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. S ,l ( ; 1 \,1::~, ;:/ ''.' ;~;;e~1:~!~,5~r(wp~n 1 ,cl &... $ ~ i t'~~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 Advertising ( Bottom) San ta rode a 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. Newspaper Ads National Publications - ~ T R~Al h\ngton Wir w ;:~!;t..: w,--:t ~ f j Present Routes Other Route Applications Pending .. . .. . ....... -c,~AVANNAH WAYCROSS . Q Q : B UN SWICK .. .. .: : ONVILLE AMA o . ITV TALLAHASSEE : . . : . . . . .. . .... d ... GAINESVILLE\ . 9 DAYTONA BEACH OCALA 0. ' : TITUSVILLE .. : qcocoA ORLANDO 0-'"" . . / <:)MELBOURNE TAMPAQ .... dLAKELAND- .... VERO BEACH WINTER HAVEN FT. PIERCE : SARASOTA- Q~RAOENTON \_ WEST PALM Q BEACH ... 0 t)FT. MYERS . FT. b.~~~:~S ? LAUDERDALE ...... :PMIAMI KEY :' WESTd ,. 01the11 AIRWAFS Southern Airways, Inc. General Offices: Atlanta Airport Atlanta, Georgia B BIRMINGHAM