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CERTIFICATE OF INDEPENDENT PUBLIC ACCOUNTANTS

To the stockholders of Colonial Airlines, Inc.:

We have examined the balance sheet of Colonial Airlines, Inc. at December 31, 1948 and the related statement of income and earned surplus (deficit) for the year ended then. 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. It was not practicable to confirm the amount due from the U.S. Post Office Department, as to the substantial accuracy of which we satisfied ourselves by other auditing procedures.

In our opinion, subject to the retroactive adjustment (which is now not determinable -- see Note 1) in compensation for mail carried, the accompanying balance sheet and statement of income and earned surplus (deficit) present fairly the financial position of Colonial Airlines, Inc. at December 31, 1948, 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.

ARTHUR YOUNG & COMPANY

New York, N.Y.
March 8, 1949

COMPARATIVE STATEMENT OF TRAFFIC, REVENUE AND EXPENSE STATISTICS 1945-1948

[[five columned table]]
|   | 1948 | 1947 | 1946 | 1945 |
|---| ---- | ---- | ---- | ---- |
|Revenue Passengers Carried …| 159,264 | 139,871 | 154,971 | 93,252|
|Revenue Passenger Miles Flown …| 52,267,952 | 41,189,846 | 45,592,520| 29,333,179 |
| Mail Pounds Carried …| 590,750 | 568,529 | 624,039 | 424,974 |
| Mail Pound Miles Flown …| 186,837,880 | 159,726,000 | 175,796,595 | 124,700,516 |
|Express and Freight Pounds Carried …| 993,520 | 610,067 | 480,426 | 228,508 |
|Express and Freight Pound Miles Flown …| 342,529,187 | 144,952,730 | 111,205,950 | 68,279,265 |

|Passenger Revenue …|$3,471,150 | $ 2,572,845 | $2,677,969 | $1,606,361 |
|Mail Revenue …| 1,407,543 | 810,929 | 533,086 | 132,247 |
|Other Revenue …| 115,141 | 73,561 | 142,153 | 41,448 |

|TOTAL OPERATING REVENUES…| $4,993,834 | $3,457,335 | $3,353,208 |$1,780,056 |
|TOTAL OPERATING EXPENSES…| 5,183,725 | 4,328,973 | 3,793,182 | 1,582,050 |

| PROFIT (LOSS) FROM OPERATIONS …| (189,891) | (871,638) | (439,974) | 198,006|
|Other Deductions Net …| 71,139 | 202,703 | 87 | (24,677) |
|    | $ (261,030) | $ (1,074,341) | $ (440,061) | $ 173,329 |
|Provision for Federal Income Taxes …|   |   |   | (64,600) |
|Recovery of Federal Taxes through Carry-back |   |   | 64,600 |   |

NET INCOME (Loss) FOR YEAR …| $ (261,030) | $ (1,074,341) | $ (375,461) | $ 108,729 |


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