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The Chairman: Thoselcase prospects were discussed by the Board. All of those people that we ever had any opportunity to lease that kind of equipment from required such a long-term lease and such a high price that our judgment told us it was beyond our capabilities financially. You spoke a while ago of our load factor on the constellation. You have got to remember that that constellation only operated during the peak months of the season. You spoke of 97%. You exaggerated slightly. It was 89%. But if you would run the constellation for the entire year and go into the low season, your load factor would probably have been 75%. Mr Barnitt: We did operate it approximately eight months. The Chairman: Yes. Mr. Skoglund: What do you consider the break-even figure on load factor? The Chairman: On that lease it ran about 75% load factor. Mr. Silver: Speaking of load factors, Mr. Dykes, what is our present load factor on DC-4 equipment? The Chairman: You can't tell what it is on DC-4 equipment, but I can give it to you on routes. Mr. Silver: I think it might be interesting. The Chairman: As of April 18, load factor on the Bermuda-operation was 68.7%. Mr. Silver: That is with the non-competitive equipment? The Chairman: That is right, DC-4 equipment. I don't put that kind of a tag on it. On the New York--Montreal route, it was 81%. Mr. Silver: I think that shows what traffic is available to us. Mr. Barnitt: You don't mind putting a tag on it, but just being practical if you went down to the bargain lot and if there was a new '55 Buick and a '45 Ford and they were both the same price, which would you take to run? The Chairman: I would probably buy the Ford, Sam. Mr. Taylor: I would like to make reference to the 44th paragraph of the present agreement between Eastern and Colonial; that is the one that refers to the liquidated damages. That is on page 31. It is a fact that a paragraph similar to this appeared in the first agreement between Eastern and Colonial Airlines? The Chairman: No, there was no paragraph like that. Mr. Taylor: Nothing at all? The Chairman: No. Mr. Taylor: Thank you. The Chairman: Our experience taught us though that we should have something like that in there. Mr. Kurland: On the same vein, on page 29, paragraph 34, was any paragraph like that incorporated in the previous agreement? The Chairman: I think that is verbatim with the first agreement. I don't think it was changed. Mr. Kurland: It seems to me that interpretation that I can get from this is that this contract is binding on Eastern providing all thing being equal, and there is no infraction on any laws and so forth. Now it turns out that there was an infraction of Section 408, if I recall correctly, and it seems to me that Eastern should be compelled to abide by the original agreement in view of the fact that they are the ones who are in error, that they are the ones who committed the violation. The Chairman: Well, I am in the same position that you are, Mr. Kurland. Not being a lawyer, I hesitate to issue any legal opinion. Mr. Kurland: It seems to me that ia person entering into a contract in good faith, which I believe Eastern and Colonial did at that time, didn't think there was any violation of Section 408 or else they wouldn't have entered into it in the first place, but in view of the fact there was a violation committed I am of that opinion that I just spoke of. It is just like saying that if a person steals something and is caught in the act of stealing and he says "I'm sorry" and puts back what he stole, then you let him go free. It's the same thing here. They committed a violation and now they just forgot the whole contract and enter into a new contract. The Chairman: Mr. Counsel, will you answer that? Mr. Silliere: The original agreement was subject to the approval of the President and when it was disapproved by the President it automatically came to an end and there was no agreement at that point. For that reason when this contract which is here today was drawn, the provision was put in for a penalty clause in the event that it was turned down by the President for violation of (16)
