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NEW YORK       ARTHUR YOUNG & COMPANY         PHILADELPHIA
CHICAGO        ACCOUNTANTS AND AUDITORS       PITTSBURGH
ATLANTA            165 BROADWAY               SAN FRANCISCO
BOSTON             NEW YORK 6, NY             TOLEDO
CLEVELAND                                     TULSA
DALLAS                                        WICHITA  
DETROIT                                       -
HOUSTON                                       CANADA 
KANSAS CITY                                   ENGLAND
LOS ANGELES                                   FRANCE
MILWAUKEE                                     VENEZUELA

The Stockholders
Colonial Airlines, INC.:

We have examined the balance sheet of Colonial Airlines, Inc. at December 31, 1953 and the related statement of income and earned surplus (deficit) for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
 
In our opinion, subject to the outcome of pending proceedings and actions resulting from the investigation by the Civil Aeronautics Board (Note 2), the accompanying balance sheet and statement of income and earned surplus (deficit) present fairly the financial position of Colonial Airlines, Inc. at December 31, 1953 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. 

[[signature of Arthur Young and Company]]
New York, N.Y.
March 4, 1954