Viewing page 37 of 126

This transcription has been completed. Contact us with corrections.

TEL. CAPITOL 6-2271
319 No. ST. MARYS ST.
SAN ANTONIO 5, TEXAS

MERRILL LYNCH, PIERCE, FENNER & BEANE
UNDERWRITERS AND DISTRIBUTORS OF INVESTMENT SECURITIES AND COMMODITIES

HOME OFFICE
70 PINE ST.
N. Y. 5, N. Y.

CODE 857R 7-49

REPRODUCED FROM M. L. P. F. & B. NEW WIRE

#ALL OFFICES 

#356

JUNE 6

PAN AMERICAN WORLD AIRWAYS / PN /
WHILE THE INITIAL PUBLIC REACTION TO THE RECENTLY ANNOUNCED MAIL AND SUBSIDY PAYCUTS FOR PAN AMERICAN WAS UNFAVORABLE, WE BELIEVE A MORE PENETRATING ANALYSIS OF THE DEVELOPMENT WILL SHOW THAT THIS MAY WELL BE AN IMPORTANT CONSTRUCTIVE FACTOR. ACCORDING TO THE FIGURES SHOWN BY THE DOW JONES NEW SERVICE, THE INDICATED REDUCTION FOR BOTH THE LATIN AMERICAN DIVISION AND THE PACIFIC DIVISION AFFECTED BY THIS ORDER IS $13.45 MYN. ASSUMING A 56PC TAX RATE ON THIS AMOUNT, THE REMAINING INDICATED LOSS ON A PER SHARE BASIS IS SLIGHTLY OVER $1.00. AFTER TAXES.

THE IMPORTANT POINT TO NOTE, HOWEVER, IS THAT THE CAB BY LAW IS REQUIRED TO SEE THAT INTERNATIONAL CARRIES OPERATE PROFITABLY AND THIS HAS BEEN INTERPRETED TO MEAN IN THE NEIGHBORHOOD OF A 9PC RETURN ON INVESTED CAPITAL AFTER TAXES FOR HONEST AND EFFICIENT SERVICE. THEREFORE A CUT IN SUBSIDY AT THIS TIME STRONGLY SUGGESTS THAT THE CAB HAS REASON TO BELIEVE COMPANY OPERATIONS ARE IMPROVING SUFFICIENTLY NOT TO WARRANT AS MUCH SUBSIDY AND / OR MAIL PAY AS IN PREVIOUS YEARS. AN ANALYSIS OF COMPANY EXPENSES PER AVAILABLE TON MILE AND BREAKEVEN LOAF FACTORS SHOWS AN IMPORTANT DOWNWARD TREND. THIS IS HIGHLY IMPORTANT AS IT SHOWS THE COMPANY IS GREATLY IMPROVING ITS EFFICIENCY, AND DUE TO THE LEVERAGE FACTOR IN AIRLINE OPERATIONS, NET OPERATING EARNINGS JUMPED AHEAD SHARPLY ALSO ENABLE FURTHER IMPROVEMENT IN OPERATIONS. AND IT IS NOT BEYOND THE REALM OF POSSIBILITY THAN PAN AMERICAN MAY BE OFF SUBSIDY ENTIRELY MUCH EARLIER HER - TO - FORE THOUGH POSSIBLE. THE OPERATING TRENDS FOR THIS AIRLINE ARE IN A FAVORABLE DIRECTION AND WE DO NOT FEEL THAT THAT FACTORS SUCH AS A SUBSIDY CUT SHOULD BE ALLOWED TO OUTWEIGH THE FAVORABLE POSSIBLITIES FOR INTERNATIONAL AIR TRAVEL IN WHICH PAN AMERICAN IS THE DOMINANT FACTOR.

RECENT PRICE 204 - DIVS PAID LAST 12 MOS $O.80 - YIELD 4.0 PC
STOCK COMMENT WITH ADDITIONAL DETAILS WILL BE ISSUED
SEC RCH F 953A

#CD ALL OFFICES 
RACE
JUNE 6
RE DAILY MIMEOGRAPHED DVD LIST DATED 6/6 SCRANTON -SPRING BROOK WATER SERV 4.10 PC PFD PAYABLE 6/1 SB 6/15
DVDB F 1011A

THE INFORMATION SET FORTH HEREIN WAS OBTAINED FROM SOURCE WHICH WE BELIEVE RELIABLE, BUT WE DO NOT GUARANTEE ITS ACCURACY, NEITHER THE INFORMATION NOR ANY OPINION EXPRESSED, CONSTITUTES A SOLICITATION BY US OF THE PURCHASE OR SALE OF ANY SECURITIES OR COMMODITIES.