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Aviation History
1925
1925 - 0858.PDF
DECEMBER 31, 1925 IMPERIAL AIRWAYS, LIMITED THE first Ordinary General Meeting of Imperial Airways, Ltd., was held on December 29, the Rt. Hon. Sir Eric Geddes, G.C.B., G.B.E. (Chairman of the Company) presiding. In his opening remarks Sir Eric reviewed the circumstances pre- vailing at the time of the formation of the company, and the work which had since been done. He emphasised the fact that four organisations had to be welded into an efficient single organisation ; repair shops and stores were centralised, the additional expense being considerable until the concen- tration was accomplished ; new maintenance and overhaul schedules had to be prepared and the combined staffs instructed in the new system and improved ; in fact, their first year's work could not be regarded otherwise than as the experimental period in the history of the company. The year also started with regrettable and serious labour troubles, which had very adverse effects on operations. Nevertheless, during this first year they obtained data which would enable them to pursue a prudently progressive policy. Turning to the balance-sheet, on the assets side aircraft and engines were shown at cost, as fleet of aeroplanes, their engines and spare engines had to be maintained at the highest efficiency and could not be allowed to depreciate. The only provision necessary was for obsolescence, for which a reserve of Z22.998 Is. 3d. was made. Ample provision for deprecia- tion had been made in respect of premises, plant, tools, etc., the plant including the most modern equipment for testing engines under even more stringent conditions than if a flight test were made. This equipment would be extended to carry out the same kind of tests for air-cooled engines which were being installed in some of the modern aeroplanes under construction for the company. It was expected that this type of engine would produce economies in maintenance costs. Stores and spare parts had been valued at or under cost. Sundry debtors appeared high, owing to an instalment of subsidy falling due after the close of the year, and the small reserve made for doubtful debts had proved unnecessary. The liquid cash position was good, and ca-sh and investments totalled ^155,781 12s. (equal to As. 5id. per 10s. of paid-up share capital). Thus, the sundry debtors would more than have paid the creditors and sundry outstandings, and from this they might seek some measure of reassurance. The trading and profit and loss accounts were affected mainly by three items, maintenance and overhauls, obsoles- cence, and insurance. Ordinary depreciation and maintenance had cost over /63.000. Of this figure no less than /61.712 4s. 1 Id. represented the cost of maintenance and overhauls. It seemed a high price to pay for maintenance, but not if they put safety and reliability first. The problem of maintenance was receiving very earnest attention, and whilst safety would be maintained, the costs would have to be brought down. It was satisfactory to know, said Sir Eric, that they were operating as economically as any other civil aviation undertaking, as was confirmed by Sir Samuel Hoare. The solution of these high costs of maintenance lay in simplification and standardisation of designs, in the use of metal alloys for aeroplane components hitherto made of wood, in research into the causes of fatigue in metal parts of aeroplanes and particularly engines, and in an increase in the paying load capacity per horsepower employed, so that the greater potential earning power of the aeroplane would compensate for the necessarily high costs of inspection, maintenance, and overhauls. Referring to the question of obsolescence, which was mainly a question of policy, Sir Eric referred to the fact that when the company was formed there were no aeroplanes which could be flown profitably on regular services unless every mile flown was subsidised, although certain types approached the profitable stage. During the past 18 months new- aeroplanes had been designed which, owing chiefly to their increased carrying capacity, were really capable of commercial development—they had the advantage of a greater margin of safety in that they had greater power and had two or three engines. On the grounds of safety and progress the board adopted the policy of replacing as early as possible with these modern aeroplanes certain other aeroplanes which were not capable of development, although they had not depreciated in the ordinary commercial sense of the word. Regarding aviation insurance, this was high during the year owing to the limited amount of business. Economies had been made under this heading, and the rates for later "•'. types of aeroplanes were lower. Bearing in mind that flying way carried out during only ten months of the year, the traffic carried showed a steady growth. The London-Paris service carried the greatest traffic and was maintained throughout the year. The London-Ostende-Brussels-Cologne service was well patronised and was duplicated throughout the summer. The London to Berlin service, via Amsterdam and Hanover, was started in June, and connected at Amsterdam with air lines to Scandinavia and certain principal towns in Germany. Over 825,000 miles were flown, 11,000 passengers and 600 tons of goods and mail were carried on these routes. Turning to the subject of advantageous routes and how to attract increased traffic, Sir Eric pointed out that regularity and reliability were the first considerations. These he expected to increase when the new types of machines came into service. The worst conditions under which to attract traffic were in competition with highly developed express train services, and the best conditions were over long distances with less highly developed competition from land or sea services. Lighted air routes, and appliances for flying and landing in foggy weather, would greatly advance commercial flying. As regards future development, Sir Eric called attention to the advantages of long routes, and said that the very name of the company implied that they would not be justified in confining operations to short European routes. Acting with this object in view, they had looked farther afield, and an agreement had now been made with the Air Ministry for the company to maintain an air service between Egypt and India, the termini being at or near Cairo and at Karachi, in India. The distance was approximately 2,500 miles, and the saving of time would be measured in days, not hours. India would be brought nearer to England by five days, with a possible saving of ten days in the time taken by a return letter. When the route was equipped for night flying, the saving of time would be increased. Aeroplanes and engines must be designed and built, hangars erected, and ground organisations provided, and an air line of this size could not be commenced without months of preparation, but they confidently hoped that the first aero- plane would leave Cairo for India not later than January 1, 1927. The agreement with the Air Ministry under which the company would receive an annual subsidy of £"93,600, was for five years, and the Government was to provide aero- dromes, hangars, and other accommodation. The service was to be run with threc-engined machines capable of main- taining their requisite height in flying on any two engines, thus materially increasing the reliability of the service. The route had been surveyed and the estimates had been most carefully checked on the spot, and it was believed thai with this subsidy and other assistance the service could be run profitably as a part of the whole organisation. They must build prudently and cautiously in these matters. At present they flew regularly to Basle and Zurich, and, looking to the future and proceeding step by step with caution, they hoped that a fast connection, mainly by air, between Basle and Cairo, might be possible, thus enormously increasing the saving of time between London and Karachi. If on this Cairo-Karachi venture they could prove relia- bility and punctuality, the possibilities opening for civil aviation would be great, and extension to Bombay and Calcutta would be justified, based on saving of time alone. In years to come they might fly regularly to Rangoon, Singa- pore, and even beyond. Concerning the new subsidy basis, Sir Eric said that the position might be summarized by saying that, though the company could have performed its strict obligation and earned its subsidy by flying small machines for the million miles per annum, this would not have served the national purposes for which the subsidy was granted. The small aeroplanes were not capable of great development for transport services, but looking at the position from a purely financial view, the company would not have been justified in using the larger aeroplanes, although these were the type most suitable. The modification in the agreement to which reference had been made encouraged the use of a truly economical aero- plane unit, as opposed to the aeroplane which was merely cheap to fly. In conclusion, Sir Eric Geddes paid a tribute to the staff, notably to the pilots of Imperial Airways. They did not start very happily, but he was glad to say that the present relationship between the staff and the management was good. The retiring director, Sir Samuel Jnstone, was unani- mously re-elected. 858
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