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In a recent recommendation by Civil Aeronautics Board Examiner in the Middle Atlantic States Case, it was recommended that our Routes 71 and 72 be linked up from New York to Washington via Allentown, Reading and Philadelphia. If the Civil Aeronautics Board accepts that recommendation and authorizes the Company to start operations
promptly, our operating efficiency will be substantially improved over night and a considerably more economical
operation will result from greater utilization of equipment.
   
Recently the Civil Aeronautics Board issued an Order fixing your Company's temporary system airmail rate at twenty cents per airplane mile, not including Bermuda operations which have not commenced. The Board further ordered, among other things (as it did in the case of some other airlines), that a factual study be made of "The economic characteristics of its (Colonial's) route system, including all factors, both beyond and within the control of management, which may contribute to the uneconomical operations of that system, together with detailed recommendations and supporting reasons designed to remedy deficiencies."
   
We sincerely believe that the present Civil Aeronautics Board is honestly trying to "Promote adequate economic and efficient service by air carriers, at reasonable charges, and assure sound development of an air transportation system properly adapted to the needs of the foreign and domestic commerce of the United States and of the Postal Service and of the national defense," as required by the Civil Aeronautics Act of 1938. We welcome the opportunity to point out to the Civil Aeronautics Board any factors which would make the operation of our system more efficient and economical, since action on the part of the Civil Aeronautics Board will be required.

OUTLOOK: During the first two months of 1947 the conditions cited above regarding the public's reluctance to use
air transportation continued in evidence and the weather in the area of our operations was the  most severe in our history. In the month of January, there were six complete days when all flights had to be cancelled on account of weather over our entire system from Washington and New York north to Montreal and Ottawa. February, also showed an abnormal amount of cancellations. Within the last two weeks, however, business appears to have stabilized and we look for the usual pre-war surge of warm-weather business.  We are now preparing to increase our daily schedule  to take care of the increased demand. With the addition of Bermuda operations, we look forward, in common with the rest of the industry, to a better year in 1947.

ROUTE EXPANSION: In accordance with the policy adopted by your Board of Directors, and looking to a sound economic development and expansion of our route  mileage, your Company has pending several new route applications before the Civil Aeronautics Board in Washington. The following are currently on file with the Board and several have reached the stage where oral argument has been heard and final decision is awaited.

DOCKET #525 - Reopened for consideration of Colonial's application and others for a new route between points in the Eastern part of the United States and Balboa and Barranquilla via the intermediate points: Nassau, Havana and Kingston,
DOCKET #501 - WASHINGTON TO JACKSONVILLE AND TALLAHASSEE VIA POINTS IN VIRGINIA AND THE CAROLINAS. Submitted to the Board for final decision.
DOCKET #674 - NEW YORK-WASHINGTON VIA VARIOUS INTERMEDIATE POINTS: BUFFALO-ATLANTIC CITY VIA ROCHESTER, BINGHAMTON; NEW YORK-CINCINNATI VIA READING, PA., AKRON, YOUNGSTOWN AND SPRINGFIELD, OHIO. Examiner has recommended that Colonial's routes be extended to connect New York and Washington via Reading, Allentown and Philadelphia.
DOCKET #730 - BOSTON-NEW ORLEANS VIA NEW YORK CITY, ATLANTA AND OTHER INTERMEDIATE POINTS. Awaiting Examiner's Report.
DOCKET #1989 - BOSTON-CHICAGO VIA ALBANY, SCHENECTADY, SYRACUSE, ROCHESTER, BUFFALO, CLEVELAND AND DETROIT. Not yet scheduled for hearing.
DOCKET #1990 - NEW YORK-CHICAGO VIA BINGHAMTON, BUFFALO, NIAGARA FALLS, ERIE, CLEVELAND AND DETROIT. Not yet scheduled for hearing.
DOCKET #221 - NEW YORK-CINCINNATI VIA PITTSBURGH, AND READING, PA. Submitted to the Board for final decision. 
DOCKET #679 - WASHINGTON-DETROIT VIA PITTSBURGH, AKRON, YOUNGSTOWN & CLEVELAND. Examiner's report issued and now awaiting the filing of briefs and oral argument.
DOCKET #2055 - NEW YORK-QUEBEC CITY, CANADA. Not yet scheduled for hearing.

CONCLUSION: The management and the Board of Directors take this occasion to express to the stockholders of Colonial Airlines appreciation of their continued cooperation and support. We also want to express our appreciation of the loyal efforts and devotion of the employees of the company who have maintained the unexcelled safety record of your company. It will be the constant aim of your management and the employees of this company, to continue to justify the patronage of the traveling public and to merit their continued support and preference over other means of travel.
   
To assure the receipt of communications from your corporation or its representatives, we urge all our stockholders to hold  their stock in their own names and to keep our transfer agent, the Empire Trust Company, 120 Broadway, New York City, currently advised of the address to which communications should be forwarded. This is important to you as stockholders as well as to the management. There is no charge to you by our transfer agent for its services.
Respectfully submitted,
Sigmund Janas
PRESIDENT