of amphibious landing gear and all-weather flight techniques suitable for
civil helicopter use in the New York area.

Labor Relations

In the fall of 1953 the Air Line Pilots Association invoked the procedures
established by Federal statute for recognition as the collective bargaining
representative of the Company's pilot personnel. After extended negotiations
(including the mediation services of the National Mediation Board) a contract
between the Company and the Association was concluded. In January 1955
both the Company and the Association requested changes in the contract and,
as a result, this matter is again under negotiation.

Financial Results

As shown by the financial statements presented with this Report the
Company earned a net profit of $69,306 for the year 1954, as compared
with $48,241 previously reported for 1953 and $3,284 for 1952.

The bulk of our revenues now consists of subsidy payments fixed by
the Civil Aeronautics Board in amounts intended to provide for the develop¬
ment of our operations in the national interest. While substantial need for
Federal subsidy will continue for a considerable period, your management
has placed primary emphasis on the generation of revenues from the trans¬
portation of passengers, express and freight, as well as other non-subsidy
income sources. The decrease in mail loads carried during 1954 was primarily
attributable to the discontinuance of helicopter mail service between LaGuardia
and New York International Airports.

The results attained are encouraging. The Company's 1954 non-subsidy
revenues show an increase of more than 400 percent over 1953. The growth
of these revenues and, particularly, the improvement in earning capacity which
will be made possible as advanced helicopters become available, will accelerate
our progress toward the ultimate goal of self-sufficiency.

Flight Equipment

Our operations have so far been conducted with five S-55 helicopters.
While this equipment is the best now available, it has been economically
handicapped by limited speed and capacity. Even so, it has performed yeoman
service in demonstrating the value of metropolitan helicopter transportation,

Helicopters with greatly increased payload and speed as well as other
superior operating and economic characteristics are expected to become
available for civil use in the near future. As a result of the Company's
financing program completed early in 1953 we are in a strong position to
take advantage of this improved equipment, as shown by the balance sheet
presented herewith.