1986 earnings grow
to record $72.4 million
Piedmont reported net earnings of $72.4
million for the year ended December 31.
1986. the most of any year in the com
pany's history.
Earnings for the year rose 8.5 percent
over the previous record of $66.7 million set
in 1985.
Per share earnings (fully diluted) for
1986 were $3.45 compared to $3.76 a year
earlier. The average shares outstanding
(fully diluted) increased 15.3 percent over
1985.
Our operating revenues for 1986 grew to
$1.87 billion, a 22.1 percent increase over
the $1.53 billion generated a year earlier.
Operating expenses grew to $1.70 billion, a
20.9 percent increase over 1985. and in
come before income taxes increased 56.3
percent to $133.8 million from the $85.6
million recorded a year earlier.
Bill Howard, chairman, president, and
chief executive officer, said:
“Lower fuel prices contributed greatly to
holding down our overall costs. In 1986.
fuel prices dropped 32 percent. But for
every penny per gallon that fuel goes up,
our expenses rise $4.5 million, and we ex
pect fuel prices to inch up this year.
■‘Our yield, although among the best in
the industry, declined 2.4 percent. At the
same time, the cost per available seat mile
increased. Our payroll is on the rise, and
some costs, such as our reservations lines,
hav'e risen dramatically. We’re also seeing
major increases in taxes. What all this
means is that we have to continue to keep
our costs under tight control if we are to
continue to compete successfully."
During the three months ended Decem
ber 31, 1986, Piedmont had after-tax earn
ings of $17.5 million, an increase of 9.1 per
cent from the $16.05 million reported in the
same three months of 1985. Per share earn
ings for the final quarter of 1986 were $.78
(fully diluted), down from $.88 per share
(fully diluted) a year earlier.
Operating revenues for the final three
months of 1986 grew to $509.8 million, a
22.1 percent increase over the $417.4 mil
lion reported for the same period of 1985.
Operating expenses during the period in
creased to $456.2 million, up 18.7 percent
from the $384.4 million in the final quarter
of 1985.
Howard noted that the 1986 figures re-
llect a strong increase in customer response
to Piedmont services.
"Our ability to generate new revenues at
a higher rate than our growth in costs,
despite the intense competitive environ
ment, was most gratifying. We also suc
ceeded in filling a substantially higher
percentage of our seats during the year
which enabled us to offset lower average
ticket prices."
The Tkx Reform Act of 1986 significantly
reduced the amount of investment tax
credits available to the Company. As a
result, fourth quarter 1986 net income was
reduced by approximately $10 million for
the reversal of investment tax credits recog
nized in previous quarters.
During 1986, Piedmont benefited from
changing the depreciable life of our 737 air
craft, electing early adoption of Statement
of Financial Accounting Standards No. 87
"Employers Accounting for Pensions," and
modifying the timing of recognition of sales
commissions. Such changes increased net
income for the fourth quarter by approxi
mately $4.9 million ($.22 per share, fully
diluted) and increased net income for the
year by approximately $13 million ($.62 per
share, fully diluted).
Ji
PI seeks approval to serve
Nassau by end of year
Piedmont plans to begin serving the
Caribbean late this year with daily nonstop,
round-trip service between Charlotte and
Nassau. We are seeking approval from the
Department of Transportation and the Ba
hamian government to begin service as
early as November.
"The approval for this route will take sev
eral months to develop," Dick James, vice
president-planning, said, "but we expect
dot's approval reasonably soon and the
Nassau government's approval without any
hearings or exhibits."
The two-hour flight between Nassau and
Charlotte will serve one of the more heavily
traveled destinations in the Caribbean.
"Nassau will be a different market for
us," Dan Brock, vice president-marketing,
said. "Whereas all of our markets now are a
mix of business and leisure, Nassau will be
predominately leisure. Nassau is very popu
lar, provides warm weather year round, has
hotel rooms to handle additional air traffic,
offers gambling casinos, and is an impor
tant cruise ship stopping point.
"The market will also be important for
our frequent flyers who, first, can earn mile
age by flying Piedmont to this vacation des
tination, and second, who can use their
accrued mileage for free trips to Nassau.
Also, travelers in the region from which
we’re providing service have never had such
an easy way to get to this popular resort.’
Brock added.
"Our service to Nassau, coupled with
Henson’s new service, gives us a presence
in the Caribbean we’ve never had before."
The Bahamas include 700 islands, cover
ing a land-and-sea area of 100,000 square
miles. Only about 15 of the island areas are
developed, and of the total population of
225,000, 59 percent reside on New Provi
dence where the capital, Nassau, is located.
TWo million visitors come to the Bahamas
resort islands each year. The airport is
served by BahamasAir, Pan Am, Eastern,
TWA, Delta, and United as well as several
commuter carriers.
up for discussion
Have a question about Piedmont?
Beginning next month a new col
umn, “up for discussion.” will ap
pear in the Piedmonitor to give you
an opportunity to ask questions
about your company.
Ail questions must be signed and
include your name, title, and loca
tion. Your name will be withheld
from publication upon request and
will not be revealed when your ques
tion is sent to the proper department
for an answer. Unsigned questions
will be automatically discarded.
When related questions are re
ceived, they will be consolidated and
answered as one question. As many
questions and answers as space
allows will appear each month in
"up for discussion."
Send your questions to Piedmoni
tor Editor, H440, or One Piedmont
Plaza, Winston-Salem, NC
27156-1000.
J-
Our fleet, as of February 15. includes 162 aircraft.
We have 62 737-200s, 21737-300s, 25 F28-4000s,
20 F28-1000s, and 34 727-200s. 'l\vo more 737-300s
will join our licet in March and one in April.
* * *
The support we received in our bid to provide Lon
don service has been overwhelming. More than 1.250
letters backing Piedmont were sent (o Ihc Department
of Ti-ansportation and/or government leaders. Ninety-
seven state and national government officials in 10
states sent letters ol support, and 66 petitions or reso
lutions of support were written by governing bodies
and other groups. The iiimiber of local officials who
supported us totaled 195.
* * *
Piedmont Chairman Bill Howard has been elected to
serve on the Board of Directors of the Air lVans|Dort
Association. The board, composed of 21 of the nation's
top airline executives, sets goals and policy for ATA,
the 50-year-old trade and service organization of the
U.S. scheduled airlines.
* * «
The City of Balti
more proclaimed
November 25 as “Wil
liam R. Howard Day”
in honor of Piedmont’s
chairman, president,
and chief executive
officer. Baltimore
Mayor William Donald
Schaefer made the
presentation to ap
plaud “the unique
accomplishments of
this devoted and hard
working professional
. . .as Piedmont con
tinues to brighten Bal
timore’s and all of
Maryland’s skies.”
Dennis O'Madigan, director-seeurity. has been
elected chairman for 1987 of Ihc ATA's Security Com
mittee. The committee is composed of officials respon
sible for carrying our airline security programs in
fields ranging from anti-hijacking, sabotage prevention
and cargo and baggage security to cooperative efforts
with governments to help curb drug smuggling.
>)[ « «
Several new sales promotions are planned for this
spring. In March and April, Piedmont representatives,
in conjunction with the State of Maryland, are promot
ing tourism in the state, particularly in the Baltimore
area.
♦ ♦ ♦
This summer if you purchase Ralston cereal chanccs
are you'll see Piedmont’s name on the box. IXvcnty-
five million boxes of Ralston cereal will soon promote
our service.
♦ ♦ ♦
For the second year in a row. Piedmont will be the
Official Airline for The Crosby National Amateur
Championship, to be held May 21-24 at Bermuda Run
Country Club near Winston-Salem.
« >i *
Our GSO maintenance facility has a new, large cafe
teria. The cafeteria is located on the second floor of
the facility’s newer section and is open during all four
shifts.
* *
Piedmont stock (PIE on the New York Stock Ex
change) soared to a record high (closing) of 58-3/8
on January 30. Our stock closed on January 31, 1986.
at 39.
Proclamation