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REPORT OF THE PRESIDENT

To the Stockholders
Submitted herewith is your Company's Statement of Profit and Loss for the year 1948 and the Balance Sheet as of December 31, 1948, certified by Arthur Young & Company, independent public accountants. There is also submitted a comparative statement of traffic, revenue and expense statistics for the years 1945 through 1948. 

RESULTS FROM OPERATIONS

In 1948 your company transported 159,264 revenue passengers, a new all time record. Revenue passengers miles flown, mail-pound miles flown and express and freight pound miles flown have all shown new record highs -- passenger miles increased by 27%, mail-pound miles by 17% and express and freight pound miles by 136%. Total revenues increased from $3,457,000 in 1947 to $4,993,000 in 1948. Due to constantly rising costs, particularly labor rates, gasoline and repair parts, these all time high revenues failed to meet our total expenses by $261,030. Included in the expense figure is an amount of $63,556 representing expenditures made for the integration, extension and development of our route pattern. Our net loss for 1948 of $261,030 compared with $1,074,341 in 1947 indicates that if the present trend continues, satisfactory results should soon be realized. We also point out that the losses for 1948 as well as the losses for 1947 and 1946 are overstated in that your Company has not been paid permanent compensatory rates for mail services performed on its domestic system from April, 1946, and on its international route from April, 1948. As noted later in this report, the Civil Aeronautics Board has presently under consideration petitions for a final mail rate on our domestic route retroactive to April, 1946, and for an increase in rate on our international route retroactive to April, 1948. Your management is confident that substantial additional amounts will be allowed which will liquidate the greater portion or all of the losses for the past three years. 

The year 1948 was the third year in a highly critical transition period from the industry's wartime operations to strictly commercial pursuits, and, keeping this fact in mind, the results are very gratifying. Your management is further encouraged by the recent issuance by the