Transcript of Record — Pan American World Airways, Inc. v. United States

Supreme Court brief1963

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TRANSCRIPT OF RECORD

| Supreme Court of the United States

OCTOBER TERM, 1962

No. 23.

PAN AMERICAN WORLD AIRWAYS, INC.,

APPELLANT, |

UNITED STATES.

-) . No. 47 |

UNITED STATES, APPELLANT,

, ) ; ie

VAN AMERICAN.WORLD AIRWAYS, INC., ET AL.

\aPPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORE

. . NO. 23 FILED JULY 25,. 1961

NO. 47 FILED DECEMBER 1, 1961

JURISDICTION POSTPONED JANUARY 15, 1962

SUPREME COURT OF THE UNITED ST. ATES

*OCTOBER TERM, 1961 .

No. 257 aa

: . ; .

* PAN AME RICAN WORLD AIRWAYS, =

APPELLANT, - .

vs.

UNITED STATES. -

~ No. 583

UNITED STATES, APPELLANT,

VS. -

PAN AMERICAN WORLD AIRWAYS, INC., ET AL. |

“%

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORE

ee: INDEX °™

VOLUME V

Original Print

Record from the United States District Court for

the Soutlrern District of New York—Continued

-Pan American World Airways, Inc. Exhibits:

DocUMENTARY EVIDENCE: . . 4ii2

1—Letter , to Wilbur L. Morrison from R. i Fes

Shrader dated October 11, 1946. 1777

ReEcorD Press, PRINTERS, NEW York, N. Y., JULY, 1962

il ee INDEX

Record from the United States District Court for

the Southern District of New York,—Continued

‘Pan American World Airways, Tne. Exhibits— .

Continued

Original

2—Agreement ‘ between Pan. American Air- *

ways, Inc. and Pan American-Grace Air- :

. ways, Ine. dated July 30, 1946 .

Annex -., maa :

, FrLetter ‘agreement between Pan American

Airways, Inc. and Pan American-Grace

Airways; Inc, dated May 28, 1947... ....

4—Letter agreement between W. R. Grage and

Co. and Pan American Airways Corpora- «

tion dated May 28, 1947 .. -

5—Supplement No. 2 to Through Flight Agree-

ment between Pan American Airways, -

‘Inc. and Pan American-Grace Airways,

Inc. dated January 9, 1948

6—Supplement,. No. 3 to Through Flight Agree-

1805

ment between Pan American Airways, .—

Inc. and Pan American-Grace “_—

Inc. dated January 28, 1949 .

7—Supplement No. 4 to Through Flight Agree-

ment between Pan American Airways,

Inc. and Pan American-Grace Airways,

Inc. dated February 9, 1949.

8—Supplement No. 5 to Through Flight Agree.

ment between Pan American Airways,

Inc. and Pan American-Grace Airways,

Inc. dated May 11, 1949 .

9—Amendment No. 1 to application of Pan

American World Airways, Inc. for ap-

proval of Supplement No 5 to the

Through Flight Agreement dated April

. 25, 1951 . :

10—Supplement No. 6 to “Through: Flight

Agregment between Pan American ‘Air-

ways, Inc. and Pan . American-Grace

Airways. Inc. dated October 18, 1949

’

-<?

1830

1831

1839

Print .

1887

1908

1910

1911

1919

INDEX

Record from the United States District Court for

the Southern District of New York Continued

Pan American World \irways, Ine. Exhibits—

Continued:

11—Supplement No. 7 to Through Flight

Agreement between Pan American

World Airways, Inc. and Pan American.

Grace Airways, Inc. dated January 31,

19350

12-—Supplement No. & to Fhrough Flight

Agreement between Pan American .

World Airways, Inc. and Pan Americ “an

Grace Abrwags,. Inc. dated December 26,

1950 °

(13—Supplement No.-9 to Through Flight

Agreement between’ Pan American

World“Airways, Ine. and Pan American-

Grace Airways, Inc. dated agnuary 24.

1951 25s

14—Supplement No. 10 to Through Flight

Agreement between’ Pan Ameriean

World Airways. Inc. and Pan American-

Grace Airways, Ine, dated June 29, 1951

/15—Supplement No. 11 to Throdgh Flight®

Agreement between Pan American

World Airways, Inc. and Pan American-

Grace Airways, Inc. dated January 1,

1952 . i

16—Suppleme nt No. 12 to Through Flight

Agreement between Pax American

World Airways, Ine. and Pan Americar.

Grace Airways, Ine. dated April 10.

1952 ;

17—Sifpplement: No. 13 to Through Flight _

Agreement between - Pan American

World Airways, Fue. and Pan Americ an-

Grace Airways. Inc. dated September 2:

1952 :

18—Supplement No. 14 to Through Flight

Agreement between Pan American

‘World Airways, Inc. and Pan American-

Grace Airways, Tue. dated: May 8, 1953

Original

1849

1872

TAS3

189]

102

1903

1925

1927

1955

1964

1971

1956

1987

iv ; INDEX

_. oon Original Print

Record from the United States District Court for

the Southern District of New York—Continued

Pan American World Airways, Inc. Exhibits—

Continued

19—Supplement No. 15 to Through | Flight :

‘' Agreement between Pan -: American

- World Airways, Inc. and Pan American-

Grace — Ine. ‘dated January 20,

eee es

upplement No. “16 my ‘Through Flight

Agreement between Pan. American

Grace Airways, Inc. dated June 29, 1954 ¢ 1934 2031 |

21—Supplement No.. 17 to Through Flight el

Agreement between Pan American

World Airways, Inc. and Pan American-/

Grace a Inc. dated September 7, 2

RR 1935 2032

- 22—Supplement No. “18 ‘to Through Flight

Agreement between Pan. American

World Airways, Inc. and Pan American- °

Grace Airways, Inc. aunt, August 4,,

ieee: 1955. 2065

23Supplement No. 19° ry “Through. ‘Flight ;

‘Agreement between Pan. American

World Airways, Inc. and Pan American-

Grace ~~ Inc. dated Augtst 7,

1957 .. : 2 1962 ° 2070

24--Supplement ‘No. 20 ry ‘Through Flight ’

Agreement tween Pan American *

World Airways, Inc. and Pan American-

. Grace Airways, Inc. dated July i, 1958 1964 2072

25—Supplement No. 21 to- Through’ Flight |

Agreement between Pan American

World Airways, Inc. and Pan American-

Grace Airways, Inc. dated December 23, .

4 EEE _ 2074

INDEX |

Record from the United States District .Court for

the Southern District of New York—Continued -

Pan American World Airways, Ine. Exhibits—

Contigued

26—Equipment Interchange Agreement be-

tween National Airiines, Incorporated,

6 Pan American World Airways, Ine., and. -

_ Pan American-Grace Airways, Ine.

a dated August 4, 1955

27--Supplement No. 1 to “Equipment Inter-

. . change. Agreement between. National

Airlines, Incorporated, Pan American

World Airways, Inc., and Pan Amer

-ican-Grace Airways, Inc. dated August

28—Application ds amended by “‘hieindiness

No. 1 of National Airlines, Incorporated,

Pan American World Airways, Inc,, and

‘Pan American-Grace Airways, Ine. for

approval of Equipment Interchange

Agreement and amendment to’ Through

Flight Agreement urider. Section Al2 of

the Civil Aeronautics Act and, if

deemed necessary, for approval under

or exemption from Section. 408 of the

Said Act dated August 4, 1955 .

29—Amendment No. 1 to application of Na-

«tional Airlines, Incorporated, Pan Amer-

ican World Airways, Inc., and Pan

American-Grace Airways, Inc.. for ap-

ment and amendment to Through Flight

. Agreement under Section 412 of. the

Civil ‘Aeronautios Act and, if deemed

necessary, for approval under or exemp-

tion from Section 408 of the said Act

dated August 10, 1955 -

30—Létter to Civil Aeronautics Board -from

. K. A. Lawder dated August 29, 1955

proval of Equipment Intere ‘hange’ Agree- .

. a

Original Print

1978 . 2088

2020 2126

2033 =2138

vi : INDEX

Record from the United States District: Court for

the Southern District of New York—Continued

Pan American World Airways, Inc. Exhibits—

Continued

Original Print

31—Supplement No. 2 to Equipment Inter-

> change Agreement between Natiofal

‘Airlines, Incorporated, Pan American

. .World Airways, Inc., and Pan Amer-

ican-Grace Airways, Ine. datéd August:

22; 1955 . ss

32—Letter agreement between, Pan American:

Grace Airways, Ine. aud National Air-

lines, Inc. dated August 24, 1955 ..

33-——Letter agreement between’ Pan American-

Gtace Airways, Inc. and’ National Air-

lines, Inc. dated November 28, 1955 -

34—S .pplement No. 3 to Equipment. Inter-

change Agreement between National

* —-—s Airlines, Incorporated, Pan- American ~

World Airways, Inc.,.and Pan Amer-

ican-Grace Airways, Inc. dated Novem-

ber 28, 1955 -

_35--Letter agreement between Pan ‘Ameriean-

Grace Airways. Inc., National Airlines,

Incorporated, and Pau. American World

. . Airways, Inc. dated April 16,°1957 __.

36—Statement of references and cost deter-

{, mination set forth in financial supple-

ment dated August 9, 1955, to the Equip-

ment Interchange Agreement dated Au- .

gust 4, 1955, between National Airlines, —

« Incorporated, Pan American World Air-

ways, Ine., and i aa American-Grace

Airways, Ine. aos ‘

Pan American Documentary Evidence—Agree-

ments: filed with the CAB

37—Agreements on Interline tickets between

Pan American Airways, Ine. and Pan

American-Grace Airways, Ine. dated

from January 26, 1932, to October 1,

1945 _...

2085 2182

2089. 2185

2091 2186

2093 2188

2102 2196

2106 2200.

2108 9904

9113 2209

INDEX

Record from the U nited States District Court for

the Southern District of New York-—Continued

‘Pan Ameri¢tan World | Airways, Inc. Exhibits—

Continued . ;

Pan American Documentary Evidence—Agree-

ments filed with the CAB—Continued

38—Letter agreement between Pan American

Airways, Inc. and Pan. American-Grace

Airways, Ine. dated June 11, 1937

39—Letter agreement between Pan American-

Grace Airways, Inc. and Pan American

Airways, Inec.dated May 13, 1942,

40—Letter agreement between Pan Anjierican-

Grace Airways, Inc. and Pan American

Airways, Ine.-dated October 28, 1942

41—Agreement ‘between Pan American-Grace

Airways, Ine. and. Pan Afmerican Air-

ways, Inc. dated May 25, 1944

42—Contract between Pan @merican Airways,

‘ Ine. and Pan American-Grace Airway%,

Inc. dated August 23, 1945

43—Agreement between Phn American, Pan-

agra and Urace dated March 3, 1948°

44-—Letfter agreement between Pan American.

Airways, Inc: and Pan American-Grace

Airways, Inc. dated July 14, 1948 _

45—Memorandum agreement regarding ser-

vices rendered and to be rendered to

Panagra by the parent companies and

- compensation . therefor between Pan

American-Grace Airways, Inc., Pan

American Airways, Inec., and W. R.

Grace and Co., dated July 14, 1948 |

46—Genefal Traffic and Sales Agency ‘Agree-

ment betweén Pan American Airways,

Inc. and Pan American-Grace Airways,

Inc. dated September 10, 1948

‘¢7—Letter agreement between Pan. American-

Grace Airways."Inc. and Pan American

World. Airways, Ine. dated. Dee ‘ember 10,

1951 .

Original

2126

2128

2129

2131

2134

2140

2163

2168

2180

2213

vil

>see

99909

—— a oe

2223

2256

2263

2297

Vili -*S INDEX

i . Original Print

Record from the United States District Court for

the Southern District of New York—Continued

Pan American World Airways, Inc. Exhibits—

Continued

Pan American Documentary Evidence—Agreé

ments ‘filed with the CAB—Continued

48—Letter agreement between Pan’ American- .

Grace Airways, Ine: and Pan American

- World Airways, Ine. dated March 6,

RES LT I. KOEN R es AOE 2215 2299

49—Letter agreement between ‘Pan ‘American-

Grace Airways, Inc. and ‘Pan American

World Airways, Ine. aecepted April 25, ;

NASR. “aes cloth, Pee 2217 2301 .

50—Exchange of correspondence between Pan

American World Airways, Inc. and Pan

American-Grace Airways, Inc. dated -re-

spectively June 26, 1957, June 3, 1957 | .

and June 7, 1957 - Etre ~ 2220 2303

51—General Traffic - hawecment hetwvecn Pan. .

_American Airways, Ine. and Sociedad:

-Colombo-Alemana de Transportes Aereos

dated March 11, 1952 - ee 2227 2309

52—General Traffic and Sales pam ‘Agee.

ment between Pan American Airways,

Ine. and Aerovias Nacionales de Colom- ered

bia, S.A. dated November,1, 1949 ~~ ' 2942 9394

53—General Traffie and Sales Agency Agree-

ment between Pan-American World Air-

ways, Inc. and Aerovias Nacionales de

Colombia, S.A. dated December 3, 1954° 2271 . 2353

54—Letter agreement. between Aerovias Nacio-

nales de Colombia, S.A. and Pan Amer-

ican World Airways, Inc. dated Decem-

ber 3, 1954 S 2288 2368

5d—Letter agreement between Pan Atnivlcain cae

World Airways, Ine. and Aerovias Na-

cionales de Colombia, S.A. dated Decem- ;

ber 3,1954....: 2291 2371

56—Interline Traffic Agreement signed by. Pan

American Airways, Ine. dated Decem- 2

ber 3, 1954. . pee Rosas itn fae Se

[fol. 1772]

\ A

1. AGREEMENTS

Trough Flight Agreement ani Supplements:

Date of °

Agnt. ;

1/30/.6

5/28/47

1/9/u8

1/26/L9

2/9/us

— Sfu/us

10/18/L9

1/31/50

12/26/50

“Y2u/si

6/29/51

u/lo/s2-

9/25/s2

5/8/53

1/20/Su_

Pan Ameeican Documentary Ei ience

Agreements Filed with the 8

WITH PAiAGRA:

Parties

PAA /PANAGRA

PAA/PA NAGRA

PAA/PANAGRA

PAA /PANAGRA

-_PAA/PAMAGRA

PAA /PANAGRA

paa/PaMmAcu’

Paa/PAMAGRA

" PAA/PANAGRA

PAA/PANAGRA

Paa/PAMAGRA

Paa/PANAGRA

Pad /PANAGRA

PaA/PANAGRA

Description

Through Flight

Table of Contents

Agnt.1

Supp. No. 1

Supp. Yo. 2

Supp. ‘lo. 3:

- Supp. No. b

Supp. No. 5

_ Supp. No. %

Supp. No. 7

Supp. No. 8

Supp. No. 9

Supp. No. 10

Supp. Mo.

Supp. Mo. 12

Supp. No. 13°

Supp. Mo. ls

Supp. No. 15

Volune }

4/22/Su

Date

Filed ,

CAB CAP_No.

A /s/ub 727

5/28/%7

, Wb/i8 21-4

| 2/18/u9 727-h/'s

sA2/s 7°7-A/¢

“lo/eu/us - -727—a/7

2/28/50 \, 727-a/8

V/2h/S. *-27-A/9

2/9/51 727-4/10

1/27/51 > T27-A/M

2/15/52 727 a/12

L/16/s2 T27-A/1}

10/13/52. 727-a/1L

5/18/53 PIAS .

727/16

Date

. App:d.

S/s/".7

8/29/50

‘8/29/50

8/29/50

89/5

+ 8/29/50

8/29/50

8/10/55

* 8/10/55

8/10/55"

a/o/ss”

8/10/55

R/LY/SS

8/19/55

1851

E-4575

B-u575_

£-1,575

st -* F

E4575

B-uS7°

B-L575

£-91.81

B-9UAL

£-91.81

E-9u.0 1

_ E-9481

E-9481

F-SU92

E-Si,A1

y Por Parent Company Agreenent considered by CAB as part of Through Flight Agveement,

see Agreement with Grace. 4 b

. [fol. 1773] ”

Date of ,

Age, Parton

6/29/Sh_ Pas/PAMAGRA -

9/1/85 -, PAA/PLMORA

8/7/st? —-PAA/PANAORA

“TAA/s®. ” PaA/PAMORA

Inter ch

Oth er with

B”/ss’ PaA/PAMORA

“2

12/23/58 ° PAA/PAMAORA

Yeefs2 Pua/ramon

nMss | PAA/MAL/PAMMORA ago liters we R05

yr ius ‘Paa/mi,/Parmons Supp. No. 2 (vanu-8/29/55 A/

| a PAL/ML/PAMORL Supp. No. 3 | 1/u/56 a/2 :

L/L6/S7 a ae. Syst. Acts. 6/26/51 / Af3* :

Joint Pectlities- 9/27/u6 607

Corumba, Brasil>

Apportionment of. — : ROR

Rev enue —

Airpiai? exchange open: Rog

_ Date. ea

: Filed . Date” Onder

; Description CAB CAB No. Appvd. No.

- Supp. Mo. 16 B/17/SL_— = TRT-A/17_—«S/10/S5_. E~9L81

‘Supp. Mo. 17 9/23/55 TRT-A/IS-_— 10/13/55 E-9654

‘Supp. Wo. 18° B//SS ss TRTMA/IRBALO/SS 9A

‘Supp. No. 19 © ° 8/20/57 7274/20 Pending

“Supp. No. 20 7/23/58 —s-727-A/23. Pending

Supp. Bo. 21 1/8/59 |: 727-h/25- Pending

‘ . ‘ rae :

qnent and Supplenents aut

8/10/55: E-9L@1

chge. ee _

9/12/55 .E~9562

ation ectear, & Lr. of

Agnt.) :

10/15/56 B-10669

Pending

a. ;

: Volume 2

ry .

Interline tickets sfrNés _— —

(21 copies cor- ae

respondence) 2 mae

ie. Agat /Ornd. 3v. 2/20/53. - 66L 2/17/53 E-7165

by PAN-AGRA/Buenos “aon

Aires Airpt...

SST

-[fol. 1774]

Date of.

Agmt .

8/23/45

3/3/L8

“Wb/Lb

1/s/L*

9/o/.s

wisi

—(If5/5S8

Lu /2u/s6

6/26/57.

6/3, 7&

“26/57

: Date

. ; Filej

Parties Description CAS

PAA/PANAGRA Airmail Service- iop

Operaticns/Panana

(Sp. Eng.)

PAA/PANAG?A/ = Gen. Sls: Arcy & 9/2L/1°

‘V.R.GRACE & CO. Commissions

~PAA/PANAGRA ~—s Purch. & Shipping 7/20/18

Agrt. y

; PAA/PANAGRA/ Agmt. re Gen. Sls. 1/20/R

. WLR.GRACE & Agcy, Pch. & Ship-

co. . ping & Adm. Sv. to

; Panagra .

PAA/PANAGRA Gen. Traff/Sls. = 9/21/L8 |

‘ Agcy. Agt.

PAA/PANAGRA —s- PAA ticket sale on §/12/52

: "lift" basis

PAA/PANAGRA = Appyl. changes in 3/27/56

. design

PAA/PA“AGRA Commissions re | 5/17/57

oc8s

PAA/PANAGRA Procurement of —-7/22/57

an partes DC6s —

PAA/PANAGRA Avianca an affil. 7/10/57

* carrier

2, AGRESMENTS WITH AVIANCA AND SCADTA:

3/1/32 - *

nA/s

PAaA/SCADTA.

PAA/AVIANCA

General Traffic 9/30/38

Agnt.

Gen. Traffic/ 1 1L/Ly

‘Sle. Agcy. Agt.

12/3/Sk ‘* PAA/AVIANCA = Gen. Traf/Sls.. 12/8/sk

12/3/S5u

‘

é7

PAA/AVIANCA

«>

Agcy. Agt. '

Reimbursemt. of 1/10/57

expenses

1853

, Date Order

CAB No, Appv 1. No.

6Th-k/? 11/7/52. E<651.5

2'.7? Pending re

bg 1/2/52 EH OLA.

2273 Terminated

2u73 11/8/51 = E-S8L2

4133 6/3/S2 E476

As. Pending —

afl Pending

a/2 Pending

a2 Pending

166 Terminated

3763 11/6/51 B=58L2

6528 Pending

a/2 Pending

1854

(fol. 1775)

Date of

' 3/31/s8

10/30/58

3, AGRE wrrH pranarr:

L/27/u8

9fe7/8

w/e

12/1/9

1/20/50

W/30/2

6/20/57

10/21/57

Parties” Deecription

ras/aViamca Pa ir. eae)

affiliates

Paa/a\ lama 8=s LATA Inter]

Treff. Agt

Paa/aVIAICA AnGet. Wo. 1 re

territory

PAA/AVIANCA Rell. to terri-

' tory/Amant. Mo. 2

PAA/AVIAMCA 8 =— Amdt. Mo. 3} - re

territory

Paa/AVIANCA Amdt. Mo. l - re

territory

PAA/BRAMIFP = Ornd. Sw. Agt.

Date

Piled

1/10/57

L//Ss

1/10/S?

1/31/58 ..

U/2u/58

Hevene & Sen Blas,

——

PAaA/BPAMIPP . Amdet. Mo. 1 re

charges

PAA/BRAMIPF Amdmt. Mo. 2

re charges

PA/SPANIFF Amant. Mo. } re

7 char gee

Paa/Bha KIPF Am@et. Mo. & re

charges

PAA/BRANIFF Apeignat. to AUBA

of Svcg. Agt

PAA/PRANIFF = Pacticipn. in PAA

Syst. tariffe

PAA/BSANIFF = Amdnt. No. S re .

charges

PAA/BRANIPF Amdmt.. No. 4 re

charges

9/25/S2

11/30/5L

1/22/57

11/22/57

a/6

1980

» 9/13/57

‘Pending

5-716

1855

(fol. 1776)

Date

Date of - Piled Date Order

b. sper sats oe: :

6. AGMENTS WITH PAMIR DO BRASIL:

u/s maa/Pas (General Agency W/l/i) 27 fei —s BBL?

Age.) Lr. Agt

Vi Pua /PLB Conerel Agency —s-2//19/uh a nfefsi ss B58?

6/22 fh Paa/PAB Le. Aget. L/Afub sn uf~fi = 8-582

122z~b = =—s-_ aa PB Aget. W/u/a? /) ufefsi—s ESL?

ViAr Paa/Pas Lr. Aget. re weAr ah uff. —siE-SBL?

| . Syst. Accts.

ofr pas /PaB . agit Andet. 9/30/47 /s ues —s«B-SBL2

2/i9/S2 paa/Pab Lr. Agut. re com- 6/18/S? Ve] s/s 86587

mission retes

VVSs pasa /PaB Gen. Traffic/Sle. 12/79/55 9620

“123/595 M/A Lr. fr. Paa/re, val Pending

effil. carriers

fs? paa/Pas Amat. Mo. lre 8/5/57 af? | ‘Pending

territory

12/u/st ss Pua /PaB Amat. Ho. 2 re 2/11/58 af)

pa iy

—, ———— aa ae

1856 _ ee & | . <

(fol. 1777)

Pan American Wor_p Arrw ays, Inc. Exniit 1

BRANIFF :

Airways

[Handwritten notation—Return to Friendly] |

LOVE FIELD

DALLAS 9%, TEXAS

: [Stamp—Received—Oct 14 1946—Pan American Airways, —

Ine-—Vice President-—Latin American Div. ] |

October 11, 1946

Mr. Wilbur L. Morrison:

Vice President—Latin American Div.

Pan American Airways System

Miami, Florida .

Dear Mr. Morrison:

This Company has just completed a survey flight over its

new route from the United States to Panama and South

America, including stops at various capitols of countries’

on the West Coast and then crossing over to Rio de Janeiro

and Buenos Aires‘on the East Coast.

The personnel of Pan American Airways System gave us’

excellent service on our citire trip. In fact, airplane, crew,

and employees gould not have received any better attention

had we been traveling over our own system. We want to

‘take this opportunity to‘thank you, and through you all —

of the employees\involved,: ‘for their efforts in making this

flight a complete success. We experienced no weather or

mechanical delays, and our only deviation from the sched-

ule set up prior to-leaving Dallas was caused by our own.

inability to complete our work in one or two of the cities

visited. You have‘a very fine organization of Operations

_ ‘people, and they are all splendid fellows.

In. this connection, I believe there has been some misun- -

derstanding regarding cur uegotiations with. the Canal -

Zone Air Terminal. On our arrival there the 2nd of Sep-

tember, we were informed by the Chief of the Aeronautics

3185 +o | 5/6155

: 1857

° ° ’ , ‘

Section of the Canal Zone that when the terminal building

and hangar were built for the use-uf commercial airiimes,

certain spaee was reserved for the second United States

airline certificated into Panama. As this second certifi¢ated

airline happens to be our Company, we were informed that

certain terminal building and hangar shop space then being

used by other companies was actually being used on a. 30

day cancellation basis, so it would be available for. the

SOC ond, United States airline when require “d.

We informed the Airport Manager that the date on which

we would need any space was indefinite, as it depended upon.

‘the coipletion ofgsufficient proving runs necessary to se-

eute (LALA. operations certificate covering the proposed

route, whigh runs cannot be made until negotiations with

tarious South American countries far operating permits

have been successfully. completes OP therefore ‘suggested

to the Airport Manager that wepresent our application for

the space required, aimee! gd present oveupants of the

- quarters which were to be assigned to us be notified that

sometime within the next several months our Company .

would require some of the space for which application was’

made. I also informed him that we would be very happy

to continue the 30 day cancellation notice, so the present

. y PAA-5860

IPL

[fol. 1778] occupants would have ample time to make other

arrangementy. ‘This was done becanse we do not “want to

cause aly more disturbance. or..reorganization in other

companies than is absolutely necessary‘and still give us the’

minimum of space which will be needed to conduct our

operations. "Furthermore, it was necessary for useto apply

for considerably more space than will be actually needed

for our: initial operation, because we do not knew what

expansion may take place within a*few months" time.

On iny return through Panama a few days ago, | learned

that Canal Zone authorities had issued \acating votices,

to be effective as of November 1, to the: present oce pants

of quarters for which we made application, While thir tay .

be the only way the matter could be handled legally, it

. certainly was not our intention for any eviction notices to

be issued. We intended for the present ‘oceupants to be

notified that’ the quarters had been leased to ‘this Com-

pany, but that they could continue occupancy on ithe | pres nt

basis until such time was we wanld need the space leased

to us. We informed both your people and Taca‘s that oc-

- £ eupancy could be continued, as at present, until such time

as we would have to have certain space. Furthermore, we

, stated ‘that we did not intend Yo take possession of all the

space leased to us at the same time, but would defer giving

the 30 day notice on each of the several offices just as long _

as*possible. ae, oy ; &

If it will be of any advantage to you to continue the use of

any of this space which you are now ag¢upying for the

number of months that will elapse before We have need for

the space, vou are at perfect libe ‘rty to do so, We want you

. to know that you can have considerable length of time after

. November 1 inorder to compicte your reorganization plans,

if you so degire, I believe the Airport Manager informed

me that he understood from your personnel that Jenuary

1 would be a far more desirable date. for.them, and I feel

quite sure we will hot ueed more than one office prior i+

that date. ‘

Will you please let me ae your. desires regarding this .

ma .ter at > tah convenience.

_ Sincerely yours, ;

/s/ R. C. Suraver

’R: C. Shrader

Vice President—Operations

3185 : mae — PAA-5861

* ane . : a

[fol. 1779].

Pan American Wortp Arrways, Inc. Exuipit 2

NN eee——————eEeEeEeE—eee—eeee oe ee

NORE. EEMENT

P BETWEEN

PAN AMERICAN AIRWAYS, INC. °

. a. | AND: * |

PAN estes _\N- GRACE Annwgys, INC,

- Datep Jury 30, £946

[fol. 1779] . AGREEMENT made and entered ‘into this

30th day of Julv¥a 1946 by and between Pan American Agr-

ways, Ixc.. a New York corporation (hereinafter called

PAA), and Pax American-Gracr Airways, INc., a Delaware

corporation aha abi called P anagra) : /

RECITALS

A. PAA holds various certificates of: convenience and

necessity for routes between the continental U nited States

and the Cana] Zone, and Panagra holds a certificate of con-

venience and necessity for a route between the Canal Zone

-and various points in South America.

~B. A substantial amount‘of the passenger, air express,

mail and cargo traffic proceeding ‘between the c#ntinental

United States and the Canal Zone originites at or is des-

tind to points on Panagr ras certificated route in South

Americ a.

_ Cy PAA and Panagra believe it is in the publie interest

‘das such through traffic should be enabléd to proceed by .

fast direct flight without change of plane at the Canal

Zone and that the making of arrangements to that end is

desirable in order that they nay compete effectively with

1860 pot ae

foreign-flag and other American: flag « carriers operating or

contemplating operations between the. continental’ United

Sfates and the countries’ of South America which Panagra

is certificated to serve. .

D, Because of the foregoing and a desire to sittle out-*

- standing differences, PAA and Panagra desire to make ar-

rangenients,: as hereinafter set forth, whereby PAA will

_ charter aircraft of Panagra to be operated with Panagra

flight crews over PAA’s certificated routes between the

Canal Zone. and, phe continental United States,

{fol.1780|" | TERMS OF AGREEMENT

Now, thavetire, i in consideration of the premises and the °

mutual covenants herein contained, it is agreed as follows:

1. Charter of Pandgra Aircraft by PAA. PAA will, at

the request. ofgPanagra as hereinafter provided, charter

any aircraft operated by Panagra into the Canal Zone from

Lima, Peru or any point on Panagra’s certificated route.

in South America’ south of Lima, Péru, for throug? oper-

ation from the Canal Zone over one of PAA’s routes to the

continental United States, and for return eperation to thew

_ Canal Zone over the same route. All such chartered air-

craft shall be operated with Panagra flight crews. If Pan-

agra’ shall deem it impracticable for the particular aircraft

operated by Panagra into the Canal Zone to continue the

flight to the continental United States, Panagra may sub-.-

stitute another aircraft of the same or comparable type.

Ds PAA Routes over which Through Flights are to be

Operated. (a) The initial route over which through flights

‘are to be operated under this agreement shall-be PAA’s .

certificated route .between the Canal Zone and Miami,

_ Florida. Such flights shalt be operated non-stop: between

- the Canal Zone and Miami unléss operating or traffic ex-

perience demonstrates to the satisfaction of both parties

the desirability -of making one or more intermediate stops.

(b} Upon the granting to PAA ofa certificate for a route

between Miami, Florida and Washington, D. C., aid/or-

New York, New York, and/or a certificate for agoute from

—

1861

' Miami, Florida, to Chieago, Ilinois, through flights under. ,

this agreement shall proceed over such route to and from

such points. Such flights* may utilize-the most direct non-

stop route available to PAA, “Inthe event PAA is/cer-

tifieated to operate between Miami, Florida and Béston,

Massachusetts or any other points von the east coast of

the United States, through flights may also be: operated

‘under this agreement to and from such points provided .

operating or tratlic experience demonstrates the. desirability

thereof.

Hfolc1781) (c) If OER shall <Recquest, PAN will file

- with the Civil Aeronautics Board such applications as may

be necessary to permit non- -stop operation: between the

‘anal Zoné and New Orleans, Louisiana, it being -under-_

stood that nothing herein contained shall-limit PAA’s rights

to apply for such non-stop guthority without a request on

the part of Panagra. U “por? »AA’s receiving such non-stop

authority, whether as a result of applications filed at Pan-

agra’s request or otherwise, through flights may be madeg

by. Panagra aircraft pursuant to this agreement between,

the Canal Zone and New Orleans, Louisiana, to su@f extent

as Panagra.shall determine appropriate from time to time

in the-light of competitive’ conditions and the relative

amount of traffic available fér such route. 7f PAA shall

have obtained authority from the Civil Agronauties Board

to operate a route between New Orleans, Louisiana, and -

Chicago, Illinois, such flights with Panagra aircraft may

proceed over such route provided operating or traftic experi-

ence demonst rates the desirability thereof.

(d) PAA agrees to use its best efforts to obtai from

. the Civil Aeronautics Board aythotity to operate the vari-

ous routes and non-stop services referred to in this para-

graph 2 and Panagra agrees to support PAA to this end.

(e) Panagra aircraft chartered to PAA are not to be

_ operated over any of PAA’s routes other than those de-

scribed above except by mutual consent. -

aR umber and Destination of Flights (a) At least

thirty (30) days prior to the fiist scheduled through flight

proposed to be made with Panagra aircraft.and crews under

’ ~.

1862

charter to PAA pursuent to this agreement, Panagra shall

give notice to PAA as to the number and nature of the.

through flights proposed to be so operated during the ensu-

ing six (6) months period over each of PAA’s routes speci-

to thé expiration of said six (6) months perfod and of each

six (6) months period thereafter, Panagra shall give notice

to PAA of the number and nature of such through flights

_ proposed to be so operated during the succeeding six (6)

[fol. 1782] months period. Except.with PAA’s consent, the

number of througirflights to be so operated shall not during

any pertod exceed the number specified in such notice. Sub-

ject only to operating or other conditions beyond Panagra’s

_or PAA’s gentfol, Panagra shall be obligated to furnish the

aircraft and crews for the performance of the flights speci-

fied in such noti¢ée and PAA Shall be obligated to operate

‘fied in paragraph rey At least sixty fo days prior

the through flights with such aircraft and crews over its,

routes as specified in such notice. a

(b) If experience over any six (6) months. pevied- shall

demonstrate that the load factors (including both local and

through traffic) on the th: Jugh flights operated north of the —

Canal Zone with Panagra aircraft and crews under charter

t6 PAA pursuant to this agreement shall be inadequate,

the parties shall take appropriate action to increase such

load factors through reduction or ‘adjustment of their sched-

ules or otherwise.

4. Schedules. (a) PAA paid Panes will sania tien

time to time with a view to: fixing the schedules of the.

through flights being operated over PAA s routes with Pan-

agra aircraft and crews under charter to.PAA pursuant to

this agreement in such manner as to provide the most con-

venient and advantageous schedules for the \benefit of

through traffic between the continental United $tates and

points on Panagra’s certificated route in South\ America.

In the event of disagreement the schedules for the through

flights shall be -established as follows: Panagra shall fix

the hours of arrival of northbound through flights at the

Canal Zone and of departure of southbound through flights.

from the Canal Zone, and PAA will immediately adjust the

through schedules north of tie Canal Zone to he flown with

ae 1863

Panagra aircraft pursuant to this agreement accordingly

so as to provide the most expeditious direct through one-

plane service. It is the intention of the parties that, within

- the limitations Which may be necessary by reason of Pan-

agra’s operations ever ifs own route, through flight sehed-

ules and turnarounds shall be ar ranged to assure maximum

utilization by PAA of Panagra’s aircraft chartered by

PAA pursuant to this agreement. “

[fol. 1783] (b) The partiés will,instruct their respective. .

personnel to. cooperate in arranging and adjusting from

time %o time as occasion ‘may arise reasonable and sound

procedures for meeting trailic and operating probiems that

"may arise in respect of any perticular flight by reason of»

through flights arriving at the Canal Zone northbound or

southbound unduly delayed. Due consideration shall be

given in this connection to the purpose of this agreenient

to provide through one plane service for trafic between

the continental United Statés and points on Panagra’s cer-

tificated route in South America.

» Panagra Aircraft and Crews to ‘ Operate ‘dl ae

Pech (a) The Panagra aircraft to ke operated over

PAA’s routes under charter to PAA pursuant:-to this agree-

ment shall be operated’ with Panagra's flight crews and

cabin attendants. All Panagra aircraft so operated shall

be properly licensed for operation over such routes and all

of said flight crews shall be fully licensed*for operation on

the aircraft and, over the routes required. Panagra will

furnish PAA with all data required for the inclusion of such

aircraft and flight crews in PAA’s air carrier operating

certificate, and the parties will cooperate generally in ae-

complishing this result.

‘(b) The aircraft which shall be tendered by Panagra

for #peration under charter by PAA pursuant te this agree.

.ment shall be of a modern type capable of carrying on the

services herein contemplated a reasonable load, at com-.

petitive speeds, and with equivalent accommodation= amd

comfort-level, all measured in the light of the alrerart ty pes

currently being operated by other American-flag sirlines -

over routes of similar length and characteristics.

(ec) PAA shail hove a right to inspect any aircraft ten-

-dered by Panagra for operation-pursuant to: this a agreement |

before accepting same and may refuse to Operate any air-

eraft tendered which is not in satisfac tory operating condi-

tion in the light of regulations of the Civ il Aeronautics Av-

thority and oe airline standards.

[fol. 1784) . 6. Responsibility. for Operations on PAA

Routes. PAA shall have full responsibility for and control

over the operation of Panagra’s aircraft over P: AA’s routes

as provided in this agreement. PAA’s responsibility for

. such operation, without limiting the generality of fore- ¢

going, shall include responsibility. for operation dispatch,

flight plane clearance, radio plane guard and “in flight”

instructions and © all communications, navigation and

wéather facilities and services, and also for loading and

discharge of airplanes, handling of traflic, and passenger

service. PAA undertakes to furnish in connection with such

" operations adequate and efficient. ground facilities and per-

sonnel, to conduct such operations -in accordance with ap-

‘ proved and‘modern standards which shall in no event be

lower than. those provided in the case of its own aircraft,

and to treat Panagra’s ‘aircraft on ‘a basis of omnes

equality with its‘own aircraft.

7. Matntenance and Overhaul. (af PAA-shall undertake

and perform at convenient maintenance bases in the con-

tinental United States all major overhaul of flight equip-

_ ment owned by Panagra of the same or similar type as the »—

flight equipment chartered by PAA under this agreement,

and such other maintenance and overhaul 6f other types of

- flight equipment as Panagra may request from time to time

on reasonable: notice. If experience indicates the desir-

ability, from ‘the point of view of eost, efficiency or service

to the public, of PAA’s arranging for’ any or all of such

maintenance\or overhaul to be done by ‘third parties or of

Panagra’s making other arrangements ‘for the performance

of any or all such maintenance and overhaul in the conti-

nental United States; PAA and Panagra will join in de-

veloping plans whereby this may be accomplished.

(b) PAA will also furnish to Panagua's aircraft oper-

ated: over PAA's-routes pursuant to this agreement, air-

. . ‘

<—™

\ 1865

| ‘ : '

plane and engine inspect ion and on-line mainte nance spr-

} vice. : Ny ° : é

furnished Panagra by PAA pursuant to this agreement

shall not Mi, ae in character, quality. or extent than the

(fol. 1785) service given by PAA or Panagra to their air-

- craft or as may be required from time to time under the

standards of the Civ i Acronautics Authority?

(d) Panagra may station a veasnaehle number of its em-

ployees at maintenance bases of P AA at which maintenance

and overhaul of Panagra's flight°equipment is being per-

formed pursuant to this paragraph for purposes of ex-

pediting and general coordination, and-PAA will furnish

to such employees reasonable office facilities and 4ecess to

the work. — ey ‘s

‘8. ‘Training. At the request of Papagra, PAA will join

with Panagra in developing plans “whekeby Panagra’s pilots

or other personnel (whether to be engaged jnethe charter

service or otherwise) may be trained’ in‘any training con.

ters in the continental United States ‘operated by PAA,

PAA to be compensated for such training on bases to be

arranged from time to time. ‘aly .

9. Preference for Through Trafic Binee the purpose

‘of the thror ights.to be made. with*Panagra aircraft

under charte? to\PAA pursuant“to this agréement is pri-

marily to ‘accommodate traffic between the continental

United Statas and points on Panagra’s route in South

America, PAA and Panagra-shall book and route such

" traffic via such aircraft to _the.fullestyextent praéticable. In,

order. to give such traffic precedence over any other traffic:

to be carried by such aircraft, it.is agreed that in the case

of all northbound and southbound through flights operated

over PAA’s routes pursuant to this agreement, Panagra

shall, from time to time, request PAA to block off until a

reasonable time prior to depasture a specific. number of

seats and a designated amount of mail and cargo capacity

which will he designed to aéeommodate the threuch traflie

reasonably expected, and will itself block off for the through

flights on its own route a nmmber of seats and ‘amount of

a 7

oo”

ms,

_ ‘ °

1866 | | a

‘eo

‘ / ar :

mail and cargo capacity reasonably related to oe and

amount of capacity which it shall have requested PAA to

block off,-and the parties shall arrange their reservations

control accordingly. If éxperience over a reaspnable time

indicates that the seats or capacity so blocked off unduly

[fol. 1786] exceed‘ the-through traffic actually carried, the

parties will take appropriate action to prevent non-utiliza-.

tion of capacity, with due regard, however; for the require-

” ments of through traffic destined to or originating at points

--on Panagra’s certificaged route. Subject to the foregoing,

it is the intention of this agreement that PAAewill route.

local. and way-to-way traffic onthe aircraft under charter

‘* to PAA pursuant to this agreement in the same manner

as it does on its schedule operated with its own aircraft.

10. .General Sales Agency. of PAA for Panagra. (a)

PAA shall continue to act as general sales agent for Pan-

- agra (with the right to appoint sub-agents), in the United

. States and ia all other parts of the world except the coup- |

tries of South America served by Panagra and Panama

“ity, Panama. PAA shall use its best efforts-to promote

and develop traffic for Panagra, both in the U nited States

- and elsewhere, without discrimination and on the same

basis on which it promotes and develops traffic over. it own

routes.

(b) If at any time Panagre presents to PAA evidence

reasonably indicating that any employee of PAA shall have

diverted or attémpted to divert any traffic intended for |

‘transportation over Panagra’s routes or on the through « _

flights operated pursuant to'this agreement, or shall have”

withheld *nformation as to the availability of .Panagra’s

#ervices from any person seeking such transportation, P

agra shall cooperate with PAA as to the establishment a

the latter of adequate. disciplinary machinery for | revent-

ing further conduct of the type indicated.

methods and procg@hires which Panagra desires to have

established. by PAA‘@r PAA’s sub-agents in connection with -

the selling, handlirg or servicing of traffic to be earrted over

Panagra’s certificated route. PA A will put such metheds

@ ; ae >

1867

and procedures’ tntoeffect wherever practicable: If after

fulg consideration such methods or procedures appear to

PAA to be undesirable or impracticable, PAA: shall use

its best efforts tg work out with Panagra substitute methods °

and procedures designed to accomplish the ‘results w hich ;

Panagra is seeking. a

[fol. 1787}. (d) PAA will denighate W. R. Grace & Co.

and its qualified affiliated companies as sub-agents for the

sale of Panagra traffic in the area for which PAA shall act

‘as ‘general salesagent. ;

11. Pe anagra Display and Representation at Airports

and Ticket Offices. (a) PAA will cause the name “Pan

American-Grace Airways, Ine.” and, i Panagra shall’ so

request, the name “Panagra”™, in such fotm as Panagra may

determine, and the Panagra~insignia in the form as pre ‘S.

ently in use, to be displayed on- traffic counters at all air-

ports in the continental. United States to which Panagra’s

aircraft may he operated under charter to RAA pursuant —

to this agreement. At any such airport Panagra. may, if

it determines the same to be necessary or desirable, employ

a reasonable number of personnel to assist in the handling

of traffic arriving or departing from or to’ points on Pan-

_agras certificated route. Persons so employed shall have _

Teasdnable access to PAA’s space and facilities at such

airpomts.

(b) PAA will cooperate with Panagra to assure that ade-

quate space and personnel are available to PAA’s city

ticket offices for the efficient handling of traffic originating

at or destined {to points on Panagra's certificated route or

which proceeds via the through flights provided in this

» agreement.

At least one responsible ieiaitene ee of PAA working full

time in PAA’s city ticket offices in New York, Chicago, °

Washington and in any ather place in the continental United

. States to which Panagra’s aireraft shall. be operated. pur-

‘suant to this agreement shall be appointed by PAA and,

serve subject to the approval of Panagra, w hieh approval

shall not be unreasonably withheld. Such employee shall

‘among other duties be particularly charged with the duties

~ ,

1868".

of promoting the sale of Panagra traffie and, of facilitating

and improving the handling of Panagra traflie and traffic

routed via the through flights provided in tliis agreement.

Such ‘employee shall régularly keep Panagra fully advised

through procedures approved by PAA of all matters relat-.

ing to such traffic.

PAA will use its b&t efforts to encourage and bring

Sbout the fullest cooperation between ‘its United States

sales offices and Panagra’s traflie department.

(fol. 1788] At all of PAA’s city ticket offices im the con-

tinental United States there shall be available at all times

' full information as to the reutes operated by Panagra and

the, through flights provided by Panagra aircraft under

charter to PAA, and the ‘name “Pan American-Grace Air-

ways, Inc.” and, if Panagra shall so request, the name

“Panagra” , in such form as ‘Panagra may determine, and

the Panagra insignia in the form as presently in use, shall -

be held out to the public by display or otherwise.

such form as it may determine, as a trade name for all -

purposes it may deem fit is hereby acknowledged by PAX.

Nothing in this-agreement shall prevent PAA, in its s¥stem

advertising or otherwise, from referring to Panagra as

“Pan American-Grace Airways, Inc.” _

12. Tickets and Documentation; Through Rates..(a) All

tickets or other documents relating to transportation to be.

performed. by Panagra's aircraft being operated under

charter to PAA pursuant to this agreement sliall show

that such transportation is being made via PAA and, to

such extent as practicable, passenger tickets shall show

that such‘transportation is being” made with Panagra air-

craft. .

(b) PAA and Panagra will establish through rates for

services over their respective ‘certificated routes between

all principal points as may be required and revenue there-

from will be divided on a mileage flown basis or such other

‘ basis as may be agreed. |

Fie

1869

. ©

} | ora

-(c) PAA, by one or aul qualified employees, shall con-

tinue to. act as tariff and schedule publishing agent for

P anagra, ; :

13. Further Agreements. (a) Within a reasonable time

after the inauguration of through flights pursuant -to this

agreement, PAA and Panagra.will negotiate with the ob-

jective of entering into ah agreement, subject to the ap-.

proval of the Civil “Aeronautics Board, for sharing, in

the light of: the services offered: by the parties and the

mnileage operated by each of them, gall revenues arising out’

of transportation by each of them, both northbound, and

(fol, 1789] southbound, of passengers, air express, cargo

and mail (other than United States mail) -originating in

or routed through thegcontinental United States and des-’

tined to Buenos Aires, Argentina, and/or Montevideo,

Uruguay, and vice versa.

(b) If either party shall be of tife opinion that technical

and traffic developments in the field of air trangportation

would make advantageous the operation of non-stop flights

between a point or points im the continental. United: States

on the certificated routes of PAA and any point or points

on the certificated route of Panagra in Ecuador, Peru,

Chile, or Argentina, the parties will negotiate with. the

objective ‘of making a further agree ment which will permit

the operation of such flights (for the account and under

the control of PAA north of the latitude of Balboa -and

for the account and under the control of Panagra south

of such latitude), subject to compliance with all applicable

laws and regulations and to-the approval of the Ciyil Aero-

‘ nautics Board. . ae

(e) If, after reasonable efforts, the parties are unable

to negotiate- either of the agreements contemplated by

subparagraphs (a) or .(b), the terms of such agreement

shall, on the request of either party, be settled by arbi-

tration as prov ided in Pardgraph 25.

14. Advertising and Publicity. The name “Pan Ameri-

ean-Grace Airways, Iné.” and, if Panagra so desires, the

name “Panagra”, in sue h form as Panagra may dete rinine,

and the Panagra insignia in the form as presently in use,

”

Jnt

1870 *

“shall appear on the exterior of all airplanes chartered ta

PAA under this agreement in addition to an appropriate

—— inside the eee informing the ops that

“PAA will: sieiilad and marta a ARE that “aA

one plane service is afforded over PA*A’s and’ Panagra’s

routes between the continental United States and. points

- on: Panagra’s certificated ruute in South America. P anagra

will advertise and ctherwise publicize that such service is

afforded with Panagra aircraft over Panagra’ sand PAA's

routes. In this-connection PAA and Panagra will work out

{fol. 1790] from time to time appropriate programs for

advertising the through service afforded unde? this agree-

ment as well as the services afforded by Panagra_ on its

certificated route in South America and will establish the

relative contributions to such advertising to be made by

Panagra and PAA.

15. Liability to third parties, PAA will indemnity Pan-

agra and hold it harmless in respect of any liability (other

than to employees of Panagra who-are not travelling as

passengers on aircraft operated pursuant te this agree-

ment) arising or claimed to arise as a result of the’ oper-

ation of Panagra’s aircraft over PAA’s certificated routes

as provided in this-agreement. PAA will carry passenger

and public liability and property damage insurance policies

covering risks attendant upon the operation of Panagra’s

aircraft over PAA’s certificated routes to the same extent

and on the same basis as for operations conducted by

its own aircraft and will cause Panagra to be included as

‘a party insured. Panagra will indemnify PAA and hold °

it harmless from claims of Panagra employees arising or

claimed to arise as a result of the opeyation of Panagra’s

aircraft over PAA’s certificated routes as provided in this

agreement (except employees travelling as passengers) and

will carry appropriate policies of workmen’s:compensation

insurance with respect to such employees, All indemnities

herein shall include oo costs and expenses.

16. Risk of Loss of Airmraft. Panagra shall be respon-

sible for loss of ar damage to its aircraft or other property

while under charter to PAA pursuant to _this agreement,

“of

ee? 2 a, 171

except as hereinafter provided. Unless otherwise agreed,

Panagra shall carry appropriate insurance providing

against Joss of or damage to such aircraft or other prop

erty while under charter to’ PAA, with the same coverage

as that carried by Panagra for similar property while in

Panagra’s possession, and will cause PAA to be included

as a party insured. Except in the case of risks as to which

Panagra iso obligated to insure, PAA shall be liable to

Panagra for loss of or damage to Panagra’s aircraft ‘or |

fol. 1791] other-property while under charter to PAA pur

‘suant to this aggeement if such loss or damage arises out

of gross negligencé on the part of PAA or its employees.

If there should arise operating conditions peculiar to the

L/ : ; ” — pe ear ‘

routes of PAA over which Panagra’s airéraft are operated —

pursuant to this agreement which the parties agree require

Panagra to: carry insurance against risk of loss of its .

property while under charter to PAA by reason of war

risk, riots, strikes or civil commotion, such insurance may

be carried by Panagra and the cost thereof included as a-

direct cost chargeable to PAX.

17. Financial Provisions.’ (a) As compensation for the

flight equipment and flight crews furnished by Panagra for

operation under charter to PAA pursuant to this agree-

ment, PAA shall pay to Vanagra an amount representing

(1) reimbursement of all direct costs incurred by Panagra

‘in such operation, and a reasonable proportion of such

‘indirect costs of ,Panagra as are fairly attributable to such —

operation, and (2) a fair rate of return on the investment-

of Panagra‘used in or useful for such operation.

The payments so to be made by PAA te Panagra shall be

determined initially in accord&nce with the detailed pro-

visions of Annex 1 hereto attached.

If either party shall be of thé opinion that the detailed

provisions for payment-by PAA todPanagra in effect at

any time do not properly carry out the intent of this sub-

paragraph (a). or are operating unfairly er inequitably,

such party may request review of such provisions. The

parties will thereupon negotiate in an effort to adjust such

provisions and in tlie event of their inability to agree the

» >

1872

matter will be arbitrated as prov ided in paragraph 25,

Pending any ag egies or sac bom pay! ments, ahen

agreement 0 or iniea as may ultimately be ine

(b). Panagra will pay PA‘A for maintenance and overhaul

of Panagra’s flight equipment performed, by PAA pursuant —

‘to paragraph 7 of this agreement, an amount representing

(1) reimbursement of.all of PAA’s costs for direct, labor -

and materials used in such maintenance or overhaul and a

(fol. 1792] reasonable proportion of PAA’s indirect: or _

burden expenses applicable thereto—{distributed on the

-basis of direct labor costs) and (2) a fair ‘rate of return:

on so much of PAA’s investment in maintenance. and over-

haul facilities, flight equipment spare parts and assemblies

and working capital as may be properly allocable to such

maintenance and overhaul performed by PAA for Panagra.

a parties will: from time to time agree upon such detailed

provisions as may be a to establish the amount

of such payments. ;

The costs to be penabuned by Pubaste to PAA pursuant

-to this subparagraph (b) shall be the direct and indirect ©

expenses of the type presently set forth in accounts 401-408

and 421-428 inclusive of the Civil Aeronautics Board’s Uni-

form System of Accounts for International Air Carriers.

Amounts payable by Panagra to PAA pursuant to this

subparagraph (b) shall, to such extent as appropriate, be

reflected in the billings by Panagra to PAA for charter

flights performed by Panagra pursuant to this ‘ipittamam

as set forth in subparagraph (a) hereof.

If, in pursuance of its obligations under subparagraph

(a) of paragraph 7 of this agreement, PAA shall have

acquired maintenance equipment or facilities specially de-

signed for the maintenance or overhaul of flight equipment

of Panagra of a type different from any of PAA’s flight

equipment which is or could practicably be maintained at

: the same. maintenance base and if Panagra shail cease to

utilize such special maihtenance cquipment or facilities | -

prior to the date when the same shall have been depreciated —

to the residual value thereof in accordance with recognized |

1873

standards as to depreciation rates, then, unless Panagra

shall elect’ to purchase. such maintenance ‘equipment’ or

facilities at their depfeciated value, PAA wilf-sell such

maintenance equipment or facilities at the best price ob-

tainable and the difference between the price so obtained

(less any expenses of sale) ‘and the depreciated value

. thereof shall be paid by Panagra to PAA in the case of

a deficienéy or paid to'Panagra by PAA in the case ofan.

excess.

“(e) ‘Each of the parties will render to the other as soon as

possible after the end.of each calendar month bills for the

payments due under this agreement. with respect to such

[fol. 1793] month.’ Such bills shall be paid. within fifteen

(15) days after receipt. Unless otherwise agreed, billings

during any calendar year shall be on a cumulative basis

for purposes of periodic. payment and shall be subject to

adjustment from: time to time prior to the close of the .

accounts at the end of the calendar year.

(d) References in this paragraph and in Annex 1 to pay-:

ment ofa fair rate of return shall mean such rate as is

required to yield, after taxes, the rate of return on invest-..

ment, after taxes, allowed by the Civil Aerénautics Board.

in fixing mail pay compensation in accordance with the

provisions of the Civil Acronanties Act for the particular

‘carrier whose investment is invoélved. It is contemplated

“tliat while such rate of return will rary from time to time,

the rate of return payable under this agreement shall at

all times be equal to the rate of return currently in effect

under decisions of the Board. If the Board has -not deter-

_ mined mail \pay compensagion by fixing a rate of return

on investment or if for any other reason thé foregoing

provisions shall:not result in-establishing a rate of return

for the purposes of this agreement, then the rate of return

payable hereunder shall be fixed by imitual agreement and

in the event of failure to agree shall be arbitrated’ under

paragraph 25 hereof. °

(e) If it shall develop in the course of operations under

this agreement that either party “is utilizing major items

of property ‘owned by the other which have been fully

‘depreciated on the books. of the owner without the user

: 1814

having contributed its proportionate share of the full de-

- preciation, the parties will negotiate provisions: for appro-

priate payments for the use of such property. In the event

of their failure to agree, the matter shal? be arbitrated

under paragraph 20 hereof. ;

(f) Either party shall have sank access e* the atthe:

records and accounts of the other as‘may be reasonably

required to verify billings under this agreement.

_ 18. PAA to Maintain Certipcates in Good Standing. Ex.

cept with Panagra’s written consent PAA will’not transfer

or abandon any of its certificates covering routes’ over

[fol. 1794] which Panagra aircraft may: be operated under

-charter to PAA pursuant -to this agreement or seek ‘o

modify such certificate or cértificates in any manner which

would prevent or adversely, affect the operations contem- .

plated hereunder.

19. Representation of Panagra m /uanitene, Related to

this Agreement. PAA agrees that any action to make any

claim, fo take any position, or to enforce any rights of

. Panagra under this agreement may be taken on behalf |

of Panagra by its President; prov ided, however, that the >

foregoing shall not be deemed to withdraw from the Board

of Directors of Panagra, its function of determining in-.

_ dependently of this agreement. sual questions of general

business policy relating to the conduct of Panagra’s affairs

(such as the’ purchase of equipment, the establishment of

equipment reserves.and the fixing of depreciation rates)

as are determined by a board of directors in accordance

with law or normal corporate practice. .

20. Proceedings for Approval; Effective Date. (a) PAA

will forthwith file application with the Civil Acrenautics

Board for approval of this agreement. The parties will

use their best efforts to obtain such approval as expe-

ditiously as possible. If the Board shall impose conditions

upon its approval of this agreement or shall suggest modi-

fications in the same but within. the general framework

hereof, the parties undertake to negotiate in an effort to .

meet all such conditions and suggestions.

1875

(b) Except fot Paragraph (a) of this Paragraph 20 and

Paragraph 22, which shall become ‘effective nnmediately,

this agreement shall become effective only upon the entry

of an order by the Civil Aeronautics Board approving the

same and upon said order becoming,final. ~ |

21; Term. As between the parties, this agreement shalt

be for a term of 99 years from the date upon whieh it shall .

~ have become effective; except that it may be sooner termi-—

nated as hereinafter provided:

(a) If at any time subsequent to December. 31, 1948, T’an-

agra shall consider that this agreement is not satisfactory .

[fol. 1795] because of failure by, PAA promptly and ade-.

quately to perform any of PAA’s obligations under this

agreement (including without limitation, such matters as_

failure to establish the proper schedules for flights under

this agreement, failure to handle flights under this agree-

ment in such manner, that the schedules shall be duly and

_ punctually performed, failure: properly to maintain and

overhaul Panagra’s aireraft used in the service performed

under this agreement, or failure to discharge the provisions

of this agreement with respect to the selling and han-

dling of traffic) in such manner as to promote the fullest

development of throvsh traffic between the continental

United States and points. oi. Panagra’s certificated route

"in South America within the spirit and intendment of this .

agreement, Panagra may give notice to PAA stating the

respect in which it considers PAA’s performance to be

unsatisfactory. Thereupon Panagra and PAA will nego-

tiate in an endeavor to see waether the views of Panagra °

can be met. If such negotiations shall not sueceed within

thirty (30) days, reference shall be had to arbitration as

provided in paragraph 25 to determine whether Panagra’s -

dissatisfaction is reasonable and, if so, what measures

should be taken to meet Panagra’s views. If such. arbitra-

tion determines that Panagra’s dissatisfaction is reasonable, .

PAA shall be bound to take the action recommended — by

the arbitrators and thereafter diligently proceed with the

same. If PAA shall fail to do so, Panagra may thereupon

cancel this agreement upon three (3) month's notice, but

such right of: cancellation shall not exclude: any other

remedy. , ;

1876

(b) ‘Tf at any time iiicatignas to December 31, 1948, PAA.

shall be of the opinion that Panagra’s services are not con-

sistent with recognized standards of other United States -

flag air carriers operating sutside the continental limits ©:

of the United States in any particular which for.a sub-

stantial period of time unreasonably interferes with the

eflicient conduct of the through flights over PAA’s routes,

PAA may give notice to Panagra stating the respects in

which ‘it considers such services to be unsatisfactory, Pan-

agra and PAA will thereupon negotiate’in an effort to seel

whether the views of PAA can be met.. If such negotiations

- shall not succeed within thirty (30) days, reference shall

[fol. 1796] be had té arbitration as provided’ in paragraph

* 25 to determine whether PAA’s dissatisfaction is reason- *

ablé and, if so, what meaSures should be taken to imeet

PAA’s views. If such arbitration determines that PAA’s

dissatisfaction is. reasonable, Panagra sha!l be bound to

take the action recommended by ‘the arbitrators and there-

- after diligently proceed with the same: If Panagra shall

fail to do so, PAA may thereupon cancel this agreement .

upon one (1) year’s notice, but such right of cancellation

shall-not exclude any other remedy.

+22. Non-prejudice. If this'agreement is not approved by

the Civil Aeronautics Board or for any other reason does

"not become effective or if, having: become effective, this

' agreement should be terminated or canceled, the negotiation

and the terms of this agreement and all applications filed

and‘acts done hereunder shall -be without prejudice to the .

Tights or future position of any. of the.parties.

23.. Construction. (a) It is the intention of the- parties;

- that within the general framework: and conception of this

‘agreement; the various “provisions shall be broadly and

liberally construed to accommodate technical, commercial,

international and regulatory developments in the field of

. air transportation to the end that through traffic will be

“handled at maximum efficiency and in a manner to mect

changing competitive conditions.

‘(b) Nothing in this. agreement shall be deemed to require

either of the parties to take any’ action in violation of any

| “a law, | Pegeintion, or order. |

2 : : 3

ba .

- 3

(e). This contract shall be construed in accordance with

‘\the laws of the State of New York. ° n

-(d)- The various headings herein and. the grouping-of the

provisions of this agreement into separate paragraphs shall

not bee apt se tg limit or restrict the meaning or appli-

cation of an

of convenience only.

(e) The parties will formulate prodbdures for evidencing

the delivery of flight equipinent by Panagra to PAA for op-

eration under this agreement and the return of ‘such flight .

[fol. 1797] equipment by PAA to Panagra. All proyisions

of this agreement with respect to liability, risk or loss, ete.

shall date from the delivery or return of flight equipment

as-shown in such evidence. F

24. Notice. Notice’to PAA wherever provided in ihe.

agreement shall be given in Ww riting by retistered letter

addressed President, Pan American Airways, Ine., Chrysler

Building,.New York, New York, or in ‘such other manner

or to such other address as PAA may designate to Ps anagra

in writing. Notice to Panagra wherever provided in. the

agreement shall be given in writing by registered’ letter

| addressed. President, Pan American- (race Airways; ‘Inc.,

7 Hanover Square, New York, New York, ar in such other

manner or to su¢h other address as Panagra may designate

‘to PAA in: oes. Notice shall not be - considered given

until the date when the same shall. have been reeeived as.

evidenced: by the Post Office return receipt’ or, if the ad-

dressee. shall have, refused to accept the registered. notice,

the date on which such registered notice shall: have been first

tendered to the addressee. : ,

_° 25. Arbitration. Anv and all disputes as to atiee construe-

tion or operation of this agreement shall. be subinitted to

arbitration’ pursuant to tlie rules of. the: American Arbitra-:

tion Association having general application, in the mannér

hereinafter provided. The party requesting arbitration

shall notify the other party naming :its arbitrator in thy.

- notice. Thé other party shall appoint an arbitrator within

. ‘ten (10) days after the receipt of such notice. Within ten

provision héreof,. and are for the purpose

1878" 3 e

(10) days after such appointment, the two arbitrators shall

appoint a third arbitrator and the@lecision or the award

of any two-of such three arbitrators shall be final, binding

and conclusive upon the parties. If either party fails to,

appoint the arbitrator to be appointed by such party, or

if the arbitrators appointed by or for the respective parties

shall fail to appoint such third arbitrator, then and in

either such évent such then unappointed arbitrator shall

be appointed by the then President of the American Arbi-

tration Association or in the event ‘such President shall be

disqualified by reason of his association with either’-party

or otherwise, then by the next highest; ranking official: of .

such Association. Any such arbitration shall be conducted

in accordance with the law of the,State of New York and

-{fol. 1798] held in New York City, New York, unlesd the

parties shall otherwise agree in writing.

| 26. References. (a) All references in this agreement or

in Annex 1 to the Civil Aeronautics Authority and/or the

‘Civil Aeronautics Board shall include ‘any. Federal agency

having jurisdiction similar to that now exercised by said’ -

Authority and said Board.

(b) If changes shall ‘be made from time, to timé in the

_ Civil Aeronautics Board’s Uniform System of Accounts for

- .

International Air Carriers, appropriate modifications to-

give effect-to such changes shall be made:in this agreement

and in Annex 1. . ;

.or in Annex 1 shall include aircraft, engines, propellers and

other property. as defined’ in said Uniform System of Ac-

counts as presently in effect.

In Witness whereof each of the parties hereto has sieeneil

this agreement to be éxecuted at New York, New York, in |

its respective corporaté name and its respective corporate

* seal to be hereunto, affixed and attenten by its respective

1879

€ te

officer or officers thereunto duly authorized as of the day ‘

and year first above written,

Pan American Atrways, Exc. | .

* By J. T. Tree e 4

J.T. Tripre, President

Attest : an

H. Preston Morris - . a

-H. Preston Morris, Secretary

Paw American-Grace Mrways, INXc.

§By. Haro J. Row 2.

| Harotp J: Roig, President — ,

_ Attest’ ore ne

~W. F: Cocsweiu . *

W. F. Cocswe.u, Secretary ~ . *

“[fol.1799] ss ee ee :

4 ANNEX 1

Detailed Provisions for Payme nts by PA. 1 to Panagrat

1. Direct Costs. . .

A. PAA shall pay directly the cost. of fuel used in the °.

charter service, Accounts 358 and 359, and of élearance of — * ..

aircraft while ‘in use in the charter se rvice, Account 371.

‘Any amounts properly recorded by Panagra for employees’

compulsory compensation, Aceoun 364, and Social Sec urity a

taxes, Account 370, insofar as the same relate to the charter

Service, shall ‘be charged directlWby Panagra to PAA. ,

PAA will reimburse Panagra for all flight costs mae

recorded by Panagra for the aircraft,typie used im the char-. es

‘ter service in Accounts 351-372 inclusive, 461-408 ine lusive,

ina 28 inclusive and 4501 4505 inclusive, such ‘costs to be

* All references to ace ount numbers are to the Civil Avronauties

Board's Uniform System of Accounts for International Air Carriers " %

presently. ‘in effect. 2 ce

allocated to the charter service onthe basis of the. ratio of —

the revenue miles flown by such aircraft type in the charter

service to the total revenue miles flown by such aircraft type

including those flown in the ¢harter service. If it shall

appear that major items of cost recorded in such accounts

are applicable only to the charter service or to Panagra’s*

common carrier seryice, provision will be made for re-

_moving such costs from allocation and charging such costs

“directly .to the charter service, if applicable thereto.

It is intended that the payments provided@o be made

directly. by PAA and the flight costs to be allocated shall

tnclude non-revenue flights by the aircraft type used in the

charter service. PAA shall determine the fuel cost, Ac-

counts 358 and 359; incurred by it for such non-revenue

flights and charge Panagra for this expense. Panagra.shall

determine the fuel cost, Accounts 358 and 369, for such

flights incurredpy it. PAA shall-pay to Panagra a portion

of the total fue cost of non-revenue flights by such aircraft

type equal to the ratio of the revenue miles flown by such

aircraft type in the charter service to the. total revenue

miles flown by such aircraft type including those flown in

the charter service.

{folk 1800] Flight Equipment Depreciation, ‘Accounts 4501

to 4506, shall be computed in ‘accordance with Panagra’s

rates, or in the event such yxtes are’ not satisfactory to

PAA, at rates to be mutnally agreed upon by the two com-

‘ panies, or, in the event of their. inability to agree, to be

- fixed by arbitration consistently with rates generally pre-

vailing in the international air transport industry for the

type of flight equipment used in the charter service.

The shop burden of. Panagra applicable to the mainte-

nance and overhaul of the type of flight equipment peed

in the charter service, Accounts 421 to 428 inclusive, will

be determined in accordanee with the CAB Unifortn System

of Accounts for International Air Carriers and will be dis-

tributed on the basis of direct labor costs.

B. Panagra shall be reimbursed for passenger service

direct flight costs incurred by Panagra in the charter .ser-

vice and charged to Account 660—Pursers, Stewards and

18s]

Stewardesses—(inchiding appropriate provision for vaca-

tions earned while in the charter servicer) andwrglated ex-

penses in Accounts 664 -Travel and Incidental Expenses,

673—Eimployees’ Compensation and Other Insurance, and

G86—Socia!l Security* axes, and in addition, to the extent

applicable as a direct charge, costs incurred in the following

accounts :, . 1

677—Injuries, Loss and Damage ©

685—Compulsory Compensation

687—Passenger Supplies and Expenses

688—F ood Expense—-Caterers

689—F ood Expense—CompanysRestaurants

. 692—Interrupted Trips Expenses —. -

699— Miscellaneous

‘“

C. Panagra shall be reimbursed for a portion of its costs

of trainin, flight crews (inelnding .pursers, stewards and

stewardesses) not reimbursed pursuant to paragraphs -A

and B. tee allocated to the charter service on the basis

of the ratio of the salaries of flight crews‘charged to the

charter services to the total such salaries.

[fol. 1801} 2. Indirect Costs.

A. Panagra will be paid 9 portion of so much of the

operations overhead of Panagra as consists of the office

of the operations manager, the office of the chief pilot.

(after proper deduction for revenue flying done by him or

his staff), the office of the superintendent of flying, the

office of the communications superintendent, New York ex-

penses applicable to te operations, maintenance and com-

‘munications departménts (including the salaries and re-

lated expenses of Panagra’s United States maintenance

representatives as provided in paragraph 7), and the costs

of Panagra’s medical denartment. The amount so payable

shall be the amount. obtained by multiplying the total of

- these ‘costs bw a fraction of which the numeragor will be

50% of the available ton miles flown in the charter service

‘and the denominater the total available ton miles flown in

Panagra’s coinon carrier service plus 50 of the avail:

able ton miles flown in-the tharter serviee.

1882

B. Panagra will be paid a portion of so much of. its’

—passenger service-overhead-as-eonsists-of-the-office-of pas-:

senger service superintendent and the office of chief purser. *

The amount so payable shall be the amount obtained by

‘multiplying the total of these costs by a fraction of which

the nunierator will be 40% of.the ay ailable ton miles flown

‘in the charter service ad the denominator the total avail-

-able ton miles flown in Panagra’s.common carrier service -

plus 40% of the available ton miles flown in the charter

service.

C. Panagra will be paid a portion of the costs of its.

financial and accounting departments: (up td and including

‘the level of the offices of assistant treasurer and assistant

comptroller directly supervising the accounting under this

agreement) _and the cost of. the personnel departmient lo-

cated at New York. The amount so payable shal! be the

amount obtained by multipiying the total of these costs by

a fraction of which the numerator will be 35% of the avail-

able ton miles flown in the charter service and the denomi-

nator the total available ton miles flown in Panagra’s

common carrier service plus 357% of the available ton miles

flown in the charter service.

[fol. 1802] D. All references to available ton miles flown

are to miles flown on rev enue flights. = ,

3. Return on Panagra’s Investment.

Panagra shall be paid an amount ee a fair rate

of return on

(i) So much of Panagra’s investment (computed at

cost less depreciatiqn at rates fixed as provided in 1A.

above) in the type of flight equipment (Accounts 1501-

1506) used in the charter flights as shall be allocable to

/such service on a revenue miles basis as set forth in

. paragraph 1A.

(ii) So much of Pannen’ s funds or securiti®s ear-

marked and reasonably required for replacement of on,

additions to the type of flight equipment operated or .~

to be operateA&in the charter service (not less than the

funded depreciation reserve with respect thereto) as

\ 9

, 18833

shall be allocable to the charter service on a revenue

niles basis as set forth in paragraph LA. Tn case

disbursement of such funds or use of the equipment

purchased shall be” other than as indicated by such

earmnarking, appropriate adjustments of prior billings

under this subparagraph will. be made.

(iii) Se much of Panagra’s working eapital as shall

be allocable to the Charter service operated by Panagra

pursuant to this agreement,.to wit, three times Pan.

agra’s expenses for this operation for each month, ex-

clusive of depreciation accruals and of amounts paid

in the first instance by PAA.

(iv) So much of Panagra’s investment in mainte-

ri and overhaul facilities as sliall be allocable to

the flight equipment maintenance and overhaul services |

‘performed by Panagra for the charter service on the

saine basis as stated in: ‘paragraph 1 A with respect to

shop burden. —

(v) So mitch of Panagra’s investment in planes nor-

mally used for training, in link trainers and in other

major items of special equipment used for the training

of flight yrews as shall be allocable to the charter ser-

vice on the same basis stated in paragraph 1C.

Stee tedine

1884 i ;

(fol. 1803].

Pas Americas Wort Atkways, Inc: Exuinit 3.

[ eshiewn) "

; PANAGRA

{Handwritten notation—-CAB 727] |

PAN AMERICAN-GR ACE AIRW ‘YS, INC.

OFFICE OF THE PRESIDENT

; 7 HANOVER SQUARE ,

NFW YORK 5, N, Y. :

May 28, el 1)

President,

Pan American Airways, r ne. >

135 East 42nd Street, ,

“New York17,New York

Dear Sir:

Reference is made to Paragraph 20 of the agreement

~ between Pan American Airways, Inc. and Pan American-

‘Grace Airways, Inc. dated July 30, 1946, which was ap-

proved, together with the agreement of ‘the same date

between W. R. Grace & Co. and Pan,American Airways

Corporation, by order of the Civil Aeronautics Board dated

May 5, 1947, subject to the following feur terms, conditions

and. modifications :

es |) That paragraph 13 of the throws flight ‘agreement

is disapproved and shali be deleted froim thie agree-

ment;

(2) That approval of the agreements, shall be bon a term

of 3 ‘ears from the date of the Board’s order, at

“\ which time the Board without further hearing, if —

deetned appropriate, mray extend the approval for

such period as may be desirable at that time;

(3) That any changes in accounting under the agree.

ments even though considered minor by the parties

shall be reported to the. Board through the Eeo-

nomic Bureau in accordance with sectiow 407 of the

Act; — ‘

a * 18S)

(4) That agreeme nts in relation to compensation in re.

gard to ageney fees, traiming, or other matters not’

previously agreed upon in the through flight agree.

ment shall be tiled with the Board insaecordanee with

section 412 of the act.” .

This is to advise that Pan American-Grace Airways, Ine. ,

considers. the above within the general framework-of the

agreement between it and Pan American..Airways, Ine. and

proposes that said agreement, as modified by paragraph

(1) abovesand subject toe the terms and conditions: stated

in paragraphs (3), (3) and (4) above, shallshbeeome effee-

tive immediately.

Please indicate. your acceptance and concurrence by sign-.

ing and returning the attached duplicate-copy ofthis letter. ,

_ Very truly yours, of /

’

Pax Alekate: AN- 0 Abeaii Amway? Ixc.

By /s/ Hanon J. Rote

‘Harold J. Roig -

Accepted:

Pan American .Airways, Isc.

President

[fol. 1804] | |

Pax AMertcan Wortp Airways, Inc. Exuipit 4

7 WAR GRACE & C0:

7 Hanover Square, New York 5, N.Y. a

Office of the President

8 ee May 28, 1947

Pan American Airways Corporation

Wilmington, Delaware

Gentlemen:

Reference is made to the letter ‘of. even date addressed

by “an Amerigan-Grace Airways, Ine. to ’an American

1886 ti if

Airways, Inc. placing the agreement between these parties,

dated. July 30, 1946, in effect immediately, subject to the

terms, ‘conditions and -m6difications’ ordered by the Board.

We are writing to note our ratification of that letter.

We wish also to confirm our understanding that the agree-

ment dated July 30; 1946 between W. R.-Grace & Co. and |

Pan American Airways Curporation shall become effective _

immediately except as te the provisions of Paragraph 6. —

which shall become eftective only upon the order of the

Board dated May 5,-1947 becoming final or. such earlier date.

as may be agreed upon.

rs ‘ .

Will vou kindly note your ratification of the letter be-

tween Pan* ‘American- Grace Airways, Inc. and Pati Amer-

ican Airways, Inc. referred to above and your concurrence

in this letter by signing the attached duplicate.

’ Very truly yours, -

W. R. Grace & Co.

By /s/ J. P. Grace, Jr.

ey ; i ~ _ President

Accepted: ; *

Pan AMERICAN Airways CoRPORATION ?

By /s/-J. T.. Trrpre

President

[fol. 1805]

Pas American Worup' Airways, Isc. Exuipit 5

CONFORMED COPY Fey

Supplement No. 2

; TO.

THROUGH. FLIGHT AGREEMENT

y ’ BETWEEN |

PAN AMERIC AN ATRAY AYS, INC.

AND

PAN ‘AME RICAN.GRACE AIRW AYS, INC.

. DaTEep JANUARY Y, 1948

[ fol. 1806]

THROUGH FL IGHT AGREE MENT—

~ SUPPLEMENT NO. 2

AGREEMENT ,made and entered into this 9th day of

January, 1948, by and between Pax AMERICAN Airways,

Ixc.. a New York corporation (hereinafter called "PAA”),

and Pan AMERICAN-GRACE Arrways, INc., a Delaware cor-

poration- (her einafter called * *Panagra”) :°

Wuereas, PAA and Panagra are parties to a certain

agreement dated July 30,1946 (hereinafter referred to as

the “Through Flight Agreement”) and to a letter agree-

ment dated May 28, 1947,.with respect thereto; cand

WHEREAS, the partie s desire to supplement and amend the

Through Flight Agreement as herein set fortli.:

Now, THEREFORE, THIS AGREF MENT WITNESSETH :

28. The letter agreement dated May 2, 1947 edie

PAA and Panagra is hereby designated * ‘Through Flight

Ros 1887

1888

/ Agreement—Supplement No. 1” and is: assigned the para-

graph number 27. Unless otherwise agreed, all. further

amendments of the Through Flight Agreement shall be des-

ve ignated “Through Flight Agreement—Supplement No. -

and shail be consecutively numbered,-and their paragraphs

shall likewise .be numbered in continuous sequence, «The

parties will prepare and distribute to their respective staffs,

— for Working purposes, copies of the Through Might Agree- ..

ment as from time to time supplemented and revised. x-

_ cept where otherwise expressly stated, this Sipplement No.

2 shall be effective.as of 0:01 A. M., E. S. T., May 31, 1947.

- 29. Charges to Panagra pursuant to paragraph 8 of the

Through Flight Agreement for training shall, until further

notice, be at the following, rates:

Miami Schools oan

Mechanics ................ plaids i 1156 (Dollars per hour)

Meteorologists .............. 1.2906 ©

Navigators .......:....---. hos - 9320

Radio........... pikceclnddiiaaaann . 1.2244

Station Manager .......... 1.73899

TIE cinachasidnatpiasstieaAaianasin ~~ 6.3142

PE Seiniigtanbicsieenss ww. 16.3218

{fol. 1807] Miami Aircraft ok Lk

* SUSIE siahuadahedeliscaammeiianenitiacis 41.6864

DC-3 Cargo .-:.......0:.,....-.. 73.4179

@ DC-3 Passenger ............ 71.5699

' (©-54 Trainer .................. 107.9692

| C-54 Cargo .................... 146.6863

C-54 Passenger ............ 169.8414

Note: Flight training charges per hour are the sum of

the school rate and the aireraft rate for the type

aircraft used.

If either PAA or rennin shall no longer regard the above

rates as fair and equitable, such party shall give written

notice to the other; provided, however, that. the first such

) notice may not be given prior to Jannary 1, 1948, and that

_ 1ssd.

no notice may be given less than six months after a new

rate shall have been established. ‘The parties will thertupen

endeavor to agree upon new rates, failing which the matter

shall be arbitrated as provided in paragraph 20. Unless

otherwise agreed, any new rates established as a result of

such notice shall be effectivecas from the first day of the

month following that in which notice Was given, wi

*30. Pursuant to paragraph 12(b) ‘of the Through Flight

Agreement it is agreed that, antil further agreement of the

parties, revenues from through rates shall be divided as

set forth in Annex 3.

31. Pursuant to ‘paragraph 14 it has been agreed that

for the calendar year 1947 PAA and Panagra will share

the costs of special advertising of the through flight ser-

vice within the total budgeted for expenditure by the re:

spective companies, in the proportion of 3172% to PAA

and 68142% to Panagra.:

32. Paragraph 5 of the Through re Agi ‘coment is

amended to, read as follows: '

“15. Liability d third parties, (a) PAA wilh indem-

nify Panagra and ‘hold it harmless in respect of any.

liability (other than to Panagra’s flight employees ‘in-

’ cluding stewards and stew ardesses engaged in the op--

eration of Panagra’s aircraft) arising or claimed to

[fol. 1808] arise as a result of PAA’s possession of

Panagra’ s aireraft. PAA shall be deemed to be in pos-

session of Panagra’s-aircraft (1) in the ease of aircraft

turned over to PAA for operation on through flights

under this agreement, from the time when such aircraft

is so turned over to PAA by Panagra until the time

when s such aireraft is returned to Panagra, and (2) in

. the caxe_ of aircraft turned over to PAA for mainte-

“nance, from the time when such aireraft is turned over’

to PAA at one of the latter's maintenance bases uptil

the time when such aircraft is returned to Panagra;

except, in either case, fer non-revenue or other special

flights during-such period made at the instance and

request of Panagra. PAA will carry passenger and?

( .

1890. : %

~ public liability and property damage insurance policiés

covering risks attendant upon the feregoing to the same —

extent and on the same basis as in the case of its own

_ aireraft and will cause Panagra to be included as a

party insured.’

“(b) Panagra will indemnify PAA and hold it harm- -

less (1) in respect of any liability arising or claimed to

arise as a result of the operation of Panagra’s aircraft

except when such aircraft shall be in the possession of

PAA, and (2)-‘from all claims of Panagra’s flight em-

. ploy ees including stewards and stewardesses engaged:

-in_ the operation. of Panagra’s aircraft. Panagra will °

carry appropriate policies of publie liability and prop- -

erty ‘damage i insurance.covering the risks agains which

it agrees to indemnify PAA under clause ¢1) hereof

. and will cause PAA to be .included.as a party insured,

. and will carry appropriate policies of workmen’s coi-

, pensation insurance with respect to the employees re-

ferred to in clause (2) hereof. _

“(e) All indemnities herein shall include te lated costs

and expenses. —

“(d) No employees of Panagra shall be permitted to

travel on Panagra’s aircraft operated over. PAA’s cer-

tificated routes as provided in this Agreement except

(1) when holding an appropriate PAA ticket ‘or pass;

or (2) as members of the flight crew as specified in

the Civil Aeronautics Administration's operating spec-

ifications, or as stewards or stewardesses. Subject to”

payload permitting, and to applicable regulations of

the Civil Aeronautics Administration, Panagra flight

crew personnel may travel without charge as additional

members of the flight erew on flights of Panagra’s air-

[fol. 1809] craft over PAA’s certificated routes pursu-

ant to this Agreement when traveling for training to be

conducted by PAA-pursuant to paragraph 8 of this

Agreement, but all such emplovees shall be deemed for

the purposes of this paragraph 15 to be Panagra’s

employees engaged in the operation. of Panagra’ Ss air-

craft.”

; - ; ~ 1891

. 33. Paragraph, 16 is amended t as fellate:

(1) By striking . from the first sentence the sell

“while under charter to PAA pursuant to this agree:

ment” and substituting the words “at all tunes” F

~ 2) By striking from the second and fourth Sen

» tences. the words “while under charter to “‘PALA" and

substituting the words “while in P.AA’s, possession”.

(3) By striking out from the third sentence the words

“while under charter to PAA pursuant to this agree-

ment” and substituting the words “while in PAA's

possession”. :

34. Paragraph 17 is amended by adding the laliowine at

the end thereof: -

“(g) For accounting purposes the — Flight

Agreement shall be he to have becéme effective

-as- of 0:01 A. M., E. T., May. 31, 1947. Billings for

the through flights pe geen? on M ay 312 1947 will be

made on the basis of one-thirtieth of the costs for “June,

.1947. ‘

“(h) Route mileages to be used in determination of.

Revenue Miles Flown and Available Ton Miles as re-

ferred to-in the Agreement, will be those effective as

shown in C. A..B. Mileage: Booklet No: 2 (Revised),

| Airport to Airport Mileages Over International Routes

and Overseas Routes of Ce rtificated Air Carriers and °

in any. revisions thereof... eB

~“() Special: services sins covered. by this agree! ment

rendered by PAA to Panagra, on the written reque st of |

Panagra’ Ss’ ‘authorized representatives, at PAA’s bases:

‘in'the United States (e. g., physical examinations and

other services being. rendered by PAA’s medical ‘de-

. partment) ‘shall ve billed at rates to be established —

forthwith by mutual agreement upon the commencement _—

of such services.

{fol. 1810] “(j) To the extent that Panagra shall re-

quire passenger service equipment to be maintained at’

1892 ee ns OP

-any of PAA’s bases in the continental United States |

- for use in Panagra’s aircraft engaged in the charter

service-or in other Panagra aircraft being maintained,

or overhauled by PAA, Panagra will cause the neces-

_sary stcek of such equipment to be made. av ailable to

PAA at Such base at Panagra’s expense, “PAA will

provide suitable space for the storage of such equip- -

ment and will accord to such equipment the saine treat-

ment as to other equipment held by PAA, but ‘any

shortages or overages in such equipment: shall be for

‘

Panagra’ s account.” i

a. Awnex 1 of the have ment is amended to read in the

form attached hereto as Annex 1- “A. a”

36. Paragraph 17(b)- of-tte Through F light Agreement

is amended by striking out the first tw ° paragraphs there-

of and substituting the following:

“(b) Panagra will pay PAA for maintenance and

overhaul of Panagra’s flight equipment performed by

PAA pursuant to paragraph 7 of this Agreement an

amount representing (1) reimbursement of. all of

PAA’s costs for direct labor and materials uséd in such

. maintenance or overhaul and a reasonable proportion

. of PAA’s indirect or burden expenses applicable there-

to; (2) a fair share of depreciation expense incurred

by PAA with respect to ffight quipment spare parts

and assemblies maintained by PAA at the base or bases

where Panagra’s flight equipment is maintained or over-

hauled and used in or useful for such maintenance or

’ overhaul; and (3) a fair rate of return on’ so much of

PAA’s investment in maintenance and overhaul facili-

ties, flight equipment spare parts/and assemblies, and

working capital, as may he properly allocable to main-

~ tenance and overhaul performed by PAA for Panagra.

_. The payments so to he made by Panagra to: PAA shall

. be determined initially in accordance with the detailed

- provisions of Annex 2 hereto attached. If either party,

shall he of the opinion that the detailed provisions for

payment by Panagra to PAA in effect at any time do

not properly earry out the intent of this subparagraph

1893

* (b) or are operating unfairly or inéquitably, such party |

may request review of such provisions and, thereupon

(fol: 1811] proceedings Will be taken in the same man-

ner as set forth in paragrapli 17(a) hereef. Amounts

payable by Panagra to PAA pursuant te this subpara-

graph (b) shall, ta stich extegt as appropriate, be re-

flected in the billings by Panagra to PAA for charter

fights performed by Panagra pursuant to this Agree-

ment as set forth in subparagraph (a) hereof.

* “Tf, in pursuance of its obligations under subpara-

graph (a) of paragraph 7 of this. Agreement, PAA

shall require flight equipment spare parts and assem-

blies specially designed for Panagra‘s flight equipment

of a type ifferent from any of PAA’s flight equipment

which is Shaintained at the same maintenance base,

Panagra will eguse an adequate. inventory of such flight

equipment spare parts and assemblies to be delivered

to PAA at such maintenance base até Panagra’s ex-

pense, and to replenish such inventory as may be re-

quired from time to time. Title to such inventory shall

remain in Panagra. PAA agrees to provide suitable

space for the storage of such inventory and to accord

to it the same treatment as is accorded to other in- ,

ventory held by PAA, but any shortages or overages

in such, inventory shall be for Panagra’s account. If’

such inventory relates to a type of flight equipment

used in the charter service, the shortages or overages

shall, notwithstanding any other provision of this |

Agreement or of any Annex thereto, be prorated: be-~

tween Panagra and PAA on the basis of the ratio of

the revenue miles flown by such flight equipment. in

the charter service to the total revenue’ miles flown

by such flight equipment.” . >

‘

- , 37. Paragraph:17(d) is amended, by adding the follow-

ing at the end thereof: Pe

“Wherever payments by PAA to Panagra or by

Panagra to PAA include the provision of an element

of return on.investment, such return for the vear 1947

shall be caleulated-as follows:

fed

1894 via

“(a) For the purposes of billing, it will be tenta- ~

tively assumed that the rate of return after taxes

allowed by the Civil Aeronautics Board in fixing nail

pay. compensation is 10% per annum; that Panagra,

as a Western Hemisphere trading corporation, is

subject to Federal incon v tax at an effective rate of

24°; and that PAA is subject to Federal income tax

at an effective rate «! 38%;

[fol S12) (Cb) Acc dingly, Panagra billings to

PAA will include 13.16 on investment wheregpp-

plicable and PAA billings to Panagra will invlude

16.13% on investment where applicable—ia both cases

to net 10% ; “4

“(e) These billirigs will be altered if it should be

determined that in 1947 Panagra will not be taxable

as a Western Hemispheré trading corporation.”

38. Paragraph 17(e) of the Through Flight Agreement

is amended by adding the following.at the end thereof:

“If either party, under accounting procedures con-

sistent with applicable regulations of the Civil Aero-

nautics Board, shall make retroactive changes in

+ depreciation accruals with respect to property in re-

spect of which ‘the other shall have made payments

on account of depreciation, proper adjustmentg shall

be made.”

~«-

39. Paragraph 93 (6) of the Through Flight Agreement

is amended to read as follows:

“(e) The parties will formulate procedures for the

delivery of receipts to evidence the transfer of pos-

session of Panagra’s aircraft from Panagra to PAA

and the return of such possession from PAX to Pan-

agra.”

40. The first sentence of paragraph 24 of the Through

Flight Agreement is amended -to read as follows: “Notice

to PAA wherever provided in the Agre ement shall be given

in writing by registered letter addre ssed to Erwin Bal-

1895

luder, Vice President, Pan American Airways, Ine., Clrys-

ker Building, New York, 8. Y., or in such other manner or

to such other address as PAA may designate to P anagra

jn writing.” Paragraph 24 is further amended by adding * }

‘at the end thereof: “Notwithstanding the fore ‘going pro-

Visions of this paragraph, notice may likewise be given in

writing. by letter delivéred to the person designated to

receive notice gas aforesaid, provided .a receipted | copy is

° sec ‘ured.”

This stedioand shall be effective as of the date hereof.

_ 41. Paragraph 26(b) of the Through Flight Agreenent

is amended by striking out the ward “International”.

‘[fol. 1813] 42. Any amounts payabie by PAA to Panagra

or by Panagra to PAA in the settlement of their respective

accounts, whether arising under the Through Flight Agree-

ment or otherwise, will be paid in United States currency.

Ix wityess WHeREOF the parties have caused this erey D

. . ‘

ment to be executed by their officers thereunto duly author-

ized on the day and year first above written.

- (Seal) :

M Pan American Ajsrways, Inc. ~

By .E. Bauiuper — /s/

Vice-President

‘(Seal) ; : ;

Pan Amertcanx-Grace Atrways, INc.

a By H. J. Row /s] a

President

: 6

1896 :

(fol. 1814} SSeS yy Sait

ANNEX 1-A

‘De staile d Provisions for Payme nts by PAA ty Panagra®

1.° Direct Co sts.

A. 1. Charges for gasoline. used in the charter service

shall be accounted for as follows:.

(1) PAA will advise Simin at the close of each

month of the total, gallonage detive red by PAA, classified

by aircraft types;

(2) Panagra will aerate to the charter serviag a gal-

lonage equal to the amount obtained by“multiplying. the |

respective gallonages loaded ‘during the month. into the

‘types of aircraft used in the charter service by a frac-

tion of which the*numerator shall be the revenue miles

flown by such type in the’ charter service and the de-

nominator shall be the total revenue miles flown by @uch

type;

: £3) PAA will'price the amount specified in (2) at the

weighted average price of the deliveries — in (1)..

This amount will be retained as a cost of PA a

* (4) Any excess of the cost of the deliveries deseribed.in °

- (1) over the cost to be retained by PAA as described in

(3) will be billed by PAA to Panagra. Any excess of the «

‘cost deseribed in (3) over the cost of the deliveries de-

scribed in (1) will be credited to Panatra by. PAA.

2. PAA will pay as a direct charge (1) expenses of clear-

ance of aircraft while in use in the charter service,;-Aecount

ALOT, and (2) any amounts prope ‘rly recorded, by Panagra

Wor employees’ , compulsory competition of flight crews

(other than pursers, stewards, and stewardesses) reeorded

in Account 5174, and Social Security taxes of said em-

‘ . . . o- is

~ ® All references to account numbers are to the Civil Aeronautics

Board's Uniform System of Accounts for Air Carriers prespntly “in

effect. * es : he &

2 ® s

‘* P >

ee | 1807

plovees charged to Account 6668 in so far as the s same Pelate

to the charter service.

[fol-ISt5] 38. PAA will reimburse’ Panagra for all costs

prope ‘rly recorded by Panagra for the aireraft type used

in the charter sertice in Accounts 5123-5180 inchtisive (ex-

cluding costs of gasoline in Account 5145, gasoline taxes in

Account 5169 and accounts ineluded in the ‘preceding parae

graph 2), 5225-5227 and 5246-5248 inclusive, 5270, HoT,

5280 (exeept for credits arising out of chargés to PAA),

shop burden’ expenses applicable to the maintenance and

stores dé&partments charged dn the accounts as set forth

in paragraph 5 below, costs recorded in Accounts 5975-5977

inclusive, and 5980 (except for credits arising out of charges

to PA). cost of insurance of all kinds included in Aecount

6657 applicable to flight crews, and costs recorded in Ac-

counts 6227, 6248 and 6978 applicable to Passenger Service

Equipment carried in the aireraft type used in the charter

service. All costs dealt with in this paragraph shall be. al-

located to the charter service on the basis of the ratio of the

revenue miles flown by such aireraft type in the charter ser-

vice’to the total revenue miles flown by such aircraft type

including those flown in the charter service. If it shall ap-

pear that major items of cost -recorded‘in such accounts are

applicable only to the charter service or to Panagra’s

cominon: carrier ‘service, provision will be made for re-

moving such costs from allocation and charging such costs

direetly to the charter service, if applicable thereto.

‘4. Flight Equipment Depreciation, Accounts 5975-5977

inclusive and 5980 and Depreciation on Passenger Service

. Equipment, Account 6978, shall be computed in accordance

with Panagra's rates, or in the event such rates are not

satisfactory to PAA, at rates to be mutually agreed upon

by the two companies, or, in the event of their inability’ to

agree, to be’ fixed by arbitration consistently with fates

generally prevailing in the international air transport in-

dustry for the type of — equipment used im the charte

service. “i

5. The shop aren of Panagra applicable to the main-

tenane. and overhaul of the type of fight equipment used in

1898

the charter service shall include shop burden expenses ap-

[fol. 1816] plicable to the maintenance and stores depart-

ments charged in Accounts 6221-6274 and solely applicable °

to maintenance of flight equipment and ground equipment

-used in connection with maintenance of dlight~ equipment ;

salaries and expenses of the purchasing and cost accounting

departments included in Accounts 6621-6674; insurance—

public liability, property damage and general insurance ex-

penges included i in Account 6655 and applicable te the main-

tenance, purchasing and stores departments; cost of insur-

ance of all kinds ineluded in Account. 6657 and applicable *

to the maintenance, purchasing and stores departments;

payroll taxes included in Account 6668 and applicable to the

maintenance and stores departments; and depreciation in- .

cluded in Account 6978 and applicable to the hangar, shop

and ramp. eqiipment occupied or used by the maintenance,

purchasing and stores departments; and will be distributed

on the basis of direct labor costs. 3

B. PAA will reimbursé Panagra for passenger service

direct flight costs incurred by Panagra‘in the charter ser-

vice and charged to Account. 6324, (including appropriate

provision. for vacations earned while in the charter service)

" and related expenses in Accounts 6328, 6336, 6374, 6380 (ex-

cept for credits arising out of charges to PAA), 6657 and |

6668. Expenses in the foregoing group of Accounts will be.

allocated to PAA in the same manner as similar accounts in

thet00 group. PAA will reimburse Panagra for passenger

service direct flight costs recorded on the books of Panagta

andineurred by either P A‘A or Panagra in the charter ser>

vice ‘gud charged to Accounts 6348 and 6352.

PAA will reimburse Panagra for passenger service direet

_- flight costs incurred by Panagra for ,the charter -service

_and charged to Accounts 6353 and 6354 after proration to’

types of. air¢raft.on a revenue mile basis for those costs

included in the above Acéounts not directly allocable to air-

craft types.

All costs incurred ander the charter service as deseribed

in the first two paragrdphs of this paragraph B shall be

prorated on the hasis of the ratio of the revenue miles.

’

-* operations overhead of Panag

$ 1899

flown by aircraft types -in the charter service te the total

revenue, miles flown by sych aircraft types including’ the

revenue fniles flown in the charter r service,

[fo]. 1817] Expenses recorded in Accounts GH351 (exept

’ for food withdrawals authorized by and for the other party 4,

6348 and. 6367 on the books of PAA‘ or Panagra should be

absorbed by the respective Companies. ixpenses in Ae-

count 6563 shall be for the account of the-respective Com-

panies in ther respective areas of operation undgr thet

charter service exeept that expenses incurred at. Balboa

shall be for the aecount of the delivering carrier.

(. Panagra shall be reimbursed for training costs in-

curred in training flteht crews (including pursers, stewards,

and stewardesses) not reimbursed pursuant to, Paragraphs

A and B, as foliows: ‘Panagra shall segregate the training

costs incurred in training flight crews other than pursers,

stewards, and stewardesses on all aircraft types emplayed

in the charter service and PAA will share in the costs-so

segregated for each type on the basis of a fraction the

numerator of which shall be. the flight crew salaries for

such type chargeable to the charter service and the de.

nominator of whieh shal be the total flight erew sala

dor such type. In the « case of training costs incurred w ith

respect to pursers, stewards, and steWardesses PAA will

share in such cost%.on the basis of a fraction the nume ra

‘tor of which shall be the salaries of pursers, stewards, and

stewardesses chargeable to the charter service and the de-

nominator of which shall be the tetal such salaries.

°¢

2. Indirect Costs.

A. Panagra will: be paid _— of so much of the

Regional Manager, ()perations Manager, Direetor of Safety,

Chief Pilot (after proper deduction for revenue flying done

by him or his staff, Operations Superintendent, Commiuni-

cations Superintend§nt, CAA Liaise n antl Panagra’s, Medi-

cal Department, togethe? with the costs related to the fune-

tions of such offices, provided, however, that the offices of the -

Regional Manager shall be taken into account only to the

“

as consist of the ofliees off

1900

extent of 50%. Panagra will also be paid a portion of its

United States expenses applicable to the operations, main-

tenance and communications departments, including | ;

{fol. 1818] amounts paid to PAA for such services, and a

portion of the salaries and related expenses of Panagra’ a,

United States Maintenance Representatives as provided in

Paragraph. 7, to the extent that these have not been taken

4 into account in other payments herein provided for. The

amount so payable shall be the amount obtained by multiply-

ing thetotal of the costs herein specified by a fraction of

which the numerator will be 50% of the available ton miles

flown in the charter service and the denominator the total

available ton miles flown in Panagra’s common carrier ser-.

vice plus 30% of the available t ton | miles’ flown in the char-

ter service. :

B. Panagra will be paid a portion of so much of its pas-

senger service overhead:as consists of the office of passenger

service superintendent and the office of chief purser. The

‘amount so payable shall be the amount obtained by multiply :

ing the total of these costs by a fraction of which the

numerator ‘will be 40% of the available ton miles flown in .

the charter sevice and the denominator the total available

tun miles flown in Panagra’s common. carrier service plus

40% of the available ton miles flown in the charter service.

C. Panagra. will be paid a portion of the costs of its

financial and accounting departments (up to and ‘including.

the level of the offices of. assistant treasurer and assistant

comptroller directly supervising the accounting under this.

agreement and including the audit staff attached to, Pan-

agra’s United States Maintenance Representatives) and the

cost of the personnel department located at New York. The

qmount so payable shall be the amount obtained by multi-

_ plying the total of these costs by a fraction of. which the ~~ -

‘numerator will be 35% of the av ‘ailable ton miles flown in

the charter service and the denominator the total available

ton miles flown in Panagra’s common carrier service plus

30% of the available ton miles flown in the charter service.

D. All references to available n miles flown are to miles’

_ flown on revenue flights.

eo 91901

[fol. 1819] 3. Return on'Panagra’s Investment.

Panagra shalP be paid an amount representing a fair

rate of return on

(i) So much of Panagra’s ‘investment (computed at cost

less depreciation at rates fixed as provided in 1A4 above)

in the type of flight equipment (Accounts 1601-1608) and

the passenger service equipment thereon (Account 1611)

used in the charter flights:as shall be- allocable: to sue he -

service on a revenue miles basis asset forthin paragraph

; 1A3.

(ii) So mych of Pananta's funds or securities car-

marked and Teasonably required for replacement of or ad-

ditions to the type of flight equipment operated or to be

operated in the charter service (not less than the funded

depreciation reserve with respect thereto) as shall be al-

locable to the chafter Service on a revenue miles basis as

‘set forth in gts 1A3. In case disbursement of such

funds-or use of the equipment purchased shall be other

than ‘as indicated by, such earmarking, appropriate ad-

justinents of prior. billings under this subparagraph will

be made. ial

‘

(iii) So much of. Panagra’s working capital as shall be

allocable to the charter seryice operated by Panagra pur-

suant to this Agreement, to wit, three times Panagra’s

expenses for.this operation for each month, exclusive of -

depreciation accruals and of amounts paid in the “first in-

stance by PAA. * ; is

{iv) So much of Panagra’s investment (net of. de-

preciation reserves) in maintenance and: overhaul facili-

ties as shall be allocable to the flight equipment mainte-

nance and overhaul services performed by Panagra for

the charter service on the Same basis as stated in para-

graph 1A5 with respect to shop burden.

(v) ‘So much of Panagra’s investment (net of dep precia-

tion reserves) in planes normally used for training, in link

trainers and in othér major items of special equipment

used for the training of flight crews as thé amounts in

* Account 5128 allocated to?the charter service shall bear

to the total amounts in such account.

1902

{fol. 1820]

ANNEX 2

x Detailed Provisions for Payments by Panagra to BAA

Pursuant to Paragraph 17(b)*.

_A. The costs to be reimbursed by Panagra to PAA under

clause (1) shall be the direct and indirect expenses of the

types presently set forth in the following accounts:

(1) The‘direct labor of employees engaged in the mairi-

tenance, periodic inspectign, repair, overhaul, ete. of

Panagra’s aircraft, engines and other flight sqempencnt

of the type normally recorded in ) Accounts 5225-5227,

inclusive.

(2) The cost, ‘less return parts credit and/or salvage, of

' spafe parts and assemblies, materials and supplies

* . eonsumed in the maintenance, periodic inspection, re-

pair, overhaul, etc:, and the cost of outside repairs of |

Panagra’s aircraft, engines and other: flight equip-

ment, of the type normally recorded in Accounts 5246-

5248, inclusive.

(3) A share of the following indirect of burden expenses

attributable to the base or bases at which Panagra’s

aircraft. are maintained or-overhauled (distributed on

the basis of direct labor costs) ;

(a) Shop burden expenses applicable to the mainte-

nance and stores departments charged in Accounts

6221-6274 and solely applicable td maintenance of

flight equipment and ground equipment used in

connection with maintenayce of flight equipment.

= hb) Salaries and expenses o1 the purchasing and cost

6674.

general insurance expenses included in Account

_.* All references to account numbers are to the Civil Aeronautics

Board’s Uniform Sy stem of Accourits for Air Carriers presently

in effect.

accounting mnpertanate included in Accounts 6621-

1903

6655 and applicable to the maintenance and stores

‘departments. :

| [ fol. 1821] (d) Cost of insurance of all kinds included

\ in Account 6657 and-applicable to the maintenance

(ce) Payroll taxes included in ‘Account 6668 and taxes

other than payroll included in Account. 6669 and

applicable to the maintenance and stores depart-

ments.

(f), Depreciation inelu ted in “Account 6978 and ap-

plicable to the han sar, shop and ramp equipme nt

occupied qr used Ly the maintenance, purchasing

and stores depart ments.

B. The amount pay able by Panagra to P AA lee depre-

_ ciation of flizht equipment spare parts and assemblies under |

clause. (2) shall be determined by applying to the portion

of Account 3077__F ‘light Equipme nt Spare Parts and As-

semblies ‘for the bases where Panagra’s aircraft and/or

engines are maintained a ratio of which the numerator shall .

be the dollar valu® of such spare parts and assemblies is-

sued out for the accofint of Panagra and the denominator

shall be the total dollar value, of all such spare parts\and

assemblies issued. 7

C. The. ‘investment of PAA on which a return chal mn

paid pursuant to clause (3) shall be the sum of the fellow-

‘ing: } . ‘

(a) The sum obtained by multiplying PAA’s total in-

vestment (net of depreciation re serves) in main-

tenance and overhaul facilities used in or useful

for maintenance and overhaul of Panagra’ s air-

craft at the bases where such work is performed

{ by a fraction the numerator of which will -be the

total direct’ maintenance labor costs charged to

Panagra, and the denominator of which shall he

the total direct maintenance labor costs for such

~ bases.

*See attached’ letter agreement.

1904

(b) The sum 6btained by multiplying PAA’s invest-

ment (net of. depreciation’ reserves) in Flight

Equipment Spare Parts and Assemblies at the

bases where Panagra’s aircraft are maintained by

the same fraction described i in paragraph B ait’ :

and P

{fol. 1822} (ec) An allowance for working capital equal

’ [fol..

to three times PAA’s charges under subparagraph

(17(b) for the preceding month (after eliminating

the portion of such charges representing depre-

ciation accruals, FESPA obsolescence and return

on investment).

1823] |

ANNEX 3

Basis for Division of Revenues from Through Rates

Revenues from transportation between a point on PAA’s ||

route: and a point on Panagra's route conducted under

through rates (whether or not ‘moving over ‘the charter |

service) shall be. ‘div ided as follows:

(1)

Passenger Fares—Normal adult one-way all year we joiat

fares shall be apportioned between PAA and Panagra

in proportion to the applicable normal adult one-way -

all year fare in'U. S. dollars for the PAA section of

the route to the applicable such fare in U.S. dollars for ..

.the Panagra section of the route. All other joint fares,

such as round trips, circle, open jaw, excursion, chil-

(2)

dren’s, Government, sleeper and extra fares, shall be

apportioned in accordance with the respective ap-

plicable fares in U.S. dollars for the respective sections

of the route.

Excess Baggage pa be apportioned on the

same principle as passenger fares. Excess baggage

valuation charges will be retained by the collecting

‘carrier. ~ ao

(3)

Express Charges (transportation, valuation, and ie

pers’ cargo insurance)—to be apportioned in propor-

(4).

1905

tion. to the respective mileages via the most. direct

routes between the points of origin and destination on

the routes of PAA-and Panagra and the june tion point

of PAA's and Panagra’s services, (the premiaun costof

air express carrier's liability insurance and air —

‘press shippers’ cargo insurance on shipments moving

under through rates to be divided in proportion to the

shares in the express revenues).

Transportation Rates for Foreign Mail—-(a) Foreign

Mail Destined to the United States, its possessions and

territories, (exclusive of charges for domestic han-

dling)—to be apportioned in proportion to the respec

‘tive mileages via the mest direct routes between agreed

control point or points in the country of origin and

[fol. 1824] the junction paint of PAA’s and Panagra’s

services and between such junction point and the PAA

United States terminus to which the mail is dispatched.

(b) ‘Foreign Mail Destined to Other Foreign ( ‘onntrivs:

Applicable under New Transportation | Rates—-In

accordance with the transportation rates for for-

eign mail approved by the U. S. Post Office De-

partment for effectiveness January 1, 1947, as of

the first day of: the month in which each country

‘accepts such new rates the transportation charges

will be apportioned in proportion to the respective

mileages via the most direct route between agreed

control point or points in the country of origin and °

the junction point of PAA and Panagra serviees

and between such junction point and the terminus

on PAA or Panagra, as the case may be, to which |

the mail is dispatched. i ;

will be determined in accordance with mileages ap- |

proved by the U. S..Post Office Department. :

(a) Foreign Mail Destined to Other Foreign Countries

Applicable Prior to Effectiveness of New Trans-

portation Rates—Until such time as the respective

countries served by PAA and Panagra aecept the

transportation rates approyed by the U.S, Post

1906 -.

area 4. ; \ |

Office Department or January 1, 1947, the initial

carrier will retain the mail pay received from the

country of origin and will pay the onward carrier

an amount obtained by multiplying the ‘weight of

the mail transferred to the latter by the existing

rate from the country of transfer to the country of

final destination. In the case of mail transferred”

in the Canai Zone, Panama will be considered the

~ country of transfer. In the case of mail transferred

at Buenos Aires, Argentina will be considered the

country, of transfer. For mail transferred at the

~ Canal Zone and Buenos Aires, the-rate to be used

as‘a basis of calculation will be the rate in effect

as of December 31, 1946. As each country con-.

[fol. 1825] cerned accepts the new reduced trats-

portation rates, the mail transportation charges

will, as of the first day of the month in which such

rates are accepted by each such country, be ap-

portioned on the same mileage basis as stated in -

sub- paragraph (b) above. It is the obligation of

each carrier to notify the other of the effective date

of the acceptance ‘of new transportation rates by

the respective countries. served by its lines.

(5) Route mileages applicable to paragraphs (1), (2) and

(3) will be determined~in accordance with C. A. B.

ad |

Mileage. Booklet No. 2 (Revised) ‘and any revisions ..-

thereof.

The foregoing provisions are intended to be consistent with

applicable resolutions. of International Air Transport As-

sociation (IATA) of which PAA and Panagra are members;

‘in the event that such resolutions should be changed in such

a manner that any of the foregoing provisions would no

longer be consistent therewith, the foregoing provisions

shall be automatically amend ed to conform with the changed

IATA resolutions.

1907

[fol. 1826] . January 9, 1948.

Pan American-Grace Airways, Ine.

135 Fast 42nd Street

New York City

Dear Sirs:

.° This letter will evidence the agreements that have been

reached as to-the method in which Annex 2, Paragraphs B

and ((b), shall be applied.

The amount payable by Panagra to PAA under Para-

graph B will be determined in the following manner;

Separate computations will be. made for FISPA at each

location where Panagra uses FESPA. FESPA will be di-

vided into six separate categories, to wit: airplane parts,

engine parts, engine accessories, instruments and parts,

propeller parts, and aircraft accessories. Each of these

- eategories will be further subdivided into sub-categories as |

between DC-3, DC-4, CV-240 and other types of airplanes. ,

Depreciation on each of these sub-categories shall be con-

sidered as’a separate pool of expense. Panagra will share.

in such depreciation only in months in which issues at the.

respective base and out of the respectite sub-eategory are

made to Panagra, and, in the case of FESPA relating to

CV-240 aircraft, effective only commencing with the month

in whieh PAA begins scheduled operation with such air-

craft. :

The same procedure shall be followed in computing. the

amount on which return on investment shall be computed

pursuant to Paragraph C(b). + ~

It is understood that the arrangements ‘set forth in this

letter represent simply a ‘practical application, under pres-

ent conditions; of the principles set forth in the specified

paragraphs of Annex 2 of the contract, and that either

patty may at any time give notice that it no longer con-

siders these arrangements to be suitable, such notice, how-

ever, to have no effect upon any months preceding that in

which,such notice is given. aan:

1908

‘{fol. 1827] Ifthe foregoing represents your understand-

ing, kindly so indicate on the enclosed copy of this letter.

Very truly yours,

Pax American Airways, INc.

By E. Bauuvper - -/s/

Vice President

Confirmed:

Pan AmericaN-Grace Airways, INc.

By H. J. Rote . aa /s/

President

[ fol. 1828]

Pax American Wortp Airways, Inc. Exuisir 6

CONFORMED COPY

[Stamp—Date Illegible]

- THROUGH FLIGHT AG espe

. —SUPPLEMENT N

THIS AGREEMENT, made ‘and eptered into this 28 day

of January, 1949, by ahd between PAN AMERICAN AtR-

WAYS, INC., a New York corporation, hereinafter ealled

“PAA” and PAN AMERICAN-GRACE AIRWAYS, INC.,

a Delaware corporation, hereinafter called “Panagra”.

WHEREAS, PAA and Panagra are parties to a certain ’

agreement dated July 30, 1946, which agreement has been

supplemented and amended by Supplement No. 1 dated

May 28, 1947 and by Supplement No. 2 dated January 9,

1948, said agreement as so “upplemented and amended being

hereinafter referred to as the “Through Flight Agrev-

ment”; and sh

WHEREAS, the parties desire to supplement and amend

the Through Flight Agreement as herein set forth;

NOW, THEREFORE, THIS AGREEMENT WIT-

NESSETH:

43. The following schedule of rates for charges to Pan-

agra pursuant to paragraph 8 of the Through Flight Agrees.

ment for training is hereby substituted for the schedule of

rates set forth in paragraph 29, effective as of March 1,

1948: .

Miami Schools

Mechanics

Meteorologists

- Radio : '

Pilot ,

Link

* Miami Aircraft

“pC-3 Passenger

DC-3 Cargo

DC-3 Trainer

DC4 Passenger

DC-4 Cargo

De'-4 Trainer . “af

* an

44. The following schedule of rates for charges to Pan-

agra pursuant to paragraph & of the Through Flight Agree-

ment for training is hereby substituted for the schedule of

rates xet forth in paragraph 43, effective from September

1, 1948 until further notice:

{[ fol. 1829} . :

. School .

Miami—Ground Training

Miami—Link

Brownsville—Link ;

Miami-—Pilot

Brownsville—Pilot

Rio— Pilot

New York—Pilot

Aircraft Type

1M '-3 -Aireraft

DC-4 Passenger

DC-4 Cargo

“4%

re’

Dollars Per Tour

1.2247

* 2.1370

1.6534

18.0160

7.0411

77.6875

83.3226

54.3134

165.8967

131.4446

115.2668

Hourly

$ 1.4493

9.6116

9.1569

25.1983

33.0850

10.4547

26.8186

101.5666

189.5431

171.6970

‘ne

_IN WITNESS WHEREOPF, the parties have caused this

agreement to be executed by their officers thereunto duly

authorized, on the day and year firSt above written.

Pan AMERICAN Airways, Inc.

By /s/ E. BaLiuper

Pax: American-Ggace Airways, Inc.

By /s/ G. Vipau >

(fol. 1830] aa s

Pan Awenicay W oRLp Atrways, Ixc. Exursit a »

CONFORMED COPY

THROUGH FLIGHT AGREEMENT

—SUPPLEMENT NO. 4

THIS: AGREEMENT, made ‘and entered into this Ninth

day of February, 1949, by and between PAN AMERICAN

AIRWAYS, .INC.,. a- New York corporation, hereinafter

called “PAA and PAN AMERICAN GRACE AIRWAYS,

-INC., a Delaware corporation, hereinafter called “Pan-

agra”. at |

WHEREAS, PAA and Panagra are parties to a certain

agreement dated July .30, 1946 which agreement has been

-supplemented and amended by Supplement No. 1 dated

“May 28, 1947 and. by Supplement No. 2 dated January 9,

1948, and by Supplement No. 3, dated January 28, 1949 said

agreement as so supplemented and amended being here-

— referred to.as the “Through Flight Agreement” ; and

” WHEREAS, the parties desire to supplement and amend

the Through Flight Agreement as herein set forth;

NOW, | peeenene. THIS euecenanuisits wit.

N ESSETH:

45. With respect to the year 1948 only, and notwith-

standing the provisions of paragraph 17 (c) of the Through

. Flight Agreement, return on investment and depreciation

. 7

—

. seh de” il 1911

eros ‘ ‘ .

payable hy PAA to Panagra with respect fo Panagra-owned

DC-4 equipment shall be accumulated séparately for each

of the two periods; January 1, 198 through April 30, 1948;

and May 1, 1948 through December 31, 1948. All other

itemns of expense shall be payable for the year 1948 on the

accumulative basis for the entire year as is provided in

_. paragraph 17 (c) of the Through Flight Agreement.

IN WITNESS WHEREOF, the parties have caused this’.

agreement to he executed by their officers thereunto duly

authorized, onthe day and year first above written. ~

. Pan American Airways, INC.

, By /s/ KE. BaLLuDeR

Pan AMERICAN Grace Amways, Ic.

a. °* + By /s/ G.-Viwau |

[fol.1831] a

Pan American Worip Amwaysyahxc.. Exnipit 8

(Handwritten, notation—140511 Only Copy—Do Not Re-

move} A : ok * Z

~ SUPPLEMENT NO. 5

48)

“THROUGH FLIGHT AGREEMENT

2 ad ’ BETWEEN

- PAN AMERICAN AIRWAYS, INC: *

an ¢ :

“PAN AMERICAN-GRACE AIRWAYS, INC. °

= P

,. ; .

Datep May 11, 1949 ’

od ——_——_ —

1912

[fol. 1832) :

THROUGH FLIGHT AGREEMENT —

‘i. > SUPPLEMENT NO. 5

AGREEMENT made and entered into as of the 1th day

of May, 1949, by and between Pas American Airways, Ivc.,

a New York corporation, (Ifereinafter called “P-AA”), and

Pan American-Grace Agnways, Ixc., au Delaware corpora.

tion (hereinafter called." Panagra” ):

Wuereas, PAA ‘and Panagra are parties to ‘a certain

. agreement dated July 30, 1946, and supplements thereto

dated respectively May : 28, 1947, January 9, 1948, January

28, 1949, and F sbruary 9, 1949, relating to the charter #1

Panagra's aircraft to PAA for through operation on cer-

tain of PAA’s routes north-of the Canal Zone and other

matters, which agreements are hereinafter referred to as

“the Through Flight Agreement”; and

Wuereas, Panagra desires to enter into an agreement

with National Airlinés, Incorporated, a Florida corporation

(hereinafter called “National”), for the further charter to

National of Panagra’s aircraft which have been. operated

by PAA between the Canal Zone and Miami for operation

by National over National's Miami-New York route; and

‘Wuenreas, the parties desire to supplement and amend:

the Through Flight Agree ment so as to provide for such

further charter and i in | certain. other respects as hereih set

forth.

Now, THEREFORE, THIS AGREEMENT WITNESSETH ;

46. PAA agrees that Panagra’s aircraft chartered to

PAA pursuant to the Through Flight Agreement for

through operation between the Canal Zone and Miami,

Florida may be further chartered by Panagra to National’

for through operation by National over: National's Miami-

New York route upon the specific forms. and conditions set

forth in an agreement between Panagra and National being

(fol. 1833] executed simultaneously herewith (hereinafte Tv

referred to as “the Panagra- Nationa] Agreement"). . Pan-

agra does not admit that such agreement by PAA is re-

és

~ ‘3

. ein ee 1913

quired to epabkePanagra toenter inte the Panaticra- Nation: ul

Agreement,.

47. Panagra hereby constitutes and appoints BAA as .

Panagra’s agent, for the term of the Panacra- National

Agreement, to dvliver Panagra’s, airer ft to National at

Miami, for the purpose of flights over National's redite

pursuant to the said agreement amd to receive delivery of

stews aireraft from National at Miami. PAN is au

thorized as such agent, on Panagra’s behall, to reeeive cand

exevute such receipts, to perform such inspections, to make

such checks and measurements, and .te perform all such

other actssas may be néce ssary or appropriate in comnee-

tion with the delivery or return of the said airerat. In

acting as such agent with respect to the delivery of Pan

agra’s aireraft to National and the return of Panagra’-

aircraft by National at Miami, PAA shall be bound to

exercise the same and only the same degree of care a-

PAA exefeises with respect to the delivery and return of

its own aircraft under gn agreement between PAA and

National being exe Quran herewith (herein-

“— referred t. as “the \-National Agreement”).

“PAA and Panagra shall ~~ tinie to time agree im

to ae personnel to be assigned to National's airports pur:

‘suant to Paragraph 6 (b) of the PAA-National Agreement

and the Panagra-National Agreement to the end of avoid.

mg duplication of such pe ‘rsonnel!

49. The second sentence of paragraph 3 of the Through

Flight Agreement is. amended by substituting the word-

and figures “forty-five (45)" for “sixty (60)@ -

. Paragraph.10 of the Through Flight Agreement i

amended by adding at the end thereof:

“(e) PAA will furnish: Panagra With monthly reports

showing for dll sales from New York, W ashington and

fol. 1834). Miami to Buenos Aires bew many were

routed via the East Coast of South America and how

many were routed via the West’ Coast of South

America.” :

1914

51. The last sentence of paragraph 14 of the Through

* Flight Agreement is amended to read as follows: 7

? “PAA and Panagra will agree with each other (and —

with National if the Panagra- National Agreement shall

become and be effective) in advance ®n appropriate

advertising programs (including new spaper and maga-

zine space, advertising and display, piécés and collateral

material) and budgets therefor, for promoting the’

thréugh flights made pursuant to this Agreement and

the approved expense of all such advertising shall ‘be

- apportioned among them as from time to time agreed,

/ provided, howevef, that no charge shall be made. for

transporting advertising.material to the most effective

point of u use.”

52. The second sentence of paragraph 15(a) of the

_ Through Flight Agreement as amended is further amended

to read.as follows: “PA.\ shall be deemed to be in posses-

sion of Panagra’s aircraft 1) in the case of-aircraft turned

over to, PAA for operation on through flights under this.

agreement, from the time when such aircraft is so turned

-over to PAA by Panagra until the time when such air-

craft is either (i) returned by PAA to Panagra or (ii):

turned over by PAA to National for. operation by National

pursuant to the Panagra-National Agreement ° or (iii)

turned over by PAA to National with Panagres consent

for’operation pursuant to the PAA-National agreement,

in either of which. latter events the aircraft shall .again

be deemed to be in. PAA’s possession when returned to. it

by National, and.(2) in. the case of aircraft turned over

to PAA for maintenance, from the time when ‘such air-

craft is turned over to PAA at one of the latter’s mainte-

nance bases until the time when such aircraft is returned

to Panagra; except, in either case, for non-revenue or

other special flights (excluding test flights made under

[fol. 18385] PAA custody following Inayitenanc e and ac-

cording to CAA requirements) -during ‘sueh period _—

at the instance and request of Panagra”. ;

53. "Paragraph 15 of the Through *Flight Agree ment is.

further amended to include the following: “(e) In the

‘ oe 1915

event of loss or: damage. to or delay in the delivery of

‘baggage or personal effects of a passenger, or cargo, ox.

press or mail on an aireratt making-a-through flight here--

under, the party having possession of: the aireratt at the

time the loss, damage or delay occurs shall as between

‘the parties hereto be responsible therefor. In case it’ is

not possible to establish which party had possession of the

aircraft at the time of such loss, damage or delay, any

liability or expense arising therefrom shall be. shared “he

-tween’the parties in proportion to the revenue received

from the transportation of the passenger whose baggage

or personal effects shall have been lost, damaged or de-

laved or from the transportation of the Cargo,-eXpress or

mai! Which shall have. been lost, damaged or delayed, pro-

vided, however, that if any’ such flight has been operated

under the Panagra-National Agreement (including a flight

eperated with PAA aircraft at Panagra’s request) any

‘such liability or expense shall be shared in said proper-

tions among Panagra, PAA, and National or if ‘it shall be

possible td establish that one of such parties did not have

possession of the aireraft at the time of such loss, damage

>. or delay, by the other.two parties in said proportion”.

54.. Paragraph 16 of the Through Flight Agreement as”

_amended is amended ts read as follows:

“16. Risk of Loss of Aircraft.

Unléss otherwise agreed Panagra shall carry appro-

priate insurance providing againgt loss of or damage

a . .

to its aireraft or other property under charter to. PAA

_ pursuant to ‘this Agreement and Panagra will cause

PAA to be included as a party insured. Such insurance

[fol. 1836] shall hate the same coverage as is pro-

vided by Panagra for similar aircraft or other prop-

‘erty while in Panagra's possession. Panagra will ad-

vise PAA from time to time of the provisions of its>

insurance policies on such aircraft or other property

and PAX will not Knowingly operate or use the air-

craft or vthér property chartered to it in such a inan-

~« ner that Panagra shall be deprived of the benefits of

its insurance coverage. PAA shall not he liable te

1916

Panagra for loss or damage to Panagra’s aircraft or

other property while under charter to PAA pursuant

tos this Agreement, except for violation by PAA'of .

the obligations assumed by PAA in the preceding ; sen-

tence and except for any loss or damagé occasioned

_ by PAA’s use of such. aircraft or other property as

to which Panagra is unable to collect from its insurer

by reason of any franchise or deductible provisions ¢

in its. insurance policies if such loss or damage was

occasioned by the gross negligence of. PAA or its em-

= ees acting within the course of their employ ment.”

55. Paragraph 17(h) of the Through Flight Agreement

{added by paragraph 34 of Supplement No. 2) is amended

by adding the following at the end thereof:.“and in the '

case of mileage flown over the route of National pursuant

to the Panagra-National agreement will be those effective

as shown.in CAB Mileage Booklet No. 1, Airport-to-Airport

‘Mileages over Interstate Routes of Certificated Air Car-

riers, and in any revisions thereof”.-

_ 56. “Paragraph 23(e) of the Through Flight Agreement

is amended by adding at the end thereof the words: “and

the delivery of possession of Panagra’s aircraft to National

and the return of such posséssion from National pursuant

to the Panagra-N ational Agreement”. —

57. (a) All references in Annex 1A to the Through Flight

Agreement to “the charter service” shall refer only to the

. charter service operated by PAA pursuant to said agree-

[fol. 1837] ment. All references in said Annex 1A to the .

total revenue miles flown by Panagra’s aircraft or to a

revenue mile basis shall include revenue miles flown. by

‘such aircraft pursuant to the Panagra-National Agreement.

(b) Paragraph 1A1(1) of said Annex 1A is amended by

adding at the end thereof the following: “and Panagra

will cause National to advise Panagra at the close of each

month fof Ahe total gallonage delivered hy National to

Panagra-National Agreement”. se

-_«

1917

1A is amended by adding after the words “or to. Panagra’s

common carrier service” the words “or to the charter ser-

vice operated pursuant to the Panagra-National Agree-

ment” and by eliminating the last seven words of the sen-

tence and substituting therefor the words “to the service

to which they relate”.

(d) The parenthetical phrases in paragraphs TAS and

* 1B of.said Annex 1A now reading: (“except for credits

‘arising, out of charges to. PAA”) are amended «to read:

(“except for credits arising out of charges to PAA and

charges to National”).

(e) aragraph 1A4 of Annex 1A of the Through Flight

Agreement is ainended by adding thereto the following

paragraph: - .

“Tf Panagra shall base its computations of deprecia-

tion of Flight Kquipment used in the charter service on

4 residual value of such equipment which is Increased

by the amount of one major overhaul and shall make

such computations effective. as front May 31, 1947,

_PAA‘will not participate in the credits resulting froyy

reversal of the amount by which major overhaul re-

serves shall have been so increased when such equip-

inent is sold or otherwise disposed of.”

(f). The last sentence of paragre ph 2A, the last sentence

of paragraph 2B, and the tast sentence of ‘paragraph 2C of

‘ [fol]. 1838] said Annex 1A ‘are amended by addins at the

end of each setitence the words “and in the charter service

operated pursuant to the Panagra-National Agreement”. °

-(g) The first parenthetical clause in paragraph 3(1) of

said Annex 1A is amended by adding At the end thereol

the words “and less overhaul reserves against such flight

equipment computed in the manner regognized by the Civil

Aeronauties Board”. $

58. PAA agrees that at. Panagra’s written request it

"will exéreise_ its right of termination under paragraph 19.

sub-section (2), clauses, (ii) and (viy of the PAA-National -

1918. a

en Panagra agrees that a“ PAA’s written re ques t.

it will exercise its right of termination under paragraph

_ 19, sub-section (2), clauses (ii), (iii), (iv), (v), and (vi) of

‘the Panagra-National Agreerent. |

59. This Supplement No. 5 shall hecome effective only

in the event that the agreement dated May 11, 1949 be-

tween Panagra and National shall become effective, except

that paragraphs 49, 50, 51 and 53 (e xcept for the proviso

to the last sentence of the amendment tmhade therein) shall

become effective immediately and that. the: amendments.

made in paragraphs 57 (e). and (g) shal! be effective as

‘. from May 31, 1947.

IN WITNESS WHEREOF, the parties tave caused this Agree-

ment to-be executed by the officers thereunto ‘duly au-

thorized on the day and year first above written.

Pan AMERICAN ArRways, INc.

— By J.T. Trirre /s/ »

President

ahs, Paw American-Grace Airways, INc.

By Dovcias CaMPBELL ./s/

. Vice’ President and

General Manager

1919

_[{fol. 1839] . ;

Pan. American Worup Airways, Inc. Exninit 9

(Handwritten nutation—C ‘ontained herein amendine nt 1

aappeens #95]

Before the | “

CIVIL AERONAUTICS BOARD »

Docket No. 3787

In the Matter of the Application of

Pan American Worp Airways, INc.

for a modification of the Board's Order Serial No, K-570

approving an agreement between the Applicant and Pan_

American-Grace Airways, Inc. and a companion agreement

between Pan American Airways Corporation and W. R.

Grace & Co.

AMENDMENT XO. 1 TO APPLICATION ~

Communications with respect to this amend-

, ment to appli¢ation should be sent to:

Henry J. FRrenpy

Vice President & General ¢ ‘ounsel

Pan American World Airways, Inc.

135 East 42nd Street.

New York 17, N. Y.

>» Steptoe & Johnson

_ Of Counsel for Apphecant

. 1139 Shoreham Building

EP Washington 5, D. C.

*. Dated: April 25, 1951

a New York, N. Y.

1920

(fol. 1840] 2 |. ,

wel ee Before the | :

'* CIVIL AERONAUTICS BOARD

Pe Docket No. 3787.

_ In the Matter of the Application of

Pan American Worvp Airways, [xc.

for a modification of the Board’s Order Serial, No.’ E-570

- approving an agreement between the Appliednt and: Pan

_ American-Grace Airways, Inc. and a companion agreement

between Pan American Airways. Corporation and W. R.

; Grace & Co.

es en en NO. 1 TO' APPLICATION

PAN AMERICAN WORLD AIRWAYS, INC. (herein

called “PAA”) hereby presents this Amendment No. .1 to:

@: application herein:

1. In the application herein verified May 11, 1949, PAA

- prayed that the Board make and enter an order modifying

order Serial No. E-570 so as to extend to July 1, 1960, or

to such ‘later date as the Board might determine, the

. Board’s approval of the Through Flight Agreement dated

July: 30, 1946, between PAA and Pan American-Grace Air-

+ WAYS, Inc., a Delaware corporation, of Suppleinents Nos.

1 to 5, inclusive, thereto, and:of an agreement dated July

30, 1946 between Pan American Airways Corporation - (a

Delaware corporation, tu the rights and liabilities of which’

PAA has since succeeded) and W. R. Grace & Co., a Con-

necticut corporation.:

2. By Order Serial No. E 4130, the Board extended its

approv al of the two agreements dated July 30, 1946, until

such time-as the Board entéred an order approv ing or dis-

apyiroy ing the application of PAA herein.

- [fol. 1841] 3. By Order, Serial No. E-4575, the Board ap-

proved certain amendments to the Through Flight Agree-

1921

-.*

—_—

ment unti} such time as the Board entered an order approy-

ing or disApproving the application ‘of PAA herein. The |

* amendments so approved did not include Supplement No. D

(CAB File No. 727 A-6). é .;

4. It appears from the atfached copy of a letter dated

April 25, 1951, from PAA to Pan American-Grace Airways,

Inc., that because of the repudiation by National Airlines,

Inc., of an agreement between said National Airlines, Ine.

and PAA dated May 11, 1949 (approval of which agreement

had been sought in Docket No. 3786) and the dismissal by

the Board of the said Docket No. 3786 and of an applica-

‘tion for approval of an interchange agreement between"

National Airlines, Inc. and PAA, (Docket No. 37809), Sup-

plement No. 5 to. the Through Flight Agreement will not

become effective, except in respect of paragraphs 49,. 50,

- 51, 53 (except for the proviso to:the last sentence of the .

amendment made therein), and 57 (e) and (4). PAA, there-

fore, withdraws its application herein for approval of said

Supplement No. 5 to the Through Flight Agreement except

for those portions thereof indicated in the preceding sen-

tence.

5. Since the Board's Order Serial No. E-4575, PAA has

entered into Supplements Nos. 8 and 9 to the Through

Flight Agreement which have been filed as .Agreements

CAB Nos. 727 A-9 and 727 A-10. .

WHEREFORE, PAA amends the prayer of its applica-

tion herein so that the same shall request the Board to

make and enter,an order moditving order Serial No: E-570

so as to extend to July 1, 1960, or to such ‘ater date as the

Board may deterinine, the Board's approval of the Through

Flight Agreement dated July 30, 1946, of CAB Agreements

Nos. 727, 727A, 727 A-2, T27 A-3, 727 Act. 727 Ah so

much of 727 A-6 as is contained in paragraphs 49, 50, 51,

[fol. 1842} 53 (except for the proviso to the last sentence of

the amendment made therein) and 57 (e) and (g), 727 A-7,

797 A-S8, 727. A-9 and 727 A-10, and of the agreement dated

\ 1922,

. July 30, 1946, between Pan American Aifways Corpora

tion and W. R. Grace & Co. ‘

Respectfully submitted,

Pan Americas Wortw Atrways, Ixc.

By /s/ J. T. Tripre

J. T. Trippe,

, President:

. Dated, April 25, 1951.

[fol. 1843)

STATE OF NEW YORK . )

) 8s.:

COUNTY OF NEW YORK )

J. T. TRIPPE, being. duly sworn, deposes and says that

he is President of Pan American World Airways, Inc., a

New York corporation; that he is duly authorized to sign

the foregoing application and has read and is familiar with

the contents thereof: that he intends and desires that in

granting or denying the prayer of said application, the |

Board shall place full and complete reliance upon the ac-

curacy of each and all statements made therein; that he is

familiar with the facts set forth-in said application, and

to the best of his information and belief every statement

made therein is true, and no statement is mislead'ng.

/s/ J. T. Triere

J. T. Trippe

Subscribed and sworn to before me

this 25th day of April, 1951. .

/s/ Ema F. Rany .

Emma F. Rahn

Notary Public, State of New York

No. 41-8483200

alified in New York County

Queens, New York County Clerks

Queens, New York Cotinty Register’s Office

Term expires March 30, 1952.

NOTARIAL SEAL

. 1923

Pax Amertcas Wort» Amways, Isc. Exuert 10

TUROUGH FLIGHT AGREEMENT—

SUPPLEMENT NO. 6

THIS AGREEMENT, made this 18 day of October, 1949,

-by and between PAN AMERICAN ALRWAYS, INC, a

New York corporation, hereinafter called “PAA®, and

PAN AMERICAN-GRACE AIRWAYS, INC., a Delaware

corporation, hereinafter called “Panagra”,

WHEREAS, PAA and Panagra are parties to a certain

agreement dated July 30, 1946, which agreement has been

‘supplemented and amerided by Supplement No. 1 dated

May 2X, 1947, by Supplement No. 2 dated January 9, 1948,

by Supplement No. 3 dated January 2, 1949, by Supple-

nent No. 4 dated February 9, 1949, and by Supplement No.

5 dated May 11, 1949, said agreement as so supplemented

and amended being hereinafter referred to as the “Through

Flight Agreement”; and |

WHEREAS, the parties desire further to supplement

and amend the Through Flight Agreement as herein set

forth, with a view to saving executive, accounting and

clerical expense in connection with ealculation and auditing

* of ceriain payments provided for in the Througlf Flight

Agrecment;

NOW. THEREFORE, THIS AGREEMENT WIT-

NESSETH:

60. The amounts.payable by “Ranagra to PAA which

are referred to in the provisions of Annex 2 of Supplement

No. 2 to the Through Flight Agreement mentioned below

‘ shall be determined as follows: |

(a) The payment referred to in subsection (*) of

section 3 of paragraph A. of said Annex 2 in respect of

work done’at Miami darirg the ealendar year 1949 shall

be an amount equal te 210° of the direct labor charges

to Panagra for maintenance and overhaul of Pan-

agra’s flight equipment at Miami pursuant to para-

1924

graph 7 of the Through Flight aeaihien during the

year 1949.

_ (WB) The payment referred ..to in paragraph B. and

section (b) of paragraph C. of said Annex 2 shall

[fol. 1845] (i) for the year-1948 be an amount équal to

35% of the amounts billed by PAA to Panagra for

Flight Equipment Spare Parts and Assemblies

_(FESPA)*utilized during 1948, and (ii) for the year

7 _

1949 be an amount equal to 30% of the amounts billed

by PAA to Panagra for FESPA utilized dyring 1949."

The FESPA referred to in this subparagraph (b) to

which said percentages will be applied shall include

only FESPA used by PAA in connection with main-

- tenance, conversion and modification of Panagra’s air-

craft, engines, and other flight equipment, it being spe-

cifically understoced that it shall not include FESPA

issues to Panagra line stations or FESPA classified

as component parts which are handled on a free ex-

change basis, but shall include FESPA used in repair,

overhaul or maintenance of sych compgnent parts or

in replacing non-repairable componcnts.. Any return

of FESPA to inventory, as well as any adjustment in

cost, will be reflected in an adjustment in the amount

payable hereunder, such adjustment to be applicable

to the period when such return to inventory or. adjust-

ment in cost takes place.

-‘*(e) of paragraph.C. of said Annex 2 for the year 1949

in respect of work done at Miami shall be an amount

equal to 1714% of the direct labor charges to Panagra

for maihtenance and overhaul of Panagra’s flight

equipment at Miami pursuant to paragraph 7 of the

Through Flight Agreement during the year 1949.

(a) The parties wili consult as soon as practicable i ing

1950, and each vear thereafter while the Through

’ Flight Agreement continues in effect, with a view to

fixing the basis for determining the amounts of the

paymeuts referred to in the provisions of said Annex

2 menthgned above. In the event that the parties shall

not have agreed on or before the first day of April of

any year as tothe basis for such determination for the

current year with respect to,any of said provisions and

said date shall not have been extended by mutual agree.

[ fol. IS46] ment, the pay fnts. under the provision or

provisions as to which agreement is not reached shall

‘be determined for such year in accordance with the

provisions of Annex 2, w ithout regard to the foregoing

provisioris of this Sup ple ment No. 6.

“IN WITNESS WHEREOF, the parties have: pane this

, agreement to be executed by their officers thereunto duly

* authorized, on the day and year first above written.

Pan Americay Airways, Ic.’

By /s/'E. BALLUDER

: - Vice President

Pan Asewescsshtbiais Airways, Inc.

By ./s/ Doveias CaMPBELL

Vice President -

{fol. 1847]

THROL Gu FLIGHT AGREEMENT—

; “SUPPLEMENT NO. 7 —

THIS AGRE PMENT, made and entered into this 31st

day of January, 1950, by and between PAN AMERICAN

WORLD AIRWAYS, INC, a New York corporation - (the ,

corporate none of which was, formerly “Pan American Air-

ways, Ine.”), hercinaiter called “PA A‘. and PAN AMERI-

CAN-GRACE AIRWAYS, ING, a Delaware corporation,

hereinafter called “P anagra”

WHEREAS, PAA and Panagra are & parties to a certain

agreement dated. July 30, 1946, whiel, agreement has been

_ supplemented and aniended Ly Suppleme nt No. 1 dated

_ May 28, 1947,.by Supplement No. 2 dated Janiary 9, 1948,

| “er | ;

A , ,

° . *

A :

19296

, ; : “1 2 r '

by Supplement No. 3. dated January 28, 1949, by Supple- Ts

ment No. 4 dated February 9, 1949, by Supplement No.-5

dated May 11, 1949} and by Supplement No. 6 dated Oc-

tober 18, 1949, said agreement as so supplemented and

a amended being hereinaftgr referred to as the “Through

bist Agreement” ; and

WHEREAS, the parties desire to oo. ro and amend

” the Through Flight Agreement as herein set. forth:

NOW, THEREFORE, THIS AGREEMENT WIT. b

NESSETH: © > ,

v 61. The following schedule of. rates for pone to Pan-

’ agra pursuant to paragraph 8 of the Through Flight Agree-

ment for training is hereby substituted for the schedule of

rates set forth in paragraph 44, effective as of January 1,

1950:

an ; davaanal and

; Scholl —. ; Affiliated Companies

Miami—Ground Training. - $ 1.7317

Miami—Link _ . es 10.6945

Miami—Pilot 29.0495

_ Atreraft Type Hourly

, .DC-3 Aircraft 96.4380

DC4 Passenger _ 186.5386

DCA Cargo ? 172.3714

_ [fol. 1848] IN WITNESS WHEREOF, the parties have

- caused this agreement to be executed by their officers there-

unto duly authorized, on the day and year first above writ-

ten.

Pin AMERICAN Wortp Amways, Inc.

By /s/ E. BaLLLUDER

Pan American-Grace Airways, Inc.

By /s/ G. Var 4 . é,

[fol.1849} ee |

Paw American Wortp Arrways, Inc. Exuisir 12

iy [Handwritten hotation—1403.1]

| . C

set eaied yt O

ry P ae .

THROUGH FLIGHT AGREEMENT—

SUPPLEMENT NO.8 ;

1950, by and between PAN AMERICAN WORLD AIR-.

- WAYS, INC., a New York corporation, fereinafter called

““PAA” and PAN AMERICAN-GRACE AIRWAYS, INC,

a Delaware corporation, hereinafter called “Panagra”,

WHEREAS, PAA and Panagra are parties to a certain

‘agreement dated July 30, 1946, which agreement has been

supplemented and amended by Supplement No. 1 dated May

28, 1947, by Supplement No. 2 dated January 9, 1948, by

Supplement No.-3 dated January 28, 1949, by. Supplement

No. 4 dated February 9, 1949, by Supplement No. 5 Gated

‘May 11, 1949, by Supplement No. 6 dated October 18, 1949,

and by Supplement No. 7 dated January 31, 1950, said agree-

ment as so supplemented and amended being hereinafter

_ referred to as the “Through Flight Agreement”; and |

and amend the Through Flight Agreement as herein set

forth, with a view to saving executive, accounting and cleri-

cal expense in connection with calculation and auditing of

eertain payments provided for in the Thrangh Flight Agree-

ment: ie

NOW, THEREFORE, This Agreement Witnesseth:

62.. The following paragraph’ is hereby substituted for

paragraph 17(c) of the Through Flight Agreement, effec-

' tive for the pe "iod commencing on the date of this Supple-

ment No. 8 and terminating on the date this paragraph 62

cease: to be effective’as hereinafter provided :

- "4998"

: X .

“(e) Each of the parties will render to the other. as

_ Soon as practicable after the end of each calendar

month bills for the payments due pursuant: to the

Thrqugh Flight Agreement with,respect to such month.

All such bills will be paid on gr before the fiftebnth

day after the close of the montl\to which such bills re-

late or on or before the fifth day‘after receipt of such

- bills, whichever is later.’ In the event payment of any

‘such bill is delayed beyond the time specified in the

preceding sentence, the amount due thereon shall be -

increased for each day of such delay by an amount which

beargthe same ratio to.one-thirtieth of the total amount

of the return on working capital hereunder for such

month to the party to which payment’ is due. (com-

[fol. 1850] puted in accordance with the rates shown in -

paragraph 67 hereof or in Apnex 1-B, whichever is ap-

plicable) as the amount due on such bill bears to the

total amount due on all bills rendered by said party

‘ ‘under the Thrdugh Flight Agreement for such:month.”

- 63. Annex 1-B attached hereto and made a part erect

is hereby substituted for ‘Annex 1-A to the Through Flight -

- Agreement, effective for the period commencing on Janu-

ary 1, 1950 and termirating on the date this paragraph 63

ceases to be effective as hereinafter provided.

64. In the event that thére shall be an adjustment in

Panagra’s hull insurance expense for any period after Sep-

. tember 30, 1948, to reflect Panagra’s actual, experience for

such period, there shall be a proportionate adjustment in |

the amount charged to Pan American pursuant to the

Through Flight Agreement in —— of hull insurance for

such period.

65. Section A of Annex 2 yr Supplement No. 2 to the.’

Through Flight Agreement is amended by adding the fol-

lowing at the end of said Section A, effective for the period

commencing on January 1,. 1950 and terminating on the

date this paragraph 65 ¢ ceases to be effective as hereinaft ter

ee »

) The costs payable by Panagra to PAA referred

“3 i subsections (1)," (2) and_(3) of this — Ai in

~ >

Dae ; :

1929

respect of work performed at* Miami shall be ten?’ ;

mined on the basis of applicable prices in the currently

effectiv e quarterly oflicial price lists for such work is-

sued by Pan Amefican ‘World Airways, Ine., Latin -

American Division. The official price lists referred to

in this subsection (4) relating to the first, second, third

and fourth calendar quarters of the calendar year 1990

are attached hereto, marked Exhibit A, January-March,

1950, Exhibit B, April-Jtine, 1950, Exhibit C, July-

September, 1950, and “Exhibit D, October-December,

»0, respectively, and made a part hereof, and are

- hereby accepted by Panagra, The prices set.forth in the

official price lists referred to'in this subsection (4) shall

be adjusted retroactively to reflect any change in pay

scales provided in any collective bargaining agreement

With employ ees which affects the cot of. work to which

such prices relate. The prices set forth in such price

list for overhauls include labor and overhead appro-

priate .to the area or services specified in

such price lists, and affy work or services in addition

to, or differertin natu@® or extent from, the work’and

[ful. 1851] services so specified, which shall be re-

quested by Panagra i in writing, whether normally con-

sidered as involving direct-labor.or as beg included

_ only jn overhead, will be chargéd for sep rately either

_in accordance with such price lists or, in no price

therefor is set forth therein, at prices to “mdgotiated

at the time.such work is requested. Suth prices will in-

clude overhead where appropriate.. Such additional

work or services are in the nature of, but not limited to,

the followi wipe types Of services:

(1) Aireraft and Tadio engineerimg sefvices over and ~ | °

above the requirements of the Miami Overhaul Base

maintenance, overhaul and repair functions.

(2) “Laboratory fuel and oil sampling ‘and other test-.

ing or-research services.

(3) Flight and crew scheduling services applicable to

Panagra’s certificated routes.

* - jimits own service and in

1930.

(4) First aid, inedical service and phy sical examina-

tions furnished to. Panagra employees or applicants.

(5) Civil Aeronautics Authority —— handling

services. 3

(( ) Packaging, dnnteins and shipping services to ful-

fill the requirements of ‘Panagra, such clearance and:

shipping services tobe charged for in accordance with

purchasing and shipping agreement dated J aly: 14,

1948. ”

66. The provisions of dimiumiiaie (b) ‘ebbeto of

paragraph 60 of the Through Flight Agreement applicable

to the year 1949 shall continue in eff :t for the period. com-

mencing on January 1, 1950 and ending on March 31, 1950.

67. Effective as of April 1, 1950, the amounts pavable by

~ Panagra to'PAA which are referred to in paragraphs B

and C of ‘Annex 2 of Supplement No. 2 to the Through

Flight Agreement shall be determined at the following rates

per revenue mile for each revenue mile flown by Panagra

€ service of others, except revenue

miles flown pursuant to th Qhrough Flight Agreement over

the routes of PAA: :

[fol. 1852] a

- ‘ Cents'per Cents per

revenue mile revenue mile

flown with . flown with

« DC-4 aircraft DC-6 aireraft

Retufn on Investment Working. 7 ou

Capital 0.43 ¢ 0.52 ¢

vestmient in prepaid rent and - ;

deferred shop burden) _—_ 1.08 1.54 ,

Flight Equipment Spare ae |

Parts and Assemblies 1.97 1.89 y

Depreciation on Flight Equip-

ment Spare Parts and As-.

‘semblics 4.62 . 1,85-.

1931

68. The prices s ang cha: ‘ces provided for in paragraphs |

65 and 67 and in Annex 1-B hereof ‘shall be — to re-

view and ‘change as follows: a

(a) PAA shall furnish to Panagra the official price

list referred to in paragraph 65 tor each calendar quar-

ter before the beginning of such quarter, and if Pan-

agra shall not have given Pz AA written notice of

objection thereto within a period of three (3) weeks

commencing on the first day of such calendar quarter or

within such longer period as may be mutually agreed

‘upon, said price list. shall be effective for the purposes

of paragraph 65 hereof as of the first day of such c: ul-

endar-quarter. In the event*Panagra shall give written

notice of objection to said price list within the period

specified in the preceding sentence, billings and -pay-,

ments shail be tentatively made in accordange with the —

prices in the price list last agreed upon, uni such time

as all prices in the price list shall have been*8ettled for

the. period.in question, at which time the tentative bill-

ings and payments shall be adjusted in accordance with

the prices so settled. .

(b) The charges provided for in Annex 1-B and

paragraph 67 hereof shall be subject to review at six

months’ intervals, on a prospective is, such re-

views to be for the six months’ periods commencing with

- April 1 and October 1 of each yeas, starfing with Octo-

ber 1, 1950: The parties will consult as early as prac-

ticable prier to the end of each such period with a view

: ~~ to fixing such charges -for the ensuing six months’ pe-

riod, and. the charges when agreed upon betaveen. the

parties ‘shall be effective as of the be ‘ginning of such

[fol. 1853] ‘six months’ period. In the event that the

parties are unable to agree before the first day of any

such six months’ period, or any suchi later date as may’

be mutually agreed upon, as to the charges for sue h

period under Annex 1-B and paragraph 67, billings and

-payments shall be tentatively made in accordance. with

the prices last agreed upon, until such time as all prices

shall have been settled for the period in “question, at:

199. «A ea

which time. the tentative billings ond shymiddis shalt be

adjusted in accordance with the prices so settled. Any

change agreed upon in the charges provided for in|

Annex 1-B or paragraph 67 will be reflected in an ap-

Broperate amendment to the Through. Flight aoe

ment.

(c)- ~ the event the parties are ‘tnable to agr

the price list or charges within: the respective tives

‘ specified in subparagraphs (a) and (b) of this para-

graph 68, paragraphs 63, 65.and 67 of this Supplement

_ No. 8 shall cease to be effective as of the last.date on.

‘ which agreed price lists and charges were both in effect,

and payments for the period thereafter shall be de-

*‘termined in accordance with the provisions of the

. Through Flight Agreement without Lan se pro-:

visions.. In such’ event, billings shall be cumulative

_ from the date said provisions cease to be effective to

the end. of the then current year, and thereafter in |

accordance with Paragraph 17 (c) of the Through i a

Agreement. |

| IN WITNESS WHEREOF, the parties have sieged tts

agreement to be executed by their officers thereunto duly

en on the day and year above written. |

Pan AMERICAN Wort» AIRways, Inc.

By. /s/ E. BALLUDER

Vice President

| Pax AMERICAN-GRACE AIRWAYS, Inc.

By /s/K.A.LawpeR —~ ~

_ Vice President

| “a rs Abie 7 | ‘

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