North & South Merger

Like the birds, vacationers fly south in the winter and north in the summer. No one follows their flight more closely than National Airlines President George T. Baker. His passenger traffic reaches a peak in winter on its main-line run from New York to Miami, but it slumps during the summer. Last week Baker made a deal to give National a big payload the year round and move it up from tenth to eighth largest U.S. airline. (It ranks an estimated fifth in net operating income among domestic airlines.) National will buy Colonial Airlines for $7 million worth of stock ( 7/8 of a share of National to be exchanged for one share of Colonial), subject to approval by CAB and the stockholders of both lines.

Colonial's biggest business is in summer over its northern routes (see map). By merging, the lines would feed passengers into each other all the way from Havana, Cuba, equalize year-round traffic. CAB will probably approve the deal since it has been prodding Colonial to merge with another airline as a way out of its troubles. In 1951, Colonial pulled out of the red for the first time in five years with the help of a $13-per-ton-mile payment for carrying air mail v. 54-c- per ton mile to National operating on more profitable mail routes. It had still other troubles. Last summer, CAB charged Colonial President Sigmund Janas with 40 violations of its rules (TIME, July 2). Janas resigned, was charged in Canada with illegal currency speculation and by New York's U.S. Attorney of falsifying records of $69,000 in Colonial funds.

But Baker thought he could afford to take over Colonial--troubles and all--to get its air routes. After a six months' strike of his pilots almost forced National out of business in 1948, Baker pulled the line out. Last year, National turned in a profit of $548,000. In the year ending June 1951, Baker boosted the profit to a record $2.6 million.

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