Ed Friedenburg of the Winston-Salem Journal, George Kegley of the Roa
noke Times & World News, and Sid Bost of the Sentinel, were among
those attending Piedmont’s 1979 Annual Meeting.
in our original route system, we obtained
three new 737 aircraft and three used
727 airplanes during the past year. In
January of this year we also acquired a
used 737 airplane. With these airplanes,
our fleet totals now are 30 jets and 16
YS-lls. In order to keep up with the
future growth, we have placed orders
with the Boeing Company and will
receive delivery this year, beginning in
June, of four additional 737s. We will
continue to decrease our YS-11 fleet and
hope that within two years we’ll have it
down to a total of six aircraft. We have
contract sales for the remaining portion
of the airplanes above the six. Our
interior refurbishing on our 737 program
is moving along quite well. This is a con
version from 94 to 112 seats on the 737s
and the installation of a more modern
or new-look type interior. We now have
nine of these airplanes, including the
three new ones from Boeing. The new
airplanes which arrived from Boeing have
identical interiors to those we are re
furbishing. Our maintenance department
is turning out approximately one air
plane per month. Our non-transport acti
vities of the airline division continue to
grow. In 1978, we had a 40 per cent in
crease in the sales of maintenance and
flight training services. Maintenance is
still performing maintenance on a num
ber of executive airplanes throughout the
country and our parts saleg are quite
large to both our executive customers
and airline customers throughout the
world. Our airline flight training depart
ment is still conducting training for a
number of airlines, both foreign and
domestic. Some of our customers are
Saudia Arabia, Iran Airlines, the U. S.
Air Force, Wien Alaska, Tan Airlines in
South America and lots of others. Thank
Davis: Thank you. I mentioned a little
earlier the good results of our general
aviation business and we’ll hear from Mr.
Northington, our senior vice president.
R. S. Northington; Thank you, Mr.
Davis. Needless to say, it’s much easier to
give all of you stockholders a report when
it’s the best report we’ve ever had an
opportunity to give on your general avia
tion activities. It was, by far, the most
successful year we’ve ever had. Sales in
1978 were up 20 per cent to $50.5 million
from $42 million in 1977. But what is
more important to you, as stockholders,
and to all of us is the fact that the net
income in the general aviation activities
increased from approximately $1.1 mil
lion to $1.6 million in 1978, which is a
45 per cent increase over the previous
year. The main increases came from the
sales of corporate and private-type air
planes, which we distribute for both
Piper and Beech; and also in fuel sales,
and the other main activity being parts
and accessories sales is where our in
creases were. You will recall that two or
three years ago we lost some of the
operating rights at Smith Reynolds Air
port in Winston-Salem. All of these
rights were regained in April of 1978, and
therefore, our business here has con
tinued to grow. We’re in the process of
building a new corporate hangar here in
Winston-Salem for the storage of custo
mers’ airplanes, which should be fiinished
by the end of this month. We also have
some plans to improve some of the facili
ties at our operations in various other
communities on our system. We look for
a good year in 1979, and we have fore
casted that it will be better in profits
than it was in 1978. We also, however,
must realize and be aware, constantly, of
the possibility of some economic changes
which could have a bearing on part of
our business, at least. I would like to
emphasize, again, that we are very for
tunate in the general aviation activities,
and the wholly-owned subsidiary in
Greensboro, to have some very fine expe
rienced, hard-working, dedicated people
to obtain the goals which have been done
and which lie ahead for us. With these
kind of people and their support and the
support from you, our stockholders, I am
sure we’ll continue to grow. Thank you.
Davis: Does our proxy committee have
A. F. Long: The proxy committee re
ports that we have 232,270 shares repre
sented in person and 1,999,291 shares
represented by proxy. This is a total
representation of 75.86 per cent of the
Davis: Thank you, Mr. Long. We have
a quorum so we can conduct the off^icial
part of the business. The minutes of our
last annual meeting have been sum
marized. Is there a motion that the
minutes be approved?
Stockholder D. Ruffin: I so move.
Davis: Motion made. Is there a second?
Davis: Is there any discussion, addi
tions or corrections ? There being none, all
those in favor of approving the minutes
please signify by saying aye.
Davis: Any opposition? The motion is
approved. The next order of business will
be the election of directors. It will be the
intention of management to vote the
proxies in favor of the following twelve
directors. You will also recall that the
number of directors has been fixed at
twelve for this coming year. Each of the
nominees has served during the past year.
Those directors being C. G. Brown, Jr.;
E. L. Davis, Jr.; T. H Davis: Rawson
Haverty; Lawrence Lewis, Jr.; T. W.
Morton; R S. Northington; Edward M.
O’Herron, Jr.; H. K. Saunders; John F.
Watlington, Jr.; Maurice H. Winger, Jr.;
and C. W. Womble. Those constitute the
twelve directors that the proxies will be
voted on. Are there further nominations ?
Stockholder G. Anderson: I make a
motion that the nominations be closed.
Davis: Motion has been made that
the nominations be closed. Is there a
Davis: All in favor, say aye.
Davis: Is there a motion that the direc
tors, as listed, for whom the proxies
will be voted, be elected as directors?
Stockholder: Motion made.
Davis: Is there a second?
Davis: All those in favor, say aye.
Davis: Any contrary vote? The mo
tion is carried. As you will recall from
your proxy statement, we requested
authorization for the possible issuance
of five million shares of preferred stock
of the Company. We do not have any pre
ferred stock outstanding at the moment.
We have been subjected to very heavy
financial requirements in recent past, by
virtue of the purchase of airplanes. By
the way, for those of you who do not
know it, a new 737 these days comes to
a nice round figure of about $9 million.
If you add a few parts on top of that
to go with it, we’re talking about $10
million for each airplane. It does take
very substantial capital to continue to
increase our fleet to meet our growth
opportunity. Preferred stock, as many
of you are well aware, is a fairly popular
financing vehicle these days. It is one
that may well be advisable for us to
consider using as we go further into our
financing program, depending on the
circumstances at the time. This authoriza
tion would give us the authority to use
preferred stock in the event it did appear
to be advisable and prudent to do so at
that particular time. We do not now have
any firm program that would involve
the issuance of this preferred stock. This
is simply asking for your authority to
use this additional vehicle if we so desire
at the appropriate time. Is there a motion
that the Company be authorized to issue
up to five million shares of preferred
stock as outlined in the proxy statement?
Stockholder: So moved.
Davis: Motion made. Is there a second?
Davis: Is there any discussion?
Stockholder D. E. Hamlett: I’m not
sure I’m in favor of preferred taking
precedent over your normal stockholders
and I believe that probably as for the
investment part of it, other means could
be found. Unless you can find some way
to assure the normal stockholders, I don’t
believe I would be in favor of it at all.
Davis: Well, your point is well made
and you’re quite correct to some degree.
Again, preferred stock could be detri
mental to the other stock. I don’t profess
to be an authority in this area; however,
properly structured, in many instances,
preferred stock, as opposed to additional
common stock, may well be to the benefit
of all the stockholders. It’s true that
preferred stock does have some higher
call rights. It has fixed interest payments,
for example, as opposed to no fixed
dividend payments to the common stock
holders. However, depending on the op
portunity to sell preferred as opposed to
common stock, the prices which would
prevail in either event when you have
to have the money in order to assure the
continual growth of the Company, all of
those factors could indicate that it might
well be in the best interest of the stock
holders to issue preferred as opposed to
Stockholder Hamlett: If you could find
some way to assure the common stock
holders that it is the right thing to do
so that shares won’t be worth less,
then it would be all right. I’d have to
have assurance of that.
Davis: First of all, you can be assured
that we intend to constantly keep the
best interest of all our stockholders up
permost in our minds in anything we do,
including financial programs. Of course,
as I’m sure you realize, I think if not
100 per cent, certainly a very high per
centage all the other airlines and
most other industries do now issue pre
ferred stock. Any further comments?
Stockholder E. M. O’Herron: I might
add that any debt would come prior to
common stockholders’ payments. If you
buy airplanes, you’ve got to get the
money somewhere, then preferred might
be more beneficial to the common stock
holders than debentures or bonds or other
Davis: That’s very true. The interest
rate of preferred stock could very well
be less than the prime rate.
Stockholder O’Herron: And it won’t
dilute the common stockholders’ future
Davis: Any further comments? If not,
the motion has been made and seconded.
All those in favor of the approval of this
resolution, please indicate by saying aye.