training classes for over
2,000 "students" representing pilots, dispatchers, steward-
esses, and maintenance personnel. Nearly 20,000 hours of
instruction were given in actual aircraft procedures. Southern
Airways became the first regional airline to gain FAA ap-
proval for the training of co-pilots with the Company's new
Transdyne Electronic Trainer. The cockpit of this Trainer was
modified by Training Department instructors to simulate the
Martin 404 cockpit, utilizing all of the switches, handles and
A NEW ERA
"Many Happy Returns" .. . engine build up.
Test stand for checkin Radar and Radio E ui ment.
-------
panels that confront the pilot and co-pilot in the actual air-
craft. As a resu lt of this training program, over $17,000 per
year will be saved in aircraft flight time.
Over 4,600 man-hours of classroom training was under-
taken by management and supervisory personnel under the
auspices of the Georgia Institute of Technology and new
testing procedures for mechanics and specialists were de-
veloped to augment existing aptitude tests.
MAINTENANCE-Southern's Aircraft Maintenance Depart-
ment, which has been recognized throughout the South as
outstanding, continued to update procedures and mainte-
nance programs. Overhaul times were increased on Martin
404 airframes, propel lers, and engines. In addition, fixed and
portable X-Ray equipment was made a part of the Inspection
Department activities and enables internal inspection of
aircraft without expensive time consuming disassemblies.
l Indicative of Southern's reputation in the aircraft mainte-
nance and overhaul field, is the fact that over $130,000
worth of aircraft overhaul work was done for industrial air-
craft owners.
COMPETENCE-In order to be assured of competent em-
ployees, almost four applicants were interviewed for every
employee added to the payroll. Total employment increased
8.9% over 1964, to a total of 1,233 employees. Over 1,100
applicants were interviewed in order to select the 374 new
employees hired during 1965. In recognition of experience
and ability, 121 employees were promoted as the Company
continued its policy of promotion from within.
SERVICE-The consolidated reservations office in Atlanta has
continued to grow in size and volume of activities. Eglin Air
Force Base and Panama City reservations functions were
added to the consolidated office, bringing to 14 the num-
ber of cities tying into the Atlanta center. Over 71% of all
reservations on the Southern Airways system are now be-
ing processed by this one office. Last year 573,201 passen-
gers, representing an increase of 24.1% in volume over 1964,
were handled by this office. Over 781,000 telephone calls
were answered from the traveling public throughout the
southeast. Improved equipment and procedures now make
it possible for Southern Airways' Reservations Agents to con-
firm immediately space on 37 other airlines. In addition,
Southern Airways' space availability is maintained in the
reservation computers of the major trunk airlines. Eight car-
riers now have access to this information, making Southern's
product immediately available to their customers.
Four new terminal buildings on the routes of Southern
Airways: Columbia, South Carolina; Myrtle Beach, South
Carolina; Dothan, Alabama and Monroe, Louisiana were
opened during 1965 bringing improved facilities to our cus-
tomers. Specialists were appointed as Customer Service Rep-
resentatives in order to render assistance whenever needed
and to expedite the orderly flow of customer traffic through
our major terminals.
11
12
,,ways;
Inc
SALES PROMOTION AND ADVERTISING-In a continued
program of developing new business, Southern has analyzed,
refined and added to existing promotional fare programs.
During 1965, promotional fares developed over 157,000 pas-
sengers and revenues of almost $1,700,000. The more suc-
cessful of our promotional fares include: The Family Plan,
Youth Fare, Military Standby, Group Travel, and Week-end
Excursion Fares.
Our program of advertising jointly with our major interline
connecting carriers continued to pay big dividends for Sou-
thern as evidenced by the 22% increase in revenues ex-
changed between Southern and our interline friends. The
successful efforts on the part of our personnel in working
closely with Travel Agents throughout our area are reflected
in an agency revenue increase of 68%.
The rate of growth throughout the dynamic South is fur-
ther emphasized by cargo statistics. 1962 was the first year
in which Southern Airways boarded one million pounds of
air mail, air express and air freight in any one month. In 1965,
Southern Airways boarded one million pounds of air freight
(Top) Television
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Southern aristocrat.
alone in one month and a total of two million pounds in all
categories of air cargo. Over one million dollars in revenue
in one year was produced by air cargo for the first time and
represented a 32% increase over 1964. Studies on the impact
of the air cargo boom on Southern Airways are continuing
and we shall make a decision soon regarding the use of an
exclusive air freighter aircraft.
Southern Airways entered into an agreement with the
American Express Company whereby their credit cards would
be accepted for transportation over our routes and in con-
junction with transportation over the routes of Delta Air
Lines. This program is being expanded during 1966 to in-
clude other carriers as well as other credit card companies.
Arrangements were completed with the National Baseball
League Atlanta Braves for Southern Airways to become an
official ticket agent for all Braves home games. Customers
desiring to purchase tickets for any of the Braves' baseball
games may do so at any Southern Airways Ticket Office. With
the advent of the National Baseball League in the Spring of
1966 and the National Football League, Atlanta Falcons, in
the Fall of 1966, big league professional sports will have ar-
rived in the South. The establishment of two major league
professional sports is another tribute to the dynamic grow-
ing Southland served by Southern Airways.
Advertising and promotional programs were expanded
during 1965. In addition to increased exposure in national
consumer publications such as the Wall Street Journal and
Time magazine, Southern Airways' television spots appeared
during televised broadcasts of national league professional
football. Indicative of its high quality, one of our advertising
photographs was selected to be hung at the Exhibition of
Professional Photographers of America.
Southern Airways is eagerly anticipating the arrival of its
first jet aircraft and personnel are diligently working to pre-
pare for it and for the introduction of a new era of speed,
comfort and convenience to the Route of the aristocrats.
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AIRWAFS
Southern Airways, Inc.
General Offices: Atlanta Airport
Atlanta, Georgia
B BIRMINGHAM