Viewing page 36 of 56

This transcription has been completed. Contact us with corrections.

COLONIAL AIRLINES, INC.
630 FIFTH AVENUE, NEW YORK 20, N.Y.

REPORT OF THE PRESIDENT

To the Stockholders:

Submitted herewith are the Company's Profit and Loss Statement for the year 1946, and the Balance Sheet as of December 31, 1946, certified by Arthur Young & Company, independent public accountants.

On February 19 operations were commenced on the new route extension between New York and Ottawa and six new certification points were opened for service. On April 15, service was inaugurated between Ottawa and Washington and between Montreal and Washington with a number of intermediate stops. These extensions increased our route miles operated to 1146 from 335 miles operated in 1945. 

In order to provide the equipment, facilities and additional working capital necessary for the operation of these routes, the stockholders were given the right to purchase 91,400 shares of unissued capital stock in February 1946 and $1,771,925 was realized from this source. Of this amount, $1,634,000 was invested in DC-3 airplanes, engines, parts, communications, and other equipment. In May 1946 your Company was certified by the Civil Aeronautics Board to operate between New York and Bermuda and between Washington and Bermuda. These additional routes brought our certificated miles up to 2729. In order to provide the equipment, facilities and additional working capital required to operate these routes, the Company on February 26, 1947, sold and additional 150,000 shares of its unissued capital stock and $1,270,730 was realized from this source. We are now negotiating for the purchase or lease of two four-motored Douglas DC-4 airplanes, spare engines, and other necessary parts and equipment and it is planned to start service to Bermuda in late spring or early summer. 

The total operating revenue for the year 1946 amounted to $3,353,208 as compared with $1,780,056 for the year 1945. Colonial Airlines had a loss in 1946 from operations of $439,974 as compared with a profit of $198,006 in 1945. The loss for 1946 has been reduced to $375,461 by recovery of Federal taxes through carry-back. 

I give you herewith a comparison of the traffic and revenue statistics for the years 1943 through 1946, which will indicate the progress which your Company has been making:

[[Five column table]]
| --- | 1946 | 1945 | 1944 | 1943 |
| Revenue Passengers Carried | 154,971 | 93,252 | 56,032 | 37,124 |
| Revenue Passenger Miles Flown | 45,592,520 | 29,333,179 | 17,387,268 | 11,021,746 |
| Mail Pounds Carried | 624,039 | 424,974 | 349,022 | 399,337 |
| Mail Pound Miles Flown | 175,796,595 | 124,700,516 | 99,434,121 | 118,728,595 |
| Express Pounds Carried | 480,426 | 228,508 | 252,362 | 215,205 |
| Express Pound Miles Flown | 111,205,950 | 68,279,265 | 78,227,042 | 63,113,201 |
| Passenger Revenue | $2,677,969 | $1,606,361 | $950,548 | $628,453 |
| Mail Revenue | 533,086 | 132,247 | 136,395 | 138,902 |
| Other Revenue | 142,153 | 41,448 | 49,615 | 29,285 |
| TOTAL OPERATING REVENUES | $3,353,208 | $1,780,056 | $1,136,558 | $796,640 |
| TOTAL OPERATING EXPENSES | 3,793,182 | 1,582,050 | 1,151,770 | 817,789 |
| PROFIT (LOSS) FROM OPERATIONS | (439,974) | 198,006 | (15,212) | (21,149) |
| Other Income (Deductions) Net | (87) | (24,677) | (24,530) | 30,634 |
| --- | $(440,061) | $173,329 | $(39,742) | $9,485 |
| Provision for Federal Income Taxes | --- | (64,600) | --- | --- |
| Recovery of Federal Taxes through Carry-back | 64,600 | --- | --- | --- |
| NET INCOME (LOSS) FOR YEAR | $(375,461) | $108,729 | $(39,742) | $8,885 |

In 1946 your company, in common with most certificated air carriers, experience substantial losses due to the general unbalance of economic conditions in the industry, rapidly rising costs in the closing half of the year and a marked decrease in public demand for air transportation. Your Company's situation was further aggravated by the act the it had within the year opened new operations over both its route which required the establishment of new facilities at eleven certificated cities, coupled with an unusually severe seasonal traffic decline from September through December due in a considerable degree to the cancellation of a very high percentage of schedules because of weather and other unpredictable circumstances. I am convinced that this waning of the public's reception to air transportation is by no means a permanent condition. An unfortunate series of accidents experienced by airlines other than Colonial, both domestic and foreign, during the closing months of 1946 and the publicity attendant thereon, produced an unusual reluctance in the minds of many air passengers. I am happy, however, to report that your Company has for the nineteenth consecutive year come through without experiencing any accident causing fatality or serious injury. 

I direct your attention to the fact that the sizable increases in the expense of your Company throughout 1946 reflect the developmental expense incident to the opening of the Washington-Ottawa-Montreal route and the opening of new station stops on the New York-Montreal and Ottawa routes including the expense of route familiarization of pilots and other personnel who necessarily had to be trained in accordance with the Civil Aeronautics Administration's requirements before commencing these new services.