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can figure.

MR. BARNITT: I would like to answer one of your questions on future prospects of Colonial. We hired less modern equipment on the Bermuda run and if our figures are right we carried something like 97% load factor, showing that with modern equipment we could really do the job. We only ran on trip a day and our other lines had modern equipment. They have had three, four or five extra sections a day, showing that if we had equipment we could cut into that market.

Because of our safety record for twenty-five years a lot of people will fly Colonial sooner than they will fly other lines. We have our Washington-Bermuda run exclusive that we don't even operate because we don't have modern equipment. I don't know how the financial part of the company worked on that lease deal from Eastern, but it certainly showed that with money and equipment we could do the business and substantially make Colonial a better airline and need less subsidy. Why we haven't followed that track along I haven't been able to find out.

MR. SKOGLUND: I think Mr. Hanrahan has answered that by saying that it hasn't been possible to acquire new equipment. Furthermore, I still believe that with our capital structure there would be a lot of opposition to the part of stockholders of the company to put out that outlay of money. You have got to have some working capital going. We haven't got a good capital structure in this company and we know it. It's no fault of management. It's no fault of anybody. It's just one of those circumstances.

This merger that we have got coming along her [[here]] is a pretty good thing. It is like a bright young boy who needs some capital marrying a rich girl. He gets the capital and she gets the bright young boy.

MR. BARNITT: I believe Rickenbacker made the statement in the first year of operation he will double the revenue of Colonial runs.

MR. SKOGLUND: I think he will.

MR. BARNITT: And it may be it shows as stockholders we are a little narrowminded, that if we go ahead and give him the capital--

MR. SKOGLUND: The other thing that is very healthy about this situation and with those gentlemen that are with the airlines is that it shows their loyalty to the line and I think they are going to go along with this new setup and will probably greatly better themselves with the new line. I can't see it any other way. There must be a tremendous loyalty of these boys to the company for that to be true.

MR. SILVER: There is one thing I would like to do, and that is thank you for those remarks; we appreciate them.

I would like to say one thing insofar as your remarks about Eastern's good offer for Colonial; certainly I have the greatest respect in the world for the management of Eastern and I think that their record certainly proves exactly what I say. By the same token their judgement certainly must be of the best and therefore why do you suppose if Colonial has, let us say, in the past two years--well, actually, in the last eight months, let us say, since March 1, 1954--since they renewed or since they tried to renew their previous stock offer--just in this short period of time why do you suppose that Eastern Airlines now feels that their offer to us would be that much less and would be accepted?

To me, if Eastern is going to make an offer, which they have, and I think which we all must agree basically is certainly a good financial offer in some respects, depending on how you look at it--if Colonial were in turn able, [[illegible]] as Captain Barnitt has said, and which I certainly agree, to at least double the business on our present runs, then why would it not be possible for us to realize 100% of the gain rather than, say 11%, by changing our entire capital setup?

Let me clear this point of mine. Do you believe that it would be impossible or not feasible for us to completely change our financial structure?

MR. SKOGLUND: I believe absolutely. That is entirely possible, but in doing so what are you going to have to do, water down your stock? You are going to have to revamp your capitl [[capital]] structure, issue many more share shares of stock. We have no past record that would make it an attractive investment for the issuing of houses.

Let's take one, Kuhn & Loob. Suppose we went to them and asked to issue this stock for us. I don't think that they would be especially interesting in selling their stockholders Colonial stock with the present structure. In other words, if we were to double our capitalization I don't think that would appear to them an especially attractive offer.

MR SILVER: Suppose there were $10 million available to Colonial. 

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