page eight
fyieofTwafWiroiP
Davis: Is there any opposition? The
motion is carried. We would like the op
portunity to purchase up to 50,000 shares
of common stock from the market for
issuance in the event of employee stock
options or for other purposes. Again, we
would do this when such purchases would
appear to be prudent, particularly if the
price of our stock on the open market
should happen to be below book value.
It’s much more in the interest of the
stockholders and the Company, as I think
all of you will recognize, for us to pur
chase the stock on the open market rather
than issue treasury stock in those events.
So, here again, we have no firm plan at
this moment to buy the 50,000 shares of
common stock on the open market. We
are simply requesting your authority so
that if sometime during 1979 it appears
to be prudent in our judgment we would
be able to do that. Is there a motion that
this resolution be approved?
Stockholder: So moved.
Davis: Is there a second?
Stockholder: Seconded.
Davis: Motion seconded. Is there any
discussion on this one ? All in favor,
signify by saying aye.
Stockholders: Aye.
Davis: Any opposition? The motion is
carried. For a number of years we have
had the firm of Ernst & Ernst serve as
our independent public accountants, and
it is again recommended that they serve
in that capacity for 1979. All of you, I
am sure, are reasonably familiar with
Ernst & Ernst. They have been doing a
satisfactory job for us. Is there a mo
tion that we approve Ernst & Ernst to
serve as our independent auditors for
1979?
Stockholder: Motion made.
Davis: Is there a second?
Stockholder: Seconded.
Davis: The motion is seconded. Any
discussion ? All those in favor signify by
saying aye.
Stockholders: Aye.
Davis: Is there any opposition? The
motion is carried. Is there any other
business to come before the meeting at
this time? If not, I wonder if there are
any questions or comments that any of
you may have.
Stockholder Wyant: Mr. Davis, I’m
R. L. Wyant from Lynchburg and I would
like to compliment this Company and its
management on the excellent manner in
which they overcame their competition in
the Roanoke market with the competitor
airline. I feel compelled to do this strictly
as a layman and observer. I’ve never
flown to Pittsburgh. I hope one of these
days there is a requirement that all com
panies operate in the clean manner, with
the keen, clean competition and the ad
vertising that this Company presented
to the public in that market. I think your
approach was outstanding and I want to
compliment this Company on the excel
lent manner in which they handled that
situation.
Davis: Thank you very much for your
kind comments. We appreciate them. This
is you> first stockholder meeting, I be
lieve, and we certainly appreciate your
coming to be with us today. We must
concur; we were right pleased that we
were able to run Allegheny out of that
market as fast as we did. We did it a
little faster than we thought we could.
We thought it might take us six or
eight or ten months. Seriously, they’re
a fine company and they do a good job.
Some people think that Piedmont had
the upper hand because we have such
a complex of services at Roanoke. Well,
by the same token, Allegheny has a
tremendous complex of services at Pitts
burgh. And Pittsburgh is a lot bigger
city than Roanoke. So it seemed to us
that we were certainly on equal footing
insofar as those potential advantages are
concerned. As Ken pointed out in his
traffic report, we were both operating
in that market side-by-side. Our share
of the market kept going up; their share
of the market kept going down. They’re
smart in that they saw the handwriting
on the wall. They decided to use their
resources somewhere else.
Stockholder W. Hohman: A reverse to
that; I think of Greenville/Spartanburg
as being a fast-growing area of western
South Carolina, almost like Greensboro,
High Point and Winston-Salem in this
area. With that kind of reverse, did
Eastern and other carriers have better
connections there than you had or what
prompted your plans to withdraw from
that one ?
Davis: It was primarily a factor of the
route — the way Greenville/Spartanburg
is situated on our route system. It was
an east/west route operation. We did real
well between Greenville and Charlotte,
for example, but from there west there
was practically no traffic. We were not
operating in competition with Eastern or
anybody else out of Greenville/Spartan
burg. Eastern has reasonably good ser
vice from Greenville/Spartanburg to
Atlanta, Washington, New York and
their major markets. We never did par
ticipate in those markets; so, no, we
weren’t run out of that route.
Stockholder B. Hutchens: Since you
put a nonstop between Charlotte and
Miami in direct competition with Eastern,
are you also considering putting a non
stop between Greensboro and Miami?
Davis: We don’t have plans to put a
Greensboro to Miami nonstop in at this
moment.
Stockholder Hutchens: Are you going
to get a different gate in Miami or is
that just a temporary gate or what? It’s
kind of a chaotic situation down there.
Davis: You’re exactly right. As a mat
ter of fact, Miami is not the only place
like that. It’s the same in Chicago and
LaGuardia in New York. Unfortunately,
there is just no available space for a
new carrier to go in. Any new carriers
going into most of these places, such as
Miami, have to depend on contracting
with some other airline that’s already
there. They are not forced, by any means,
to take us in unless they want to. So you
see, we don’t have a very good bargaining
position insofar as what they charge us
either. Thus far, it’s fine in Miami. Delta
kindly agreed to provide maintenance
services for our aircraft and handling the
aircraft at the ramp. They also made
available to us counter space, which will,
hopefully, be totally inadequate before
too long because we intend to keep on
growing down there. This is the case in
each of these airports. That’s just one
example of several. In Tampa, we’ve had
to depend on Delta again. In Pittsburgh,
Northwest. Eastern, in the case of
Chicago and New York-LaGuardia. So we
don’t have the flexibility we would like
to have. In most instances, the airports
are making attempts to expand their
facilities so that additional space could
be available and we would not be forced
to contract with another carrier. But
that’s been very, very slow.
Stockholder Hamlett: Mr. Davis, in
regard to the dividends, are you restrict
ed to how much distribution there can
be in relation to your debt?
Davis: We are restricted, depending on
our earnings after a certain date, and I
don’t recall what those figures are right
off hand. The dividends the directors have
been declaring in the recent past are
certainly within the requirements pro
vided for in our various loan agreements.
Stockholder Hamlett: I just wondered
what those loan agreements were. Is that
the reason the dividend is a little on the
low side ?
Davis: We think it’s a little on the high
side. (Laughter.) Seriously, my recollec
tion is that the dividend restrictions in
the covenants of our existing loan agree
ments will not present any problem in
the foreseeable future, particularly if we
keep on having reasonably satisfactory
earnings. It would if we decided to declare
unreasonably high dividend payouts. But
our dividend distribution program has
been tailored. First of all, let me say this,
Piedmont has been declaring dividends
longer and has declared more dividends
than any other regional airline in the
United States. We are one of only three
or four, I believe, at the moment that is
declaring any dividend. There are a num
ber of trunk lines that aren’t even declar
ing a cash dividend as of yet. Last year
a few more joined the pool. We increased
our dividends last year. We changed from
10-cent, semi-annual dividends to a six-
cent, quarterly dividend. The percentage
rise is a pretty good boost. Insofar as
total payout of earnings is concerned,
you’re right that it’s low compared to,
I guess you might say, the average in
dustrial company having reasonably good
earnings. The reason for this is our
enormous financial requirements to buy
additional equipment. The total capital
that we have to raise is so tremendous
in relation to our underlying equity that
we felt it in the best interest of the stock
holders not to pay out this cash and then
have to turn right around and have to
borrow it, particularly at the high in
terest rates that prevail today.
Stockholder Hamlett: I’m not objecting
too awful much to that. I’ve been a stock
holder of yours since way back in the
1950s. However, I think that everybody
except the stockholders are enjoying the
benefits of the Company. What I was
hoping for is a little bit more of a share,
for instance, on the stock that I bought
way back in the early 60s. I wouldn’t even
be getting a six per cent investment on
it right now. That’s a pretty poor record,
really. Quite a few of those here agree,
needless to say, that there was none for
the stockholder at all. I would appreciate
some consideration.
Davis: Yes, sir. You can be assured
that we will do that. I might point out
to you that Piedmont stock, insofar as
price is concerned, in the last twelve
months has performed better than the
airline industry average. Our price-
earnings ratio has increased more and is
higher today than, I think, any of the
other regional airlines, with one excep
tion and that one is involved in a merger.
Lauren Nicholson was the youngest stockholder.
Stockholder Hamlett: I just would like
to recommend to the directors that the
stockholders be given a little bit better
share. I know you probably don’t need
it, but some of us do.
Stockholder A. Nicholson: Lauren
would like to know if you’ve considered
a merger with Frontier Airlines, since
it has similar equipment and we could
go coast-to-coast.
Davis: Yes, I don’t want to give you
a short answer, but we think its en-
cumbant upon us to constantly look at
all opportunities to improve your Com
pany to make it a bigger one, to have
better earnings, and do a better job
rendering service, and hiring more
people. We make it a practice of taking
a look at Frontier and many others. I
believe the young lady who asked this
question is the youngest stockholder
we’ve ever had come to one of our meet
ings. She is the daughter of one of our
retired captains who was with us when
we started the airline in 1948. She is
also the daughter of one of our former
flight attendants, her beautiful mother,
Audrey. We are please to have you with
us. Are there any other comments or
questions? Is there a motion that we
adjourn ?
(Moved. Seconded.)
Davis: Thank you, again.
(Meeting adjourned.)