page six
PIEDMONITOR
January/February/March, 1974
(Continued from Page five)
our scheduled operations two more 737’s
jet aircraft. This brought our total fleet
at the end of 1973 to 16 of the jet air
planes with our prop fleet remaining the
same as it was in ’72. We feel that we
need some additional airplanes for ’74
and we’ve just completed negotiations
to buy two 737 aircraft which will be
delivered to us sometime in mid-May. I
think we were very fortunate indeed to
be able to get these aircraft, because
they were built by Boeing to Piedmont
specifications in 1971. We were unable
to take them at that time and they were
sold to a Norwegian carrier who was
not successful in its operation of these
two airplanes. They became available
again and we were able to purchase them
from Boeing. This brings our fleet now
up to 18 737s. We hope to put one into
scheduled service June 15th and addi
tional one into scheduled service August
the 1st. Thank you.
Davis: Mr. Ross, do you have a report
on the trafl’ic activities?
K. E. Ross: Thank you, Mr. Davis. As
stated in the annual report, the traffic
increases in 1973 over 1972 were 13.1 per
cent. In 1974 thus far, the results have
been much more promising. In fact, we
have increased slightly more than 15
per cent through the 15th of April over
1973. This is highly unusual, particularly
during the first quarter of the year. And
this increase was made in face of reduc
tion of capacity. In other words, we are
flying fewer miles than we did. Our
system-wide load factor, that’s the per
centage of available seats actually used
or occupied, reached nearly 60 per cent
for the first 15 days of April. On Mon
day, day before yesterday, we had an
all-time passenger record of 14,451 en
planed passengers. This exceeded the
previous all-time high set last November
the 25th, which was the day after
Thanksgiving holidays. In order to meet
our capacity needs, as Mr. Saunders in
dicated, he has been successful in pro
curing two additional jet aircraft. We
plan on a flight schedule change on June
the 15th, with another following on
August 1st. We also have a schedule
change proposed for May 1 and each of
these schedule changes will represent
approximately 5 per cent increase in
capacity. Obviously, much will depend on
the general economy and what our needs
are. We feel confident that Mr. Davis
will make certain that we have sufficient
flight equipment in order to fulfill any
needs that our customers may have. Our
available seat miles that we operated
through the 15th of April have actually
decreased about 15 per cent and our reve
nue passenger miles, that is, the number
of passengers that we carry multiplied
times the number of miles that they
fly, has increased about 16 or 17 per
cent through the middle of April. We
feel confident that 1974, assuming that
the general economy remains as it has,
that it will be highly successful for
the traffic growth. Thank you.
Davis: Thank you, Ken. I should have
indicated to you earlier, Ken is a rela
tively new Senior Vice President. This is
his first appearance for our stockholders.
During the course of last year, Gordon
Brown, who has been with us for so
many years, as indicated in our annual
report, decided that he was going to en
joy life a little more and take retire
ment. Happily, Mr. Ross, here, who has
also been with us about a hundred years,
was standing around in the wings. He
had followed in good steps of Mr. Brown
and learned so much from him and others
that he fit right into the picture to
assume the responsibilities formerly han
dled by Gordon Brown. We’re proud of
both of these gentlemen and pleased
with the contributions that they have
made to the Company in the past and we
feel sure they will continue to contribute
to our success in the future.
One of the main reasons that we were
able to have a reasonably satisfactory
profit in 1973 and prior years has been,
as you recognize from reading your an
nual report, the results of our General
Aviation activity which were actually the
beginning of our company. As you recall.
we were in that business before we ever
dreamed of operating an airline. We have
continued in that phase of aviation and
have continued to expand it. In that
connection. I’m very happy that we have
here with us today Mr. Ken Brugh who
is President of Air Service, Inc., one of
our subsidiaries, over at the Greensboro-
High Point Airport. Ken, would you
stand up so they can see that bald head
and recognize it. They might want
to buy an airplane on their way out.
Thank you. But, our General Aviation ac
tivities have continued to make a very
firm contribution to the success of the
Company and I’d like for Senior Vice
President Bob Northington to bring you
a report on that now.
R. S. Northington: Thank you, Mr.
President. You know, it’s always easy
to be able to get up when you’ve had
a good year. I remember Gordon Brown
saying this some years before, when you
have a good report, it’s much simpler to
make it known. In 1973, the General
Aviation activities of your company en
joyed the largest sales volume and the
largest profit that the Company has ever
had since the beginning in these activi
ties. As was noted in the annual report,
we, for the first time, exceeded $1 million
in profit, net before taxes. This was the
result of substantial increases in aircraft
sales, the sale of parts and accessories,
and even labor sales in our shop facili
ties, such as engine overhaul, aircraft
maintenance and propeller overhaul. The
total sales in 1973 of all types over 1972
increased a little bit in excess of 15 per
cent. We have something today that is
new with our General Aviation Division
which happened just two weeks ago. We
have been appointed one of the six
Beechcraft jet aviation centers in the
United States for the new Beechcraft
Hawker jet, model 125-600, which is a
$1.8 million corporate jet aircraft. We
have a demonstrator on order and we
will actively pursue sales of these air
planes. We look with a great deal of en
thusiasm to the corporate jet market.
We feel in the years to come it’s going
to be a very growing thing and it’s
going to accelerate at a very high rate.
As we have in the past, we want to be
prepared to handle the full line of air
craft in the market place and we feel
that we have a very fine opportunity in
this area. We expect 1974 to be another
good year. Our overhaul facilities and
engine overhaul mainly are booked-up
now through September. If some of the
companies can keep us supplied with the
necessary parts that we need to keep
the shop going, we’ll be in good shape
there. Aircraft sales depend mainly on,
of course, the general economy as well as
the ability to produce the airplanes. In
some cases right now some of the models
are not available to us until calendar
1975. This is quite an unusual situation
although we did experience a little of it
last year. Soy we look forward to a
good year. We will appreciate your pass
ing on the information relative to our
services to your friends and to use them
whenever you can. We think things will
keep going if we can do all that together.
Davis: Thank you. McNairy, would you
bring us a report from the proxy com
mittee :
C. McNairy: Yes. Mr. Davis, the proxy
committee reports that we had 339,289
shares represented in person and 1,680,-
894 shares represented by proxy. This is
a total representation of 82.2 per cent
of shares outstanding as of the record
date.
Davis: Thank you, Charlie. As indi
cated, we certainly have a quorum and
we are now duly constituted to conduct
the ofl’icial part of the meeting. The first
item is the approval of the minutes which
were outlined by Mr. Morton a little
earlier. Is there a motion that the min
utes as outlined be approved ?
Stockholder: So moved.
Davis: Motion made. Is there a sec
ond ?
Stockholder: Second.
Davis: Seconded. Any discussion? All
those in favor signify by saying aye.
Stockholders: Aye.
Davis Any opposition? Motion is ap
proved. The next item of business will
be, as indicated on the proxy statement
sent to you, the election of directors of
the Company. It is the intention of man
agement to nominate for re-election to
the Board of Directors who are currently
serving on your Board, those being: C.
Gordon Brown, Jr., E. L. Davis, Jr., Alex
H. Galloway, Ralph W. Gardner, Law
rence Lewis, Jr., W. M. Magruder, T. W.
Morton, R. S. Northington, E. M. O’Her-
ron, Jr., (got a lot of Juniors in there,
haven’t we?), John F. Watlington, Jr.,
H. K. Saunders, and T. H. Davis. Is
there a motion that these nominations
for membership on the Board of Direc
tors for 1974 be approved?
Stockholder: So moved.
Davis: Motion made. Is there a second?
Stockholder: Second.
Davis: Are there any further nomina
tions ? Or, any discussion ? All in favor
signify by saying aye.
Stockholders: Aye.
Davis: Is there any opposition? The
Directors are re-elected. The next order
of business will be the appointment of
our auditors. As you know, the Ernst &
Ernst company has been auditors of the
Company for quite some time. You are
probably not aware of the fact that we
have established, in addition, an audit
committee of our Board of Directors,
chaired by Mr. Alex Galloway. He will
have serving with him, Mr. Ed O’Herron
and Mr. Lawrence Lewis, all of whom,
as you recognize, are outside directors.
They will be working very closely, and
have been working very closely, with our
certified public accountants, Ernst &
Ernst, to make sure that they are on the
ball and that we are on the ball, so
that our stockholders can be confident
that the accounts and records of the
Company are maintained in as near per
fect condition as possible. That’s our
objective. There is no further ofi’icial
business to come before the meeting, but
as I have indicated, we want to cover
any subject that anybody wants to talk
about. I wonder if there are any ques
tions that any of you may have that we
haven’t fully elaborated on ?
Stockholder Snow: The CAB recently
has revised some of the rate schedules
increasing the short-haul rates and de
creasing some of the long-haul rates.
What percentage of our routes are quali
fied for that increase and what effect, if
any, will it have on our finances ?
Davis: I’ll call on Mr. Ross, for the
answer to the first part of your question.
Ross: Generally, the new rate to which
you refer is not connected with the fuel
surcharge that became available yester
day. This is in the phase nine^investiga-
tion of the Civil Aeronautics Board
which has gone on for several years. This
has been concluded. Basically, this would
permit all of the carriers to increase
their rates depending on the length of
service. To answer your question specifi
cally, if we took full advantage of the
fare increase which the Board has per
mitted under Phase Nine, which by the
way, will become effective July 16, it
would involve about 95 per cent of our
total passengers. We have not studied
this thoroughly in light of the fuel sur
charge. There may be some markets that
we now have that we do not wish to
go the full allowable under this Board
regulation. There will be a light increase
in a number of our markets, but I think
the increases will be applied primarily
to some of the longer-haul passengers
that we carry. Our long-haul passengers
obviously would be the same as a short-
haul passenger for a trunk carrier.
Davis: Now, I believe you asked what
effect that would have on total earnings.
Mr. Morton, do you have any figures yet?
I assume that you are talking about the
Phase Nine fare increase.
Morton; Our first studies indicate that
this would produce an overall average
increase in passenger revenue of 5 or
6 per cent. Our revenues without that
are close to $1 million a year so it’s
about $5 or $6 million a year, increase in
passenger fares.
Davis: I believe there was another
question over here.
Stockholder: With the increase in traf
fic in the first quarter, do you antici
pate the first quarter being profitable?
Davis: We believe, in the light of the
results that we have so far traffic-wise
in the airline division and a real good
first quarter in aircraft sales in General
Aviation that there is a distinct possibil
ity there will be a profit in the first
quarter. We should have those figures
out almost any day now.
Stockholder: What was your overall
load factor for the first quarter?
Davis: First quarter load factor was
about 56 per cent, wasn’t it Ken?
Ross: It’s around 56 per cent. We ran
57.4 in March and it’s 59.6 through Mon
day of this week. Generally, it’s around
56 per cent for the first quarter.
Davis: Almost a 60 per cent load fac
tor and as you probably recognize, this
is somewhat higher than most of the
trunk lines are even running today. Is
this not right, Ken?
Ross: Yes, sir.
Davis: And, obviously, it’s a lot easier
to run higher load factors in the longer
hauls between major points than it is
where you’ve got multiple stops.
Stockholder: Is that for the entire first
quarter, 57 per cent?
Rose: About 56 per cent.
Morton: 52.65 per cent.
Davis: 52.65 per cent for the first
quarter. The April load factor is what
we were talking about, almost 60 per
cent. March was 57 and a fraction. Any
other questions or comments?
Stockholder: Real good job. I’ve been
a stockholder for a number of years. I
understand that you’ve been first for
three years in succession and last year
you got second in the complaint report.
All I can tell you is you’ve got a reason
to do just a little bit better.
Davis: You’re exactly right. We don’t
like those second places. We prefer to
be first. Even though there are a lot
of those others on down the line, third,
fourth, fifth, sixth, seventh, eighth, and
so on, we just can’t stand that second
place. Yes, sir?
Stockholder Ruffin: Mr. Davis, as a
shareholder, I would like to make a re
mark. Dalton Ruffin, stockholder of rec
ord, I think the figures speak for them
selves. Mr. Northington said, it’s not
much you can say about it when it is as
good as your company’s figures were.
But I’d like to congratulate you on some
thing else, on the personal side, and that
is, the fine performance of your employ
ees. I’ve got two children away from
home in school, one in'the DC area and
one in the Roanoke area so Piedmont is
our transportation. And it’s certainly a
comfort to know that those children can
go to the Piedmont ticket counter and
receive the good service that they have.
It’s a comfort to the parents in the fine
service that you give in and out of those
areas. But, as a corporate citizen. I’d
)ike to comment on something else that
happened here in Winston-Salem that I’m
not sure all the shareholders are aware
of. Unfortunately for the organization I
work for, we had a bank robberv last
year. The FBI was right on the ball and
we found that thpre was a sns’ipct tak
ing a Piedmont flight out of Winston-
Salem, goine Doints all over the world,
we were afraid. The FBI went in and
questioned one of your employees at the
counter. It was enoueh description and
enone-h alertness on the part of your
employee that they felt that mavbe
someone that they had just sold a ticket
to could be the susnect that we were
looking for. Then, your people worked
with the FBI and they were ab'e to take
the passenger off the plane without in
cident. It proved to be the person that
came in and robbed our organization.
The coolness and alertness on the part
of your peonle certainly are to be com
mended and as a stockholder and as a
citizen in Winston-Salem, I want to
thank you.
Davis: Thank you very much, Mr.
Ruffin. I was going to say, we had
to refund that man’s ticket. That’s
what hurt, he was already on the
airplane and we had to go out there
and pull him ofi", that hurt, don’t do
that too much. If there are no further
questions, we don’t want to monopolize
your whole day. Let me say again how
much we appreciate your coming and
your interest. During the course of the
year, if there’s anything you want to
know about your Company, don’t hesi
tate to let us know and we’ll see that
you get the answer as best we know it.
Thank you for coming. The meeting is
adjourned.