It should be a sober warning that the problem of design and building of a short-range prototype had to be solved abroad. I speak of the F-27 which was developed in Europe. Let us consider the effect upon the mobilization potential and for emergencies when speed and readiness can save many thousands of lives. It is widely known that the trunk airlines have committed hundreds of long-range 4-engine aircraft to the CRAF plan-the civil reserve air fleet-for instant call if the bell rings. It is less known that an important short-range role is left for the planes not in the CRAF under what is called the WASP, or the war air service pattern, for reallocation of commercial aircraft in war. When the chairman of the Civil Aeronautics Board, who holds this grave responsibility, suggested that the modernization of the local service aircraft fleet be expedited by Federal guaranty of loans, I do not doubt that he was guided by this information, even though other Federal agencies not so close to these facts have not concurred. Some of the modern equipment made possible by the pending bill may have to fill the gaps in the trunkline system after the CRAF planes go for overseas duty. Others will fly where the need is greatest. When the need is so clear and so urgent, I say that even if substantial Government costs were involved, this would be bargain legislation in its public good. But I foresee no losses. In conclusion, gentlemen, may I ask that in the name of keeping the commercial airline network of the United States the finest in the world at the lowest possible (or eventual elimination of) subsidy cost to the taxpayers, and in the best interests of our national-defense program-may I ask that you give favorable consideration and recommenadtion to the passage of H. R. 7993. It has been my extreme privilege and pleasure to appear before you today, and I thank you for your time, courtesy and consideration. In February of 1955, the employees of Lake Central Airlines embarked on a new adventure in the field of air transportation-employee-ownership. Never before among the world's scheduled airlines had a group of employees teamed up to purchase the common stock in the airline for which they worked. The purchase of the 80,954 shares of common stock of Lake Central by 162 employees was finally completed on January 31, 1955. Negotiations with the former owners of the airline had been in progress since May 1954. Employee-ownership of Lake Central could be no more democratic. Of the 80,954 shares of common stock, station personnel purchased 18.6 percent; flight personnel purchased 27.9 percent; maintenance personnel bought 11.7 percent; general office personnel accounted for 10 percent; and supervisory personnel bought 31.8 percent of the available holdings. The average number of shares owned by each stockholding employee is 500 shares. No one employee subscribed to more than 3,900 shares, or 5 percent of the total stock issued, and the 162 stockholding employees represent 65 percent of Lake Central's total employment. In order to give everyone in Lake Central an opportunity to become a stockholder, Lloyd W. Hartman, executive vice president, and Robert W. Clifford, vice president, operations, arranged for the financing and the stock was offered to employees at $1 per share throughout a 2-year monthly payment plan. Twentyfive percent of the stock was purchased outright by the employees and the remaining 75 percent is to be paid for during the 24-month period. The story behind the employee-purchase of Lake Central is an unusual one. Early in 1954 the former owners of the airline, whose stock was being held in trust, decided to dispose of their holdings. With Lloyd Hartman and Robert Clifford the idea for employee-ownership was born. Initially the former owners had considered selling their stock to another local service carrier. Hartman and Clifford believed that the public interest and the employee's interest to retain Lake Central as a separate entity, plus the responsibility of fully developing and serving the required local air transport needs of Indiana, Ohio and Michigan, indicated that employee-ownership was the ideal plan. In keeping with this thought, initial contact was made with the former owners in May 1954 and in January 1955 Lake Central started on an entirely new phase of its development. In order to preserve the management program set forth by Lake Central's officers and board of directors, the employees voted to have their stock placed in a voting trust for a period of 5 years. This trust was also needed to facilitate the additional financing which Lake Central proposes to undertake. For trust officer, the employees elected Mr. J. J. O'Connell, former Civil Aeronautics Board Chairman, and noted Washington, D. C., attorney. Employee-ownership has breathed new life into Lake Central, and 1 month after the employees began negotiations to take control, the airline realized its first profit. Subsequent months have shown continued financial improvement, and at the present time Lake Central is breaking all its past records for passenger growth. Lake Central's employees, by their acceptance of the stock-purchase plan, have indicated that they have complete faith and a determined interest in the future of local air service in Indiana, Ohio, and Michigan. They regard their stock purchase as an investment in public service and have dedicated themselves wholeheartedly to that service. SUMMARY OF OPERATIONS The following tabulation sets forth certain statistical information relative to the operations of the corporation. Following is a graphic presentation of some of the above data. 1 The corporation reopened its mail rate as of Jan. 1, 1957, and, since that date, has been operating under a temporary rate. The temporary rate is intended to cover only the corporation's "breakeven need," i. e., the difference between operating expenses and commercial revenues, and does not provide for return on investment and reimbursement for recognized and approved extension and development costs. On June 4, 1957, the corporation filed with the Civil Aeronautics Board a petition for amendment of its temporary rate of mail compensation asking that Lake Central's temporary mail compensation for the period Jan. 1, 1957, through Apr. 30, 1957, be increased by $93,935, and that a new temporary mail rate be set for the future period beginning May 1, 1957. Of the amount requested, $66,962 applies to the period Jan. 1 through Mar. 31, 1957. WILLIAM C. WOLD ASSOCIATES, LAKE CENTRAL AIRLINES, INC., Weir Cook Municipal Airport, Indianapolis, Ind. GENTLEMEN: As a major aircraft brokerage firm in the United States, we feel quite qualified to render the appraisal requested which is to be used in connection with the registration in the State of Indiana of your proposed security issue. Based upon the information and data, which you have supplied to us, we find the fair market value of your 8 DC-3 aircraft, as of March 31, 1957, to be approximately $935,000. The spare parts, and other flight equipment appear to be fairly stated at book value which we understand to be at cost, as of March 31, 1957, in the amount of $155,050. Very truly yours, WILLIAM C. WOLD ASSOCIATES, |