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COLONIAL AIRLINES, INC. 230 PARK AVENUE ยท NEW YORK 17, N.Y. OFFICE OF THE PRESIDENT April 6, 1954 TO THE STOCKHOLDERS OF COLONIAL AIRLINES, INC. For over two years, your Management has dedicated itself to the accomplishment of an integration of your Company into a profit-making, subsidy-free airline for the benefit of stockholders, employees and the taxpayers. On March 1, 1954 the Civil Aeronautics Board issued an opinion in the Colonial-Eastern Integration Case, stating that it had decided to approve the sale of Colonial's assets to Eastern Air Lines on the basis of important public interest factors, including a saving in subsidy. The Civil Aeronautics Board further stated, however, that upon direction of the President of the United States, it was disapproving the Colonial-Eastern Agreement on the sole basis of a finding that Eastern had acquired the power to control Colonial in technical violation of Section 408 of the Civil Aeronautics Act. The Civil Aeronautics Board stated specifically that Eastern's power to "control" did not affect or influence Colonial's Management in the execution of the Colonial-Eastern Agreement. Upon receipt of assurance from Eastern that the factors which were responsible for the finding of "control" were non-existent, your Management on March 3, 1954 extended invitations to Eastern Air Lines and National Airlines to submit offers on March 10, 1954 to purchase all of your Company's assets on an exchange of stock basis. On March 9, 1954, the Civil Aeronautics Board ordered Eastern to show cause why it should not be directed to terminate its control of Colonial. Eastern filed an answer alleging that it does not control, nor have the power to control Colonial. The Civil Aeronautics Board is now investigating the transactions in Colonial's stock to determine if Eastern has complied with the Show Cause Order issued in C.A.B. Docket No. 6582. Your Management has postponed the receipt of offers pending clarification of the control problem. Sincerely, [[signature]] President
