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To the stockholders and employees

     The year 1964 saw New York Airways continue its upward progress from the low financial point of 1962.
     The public reliance on New York Airways' services as evidenced by the rapidly increasing number of passengers is a sound basis for confidence in the future potential of your Company. The technological and economic advances made possible by the transition to twin-turbine flight equipment (replacing the previous single-engine piston-powered helicopters) have established these services as an integral part of the air transportation system of the United States.
     This has been recognized both by the traveling public and by the other airlines serving the New York area. The Company now has joint fare agreements with thirty-two airlines serving every corner of the world, and has obtained unprecedented arrangements with major trunk air carriers covering new flight equipment financing and the provision of service from the heliport on the top of the Pan Am Building in midtown Manhattan. It has also obtained operating facilities at no cost, and revenue guarantees on certain of the Company's operations. Moreover, the existing agreements represent only a beginning. Based on discussions already underway, the prospects for additional agreements of a similar nature are favorable.
     As previously reported, since 1961 New York Airways has been confronted with the necessity of continuing its operations under a declining scale of arbitrarily restricted federal subsidy support. As a result, the Company has recorded a loss for 1964. As shown by the financial statements submitted herewith, this loss amounted to $189,950 or 75c per share. In 1963 the loss amounted to $227,890 or 94c per share and in 1962 $343,953 or 141c per share.
     The operating and financial results for 1964 show significant improvements over those for prior years. Although the Company received $56,486 less subsidy for 1964 than for 1963, its net loss (before "Special Items") was $176,999 less. Similarly, despite a subsidy reduction of $315,825 from the amount received in 1962, the 1964 loss was $154,003 less than in the earlier year.
     Commercial (non-subsidy) revenues earned during 1964 totaled $2,628,601 as compared with $2,237,830 for 1963 and $1,694,188 for 1962 - or increases of 17% and 55%, respectively. Unit operating costs were also significantly reduced. Thus, in 1962 and 1963, the Company's operating cost per passenger mile amounted to 116c and 87c respectively. This figure was reduced to 83c in 1964.