# Transcript of Record — Pan American World Airways, Inc. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386410_0138%3A05 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1963 - **Citation:** 371 U.S. 296 ## Text TRANSCRIPT OF RECORD | Supreme Court of the United States OCTOBER TERM, 1962 No. 23. a 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 ’ - 1849 1872 TAS3 189] 102 1903 Print 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 © World Airways, Inc. and 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 *t 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 el 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 e 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 _... 2 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 Print >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 Ws 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/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 i Volune } 4/22/Su id Date Filed , CAB CAP_No. A /s/ub 727 5/28/%7 , Wb/i8 21-4 | 2/18/u9 727-h/'s © 2/18/19 —-727-A/5 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 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 a3 1853 , Date Order CAB No, Appv 1. No. 6Th-k/? 11/7/52. E tah convenience. _ Sincerely yours, ; /s/ R. C. Suraver ’R: C. Shrader Vice President—Operations 3185 : mae — PAA-5861 * ane . : a my %% *] [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, J . - 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 * a iy — 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 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 ~ , eS 1868". 4 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. (c) Panagra’s right to utilize the word “Pa aagra” = & 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 sv 1878" 3 e w (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. . ; (c) All references to flight equipment in this agreement .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 : o 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. os 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 * 6 d- ~~ 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. Cc [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. a 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 io {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 / ’ f 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 *) SL [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 a. 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? ( . YY 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: - » ma % 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.” Os ~«- 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- s@ 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 9 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 4 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. o (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. (c) Insurance—public liability, propert} @amage and 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 © and stores departments: (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 ; (c) The route mileages applicable in (a) and (b) above 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. a 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 y 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 os . 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- P “— 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 i ? “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- "i 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 Pa ~ 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’ aircraft, classified By aircraft types, under the © Panagra-National Agreement”. se -_« 1917 (c) The last sentence of paragraph LAS of said Annex 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 . wt Pd 7 \ 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 ertificates filed with: © ~ Queens, New York County Clerks Queens, New York Cotinty Register’s Office Term expires March 30, 1952. NOTARIAL SEAL . 1923 | fol, 1844) © ° . 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 amen [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386410_0138%3A05. Public record. Not legal advice.