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To Our Stockholders:

For New York Airways, as for many other airlines, 1969 was a difficult year in many respects. Operating without subsidy or other underwriting support, your Company continued to accumulate large deficits despite various efforts to improve its operation, including use of STOL aircraft.

Several factors contributed to the difficulties encountered. A decline in overall air transportation in New York area continued, partly caused by the curtailment of flights in the dispute over the air traffic control pattern, which had a depressing effect on inter-airport revenues. The operating costs of the STOL aircraft, the de Havilland DHC-6 Twin Otter, were within the forecast, and substantial progress was made toward solving the difficult problems associated with the STOL operation in the metropolitan area. Nevertheless, delays in runway construction, air traffic control delays, high weather operating minimums and high landing fees hindered the effectiveness of the Twin Otter operation at this time. When the thirty-seat Sikorsky S-61 (Mark II) helicopter became available under the Pan American Agreements, described below, it became impractical to continue this pioneer STOL effort.

The adverse conditions are reflected in your Company's financial results. The 1969 financial statements submitted herewith show a loss before extraordinary items of $1,890,043, extraordinary charges (net) of $1,384,047 and net loss of $3,274,090. For comparative purposes, data for the previous year, 1968, are also shown. Extraordinary items written off in 1969 included Boeing V-107 costs, preparatory to conversion to the Mark II helicopters.

Despite these adverse results, your Company was able to take some steps to continue its operation. At the Special Stockholders' Meeting held in October, 1969, ratification of the financial agreement with Pan American World Airways infused $998,000 new capital into the Company. Ratification of the lease agreement provided a necessary means of acquiring two Mark II helicopters from Pan American in February, 1970, and in March, 1970 the remaining Boeing V-107 was deactivated and the Twin Otter lease was cancelled.

On March 2, 1970, the Mark II aircraft inaugurated your Company's "30-30 Service," a scheduled operation offering thirty seats every thirty minutes, seven days a week, Kennedy/La Guardia/Newark. Popular reception of this convenient new services is reflected in traffic growth that, combined with a reduction of costs, had by April 1970, resulted in the lowest net loss for the Company in several years. Nevertheless, the Company is still unable to meet all current obligations, and Pan American has made advances to meet certain obligations.