Opinion ID: 296613
Heading Depth: 2
Heading Rank: 1

Heading: Readjustments or Reestimates of

Text: Southern's Earning Capacity 14 The original idea of the Board was that an extension of Southern's system to Orlando and Miami would be profitable and would therefore reduce Southern's subsidy requirements, an estimable objective. However, these predictions of profitability were not borne out in the hearing before the Examiner. He found that the Atlanta-Miami route would increase Southern's subsidy need by $425,000 and logically he denied this route to Southern. 14 He also found that the Birmingham-Miami route would create an operating loss of $29,000 and require even more subsidy, hence he conditioned his award of this on Southern also obtaining the Miami-Key West route. 15 The Examiner found that the unrestricted Mashville-Chattanooga-Atlanta route would increase Southern's operating profit by $200,000. 16 15 In argument before the Board, various parties challenged the figures as erroneous. Southern in its brief to the Board recomputed its traffic forecast on the basis of estimates for the year 1970, figures for a period which had not been used by the Examiner and which were available for use comparatively by no other party. One airline, Southeast, moved to strike the 1970 estimated data or alternatively to remand the case for reopening of the record, a position supported by Delta. 17 Delta argued that at least four adjustments must be made to the Examiner's 1969 review forecast for Southern, any of which would have eliminated operating profit. 18 The Board never ruled on Southeast's motion, nor did it specifically meet Delta's and the other parties' challenge to the accuracy of the Examiner's prophecy of Southern profits. 16 The Board started afresh, and first it cast aside one reed of support the Examiner did have. The Examiner had stated: 17 The prior conclusion that Southern could operate at a modest profit between Birmingham and Key West is predicated on the assumption that it would be the sole certificated carrier operating in the Miami-Key West market. 19 18 The Board gave Southeast the Miami-Key West operating authority, 20 and then rejected the Examiner's conclusion that Southern would incur a loss: 19 We do not accept this conclusion, nor the financial forecasts upon which it was based. Instead, we have reviewed the markets concerned and find that Southern can achieve an operating profit of over $700,000 and a subsidy need reduction of approximately $50,000 in 1970. As indicated in detail in Appendix A, we have used 1970 as the forecast year, increased revenues by 15 per cent for on-line connecting traffic, and employed various standard techniques to determine stimulation and participation. 21 20 The source and reliability of the calculations used by the Board were nowhere demonstrated.