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FINANCIAL CONDITION

The Balance Sheet of your Company at December 31, 1953 compared with the Balance Sheet at December 31, 1952 is included in the following pages.

Net Working Capital was $113,680 with Current Assets at $1,418,614 and Current Liabilities at $1,304,934. At December 31, 1952, Net Working Capital was $863,907 with Current Assets at $2,194,348 and Current Liabilities at $1,330,441. The shrinkage in Current Assets is  explained by the fact that during the year your Company purchased for cash, additional flight equipment, with related spare parts and other equipment in the amount of $967,937.

At December 31, 1952 our Property and Equipment accounts were shown at cost $3,336,575, less depreciation reserves of $2,451,242, leaving a net book value of $885,333. At December 31, 1953, the cost is stated at $4,304,512 with depreciation reserves of $2,585,077, leaving a net book value of $1,719,435. Included in these amounts is your Company's investment in flight equipment comprising five DC-4 airplanes and eight DC-3 airplanes, plus spare engines and component parts. This is a very conservative valuation in terms of the current market.

Because of our low working capital position your Company has entered into a stand-by Credit Agreement up to $300,000, extending through August 1, 1955. To date it has not been necessary to make any borrowings under this agreement and it is anticipated that this credit will be adequate during the term of this agreement, as we have no immediate plans to purchase additional equipment for the operation of our present routes.


FUTURE OUTLOOK

A general decline in airline traffic, which started following the cessation of hostilities in Korea, has continued into the early months of 1954 and operations for the first quarter of 1954 will result in a loss.

Domestic passenger traffic increased 6% and Bermuda passenger traffic decreased 21% in January and February 1954, as compared to the passenger traffic for the same months of 1953. Advance Bermuda bookings are, however, currently ahead of last year and we are continuing an aggressive sales promotion and advertising program in order to maintain our competitive position on both the New York-Montreal and New York-Bermuda routes.

Bermuda round-trip fares were increased by all lines serving Bermuda, from $95.00 to $99.00 on April 1, 1954. We have also filed petitions for fare increases on our New York-Montreal route and it is expected that these will be in effect by June 15, 1954.

The night coach service fares between New York and Montreal were increased in December, 1953. This service is continuing to show a good load factor. Coach service between Syracuse and Washington was discontinued last November as it had proved unprofitable.