{"response":{"docs":[{"id":"delta_wal-ar_wal-ar-1955","title":"Western AirLines Annual Report 1955","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1956-02-10"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western AirLines Annual Report 1955"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1955"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1955"],"dcterms_temporal":["1955-01-01/1955-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"G)[iQ[iQQOGJ  [?@[;)[?[? \nIi \n the year in brief ... \nSeat miles produced ............................. . \nSeat miles sold ................................. . \nPassengers carried .............................. . \nTotal operating revenues ......................... . \nOperating income ............................... . \nNet income ................................... . \nDividends paid ................................. . \nCommon stock outstanding ....................... . \nIncome per share ............................. . \nDividends per share ........................... . \nCash and U.S. Government securities ................ . \nWorking capital ................................ . \nInvestment in property and equipment. .............. . \nLong-term debt ................................ . \nTotal shareholders' equity ........................ . \nShareholders' equity per share ..................... . \nNumber of employes . ......... . ................. . \nWages and salaries paid .......................... . \nCOVIR \nMajestic surf of the Pacific Ocean is one of the most inspirinR scenes in \nthe wonderland served by Western Air Lines. (Photograph hy Don \nKnight, courtesy of Pictorial California.) \n1955 \n870,596,000 \n514,677,000 \n1,092,578 \n$ 31,039,523 \n4,033,346 \n1,981,685 \n667,391 \n743,463 \n2.67 \n0.90 \n$ 5,943,898 \n2,783,613 \n23,377,936 \n3,484,307 \n$ 12,429,987 \n16.72 \n2,130 \n$ 11,057,216 \n1954 \n721,255,000 \n402,255,000 \n834,910 \n24,480,779 \n1,975,676 \n1,458,699 \n429,277 \n716,213 \n2.04 \n0.60 \n3,949,365 \n1,489,717 \n23,468,369 \n3,754,918 \n10,786,153 \n15.06 \n1,864 \n9,239,386 \n lhe president's letter  \nto shareholders, employes, customer's and friends: \nIn its thirtieth year of continuous operation in serving the West, the nation's \nsenior airline achieved new heights of financial success, route development and \nstature as a major regional air carrier. \nNet income for 1955 amounted to $1,981,685, or $2.67 a share, compared \nwith returns for the previous year of $1,458,699, or $2.04 a share. \nTotal operating revenues reached the highest peak in three decades at \n$31,039,523, an increase of 27 per cent over 1954's record level. \nDuring the year, shareholders received four regular and two extra dividends, all \nof 15 cents a share, for a total dividend distribution of 90 cents a share. \nSubstantial progress in the company's program of strong regional route devel- \nopment was won in a key Civil Aeronautics Board decision granting Western \nauthority to inaugurate competitive air service over the popular route linking \nSan Francisco-Oakland with Denver, via Reno and Salt Lake City. \nIn 1955, the company enjoyed the first full year of operations based on its new \nDC-6B fleet. These planes have proved ideally suited to Western's 5,525-mile \nsystem and are the keys to airline service judged by experts as \"second to none'.' \nDelivery of 13 additional DC-6Bs in the next 19 months will provide the com- \npany with a completely modern fleet of aircraft for service between principal \ncities of the West. \nWestern's progress during 1955 accurately reflected the general prosperity \nenjoyed throughout the nation during the greatest business year in U. S. history, \nand it was accelerated by the unique dynamics of western growth and development. \nYour attention is invited to the detailed report on following pages. It is a review \nof 1955-the year in which Western Air Lines produced more, sold more and \nearned more than ever before in its 30-year history. \nFebruary 10, 1956 \nWestern Air Lines Building \nLos Angeles International Airport \nLos Angeles 45, California \nP R E S I D E N T \n cD ru rum cD  \ne rnin s \nSetting new revenue records in each quarter of 1955, \nWestern Air Lines ended the year with net income, \nafter taxes, at a 30-year high. \nEarning $1,981,685, or $2.67 a share, the company \ntopped by 36 per cent the income of $1,458,699, or \n$2.04 a share, for 1954. \nPer-share earnings for 1954 included 52 cents from \ngains on the disposal of property, while such gains \naccounted for only 5 cents of 1955 per-share earnings. \nOperating income for the year was a record \n$4,033,346, an increase of 104 per cent over the 1954 \nfigure of $1,975,676. \nThis major enhancement of operating income, while \nreflecting the general improvement of business condi- \ntions during the first half of the year compared with \nthe same 1954 period, is evidence of the company's \nsoundly-planned expansion of volume. \nWith seat-mile production rising steadily through \nincreased utilization of the new DC-6B fleet, and gains \nin travel mileage sales surpassing the production pace, \nWestern at year's end soared past the $1 -million \nprofit milestone for the first time. \ndv eds \nClimaxing five consecutive years of regular dividend \npayments, the board of directors of Western Air Lines \ndeclared two extra dividends during 1955, for a total \ndistribution for the year of 90 cents a share. \nRegular quarterly dividends were declared payable \non March 15, May 16, August 15 and November 15, \nwhile the extras were distributed to shareholders on \nMarch 15 and December 15. \nAll six 1955 dividends were of 15 cents each on out- \nstanding shares of capital stock. \nFor the past five years, dividends have been paid \nregularly. The extra dividends paid in 1955 marked \nthe first such distribution of earnings in the history of \nthe company. \nv nu \nRegistering the most substantial one-year increase in \nthe company's records, total operating revenues for \n1955 were $31,039,523, up $6,558,744 over the previ- \nous year, a 27 per cent increase. \nbrief balance sheet \nWestern owns: \nCash and U.S. Govt. securities .. \nOwed by others ............. . \nMaterials and supplies ....... . \nBuildings and improvements, ne \nFlight and other equipment, net. \nDeposits on new equipment. .. . \nPrepaid expenses ........... . \nDeferred charges ............ . \nWestern owes: \nNotes payable .............. . \nAccounts payable ............ . \nIncome taxes ............... . \nTickets sold but not yet used .. . \nExcess of what is owned \nover what is owed, \n1955 \n$ 5,943,898 \n2,605,502 \n317,455 \n2,177,687 \n9,030,052 \n2,290,107 \n744,668 \n222,835 \n23,332,204 \n5,334,307 \n2,823,956 \n2,010,524 \n733,430 \n10,902,217 \n1954 \n3,949,365 \n1,791,652 \n282,036 \n2,242,955 \n10,903,178 \n769,794 \n265,221 \n2QJ04,201 \n5,180,918 \n2,739,222 \n903,243 \n594,665 \n9,418,048 \nor shareholders' equity ... ...... . $12,429,987 ___!Q,786,153 \nAccounting for 93 per cent of the record total, pas- \nsenger revenues were $28,755,616 for the year com- \npared with $22,423,388 for the previous 12 months, \nan increa e of 28 per cent. \nExpress, freight and excess baggage revenues, \naccounting for 3.8 per cent of total revenues, were up \n22 per cent at $1,185,296, compared to $968,487, for \n1954. \nReflecting the company's subsidy-free status, mail \nservice revenues of $862,014, while 13 per cent over \nthe previous year's total of $763,586, represented only \n2.8 per cent of total operating revenues, lowe t in \nWe tern's history. The company continued to be an \n revenue and Income \n(in millions) \nactive participant in the Post Office Department's \nexperimental, space-available movement of 3-cent sur- \nface mail aboard scheduled airliners. \nsal s \nPassing the one-million mark for the first time in it \nhi tory, Western in 1955 carried 1,092,578 air trav- \nelers as traffic was increased 31 per cent over the previ- \nou year' total of 834,910. \nPassenger revenues climbed to an all-time high of \n$28,755,616 as the company aggre sively merchan- \ndised its expanded operations featuring deluxe DC-6B \nservice. \nAn increase of 21 per cent in total seat-miles pro- \nduced was more than matched by a 28 per cent boost \nin seat-miles sold. \nThe company's deluxe services, highlighted by the \nnow-famed Californian \"champagne flights;' accounted \nfor the major por. \ntion of 1955 traffic gains as 40 per \ncent of all seat-miles sold were in this category. \n The \"champagne flights;' now established as a new \nstandard of airline service, were advertised, promoted \nand sold . as an entirely new concept of luxury travel. \nIncluding such innovations as reserved seating, gour- \nmet meals, special wine, soft mus!c and souvenir gifts, \nthe service was sold as a '-'package\" to record numbers \nof western travelers. \nThe Californian service, inaugurated in 1954 and \nsubstantially expanded during the past year, has won \nwide public acceptance and has been acclaimed by \ntravel authorities as \"second to none'.' \nAt the same time, scheduled aircoach travel, pio- \nneered by Western in 1949, showed a 12 per cent \nincrease in volume. Economy aircoaches accounted \nfor one-third of the company's total passenger traffic. \nKeynoting sales of its new services, the company \naccelerated its activities, engaging in extensive adver- \ntising and sales promotion programs embracing tele- \nvision, radio, newspaper and magazine campaigns, as \nwell as increased distribution of posters, films, dis- \nplays and direct-mail literature. \nThe company's no-deposit \"Charge-A-Flight\" credit- \ncard plan for regular air travelers achieved major \nrevenue status in 1955, generating $900,000 worth of \ntransportation. The company's 27,000 cards, repre- \nsenting 19,000 accounts, now are accepted by leading \nhotels and car-rental agencies for immediate identifi- \ncation and credit privileges. \nSubstantial revenue increases were achieved from \nconvention travel, military traffic, sales-incentive pro- \ngrams, charter flights and athletic transport services, \nthe latter a specialty for many years which is partic- \nularly popular with leading universities on the com- \npany's system and with professional baseball teams of \nthe Pacific Coast League. \nJoint sales programs with connecting airlines at \nprincipal travel gateways, packaged holiday trips pro- \nmoted in cooperation with resort hotels, increased \nemphasis on the economic advantages of family-plan \ntravel, and participation with other air carriers in hun- \ndreds of joint fares resulted in material revenue gains \nduring 1955. \nales of transportation by Western's travel agents \nincreased 31 per cent, interline sales by other carriers \nfor travel on the company's sy tern were up 34 per \ncent, and sales on Western-is ued Universal Air Travel \nPlan cards were boosted 33 per cent during the year. \n dollar \nexpe ses \nAn increase of 25 per cent in available ton-miles flown \nwas the major factor in the rise of total operating \nexpenses in 1955 to $27,006,177, a 20 per cent increase \nover 1954. \nIntegration of the DC-6B fleet, expansion of deluxe \nservices, steady rise of supplies, parts and equipment \ncosts, and increases in personnel compensation all con- \ntributed to the $4,501 ,074 climb in operating expenses, \nas did a 22 per cent increase in depreciation on flight \nequipment. \nAt the same time, the unit cost of producing a reve- \nnue ton-mile was reduced materially to 49.1 cents in \n1955, compared to 52.7 in 1954 and 53.5 in 1953. \nWith one of the airline industry's lowest \"break- \neven\" passenger load factors, reflecting the lowered \nunit cost, the company was able to improve and expand \nits services at reasonable additional expense. \nOperating expenses were further reduced by the \nefficient utilization of manpower and facilities at the \ncompany's Los Angeles maintenance and overhaul \nbase, as exemplified in service contracts fulfilled for \nPan American World Airways, Compania Mexicana de \nAviacion and Scandinavian Airlines System. \nfinances \nA record business year in 1955 resulted in substantial \nimprovements in the company's financial position. \nWorking capital was increased 87 per cent from \n$1,489,717 in 1954 to $2,783,613 at the close of 1955. \nCash and U. S. government securities totaled \n$5,943,898, compared to $3,949,365 for the previous \nyear, an increase of 50 per cent. \nPrincipal asset of the company was its flight equip- \nment, listed at $17,950,247. Together with buildings \nand improvements on leased property, and other equip- \nment, properties and equipment totaled $23,377,936, \nless $12,170,197 allowance for depreciation for a net \nof $11,207,739. \nIn 1955, $1,801,040 was obtained under a credit \nagreement, established with several western banks \nheaded by the Bank of America, and payments of \n$2,071 ,651 were made. At the same time, Westem's \nlong-term debt was reduced by $270,611 during the \nyear from $3,754,918 in 1954 to $3,484,307 on \nDecember 31. \nDeposits on equipment-purchase contracts totaled \n$2,290,107 at the close of the year covering 13 DC-6B \naircraft. \nCurrent assets for 1955 totaled $9,611 ,523; current \nliabilities were $6 827,910 for the year. This reflected \nan improvement in the assets-liabilities ratio from \n$1.28-to-$1 in 1954 to $1.41-to-$1 in 1955. \nSymbolizing modern service for the \nmodern West, the company's DC-68 fleet appears \nin impressive new design scheme. \n Illustrating 30 years of progress, \nmodern DC-6B overwhelms 1926 M-2, first plane \nof Western, America's oldest airline. \nEarned surplus was $6;805,915 on December 31, \n1955, as compared with $5,491,621 at the close of \n1954, while capital surplus was increased from \n$4,578,319 to $4,880,609 by the excess of proceeds \nover par value of 27,250 shares of capital stock issued \nunder the company's restricted stock-option plan. \nequipment \nServing 45 cities in 12 western states and Canada over \nits 5,525-mile system, the company established a per- \nfect safety record in 19 5 5 while operating a fleet of 31 \nplanes composed of eight 60-passenger Douglas \nDC-6Bs, six 66-passenger Douglas DC-4 Coachmas- \nters, nine 40-passenger Convair 240s and eight 22-pas- \nsenger Douglas DC-3s. \nWestern now has on order 13 additional DC-6Bs, \nsix for delivery in 1956, seven in 1957. \nUnder active study during the year were specifica- \ntions and performance estimates of both turboprop \nand jet aircraft as applicable to Western's system, pres- \nent and future. While no orders have yet been placed \nfor future delivery of these new types of airliners, deci- \nsions will be made soon and new equipment ultimately \nwill be introduced into the Western fleet in line with \nrequirements of planned growth and development. \nAt the same time, attention was given by manage- \nment to developments in the passenger helicopter field, \nparticularly to performance in short-haul operations \nat metropolitan centers. \nshar hol ers \u0026 stock \nAt the close of 1955, there were issued and outstanding \n743,463 shares of the capital stock of the company \nheld by approximately 6,500 individual shareholders. \nDuring the year, shareholders' equity increased from \n$10,786,153 to $12,429,987. Book value for each share \nof outstanding stock increased to $16.72 at y;ear's end \nfrom $15.06 in 1954. \nTrading in Western stock was considerably more \nactive in 1955 than during the previous 12 months. \nOn the New York Stock Exchange, 553,700 shares \nwere traded at prices ranging from a low of 16'1/s to a \nhigh of 25, with a closing price of $22 a share, up \n$4 from the 1954 closing level. \nOn the Los Angeles Stock Exchange, 13,080 shares \nwere traded within a range of 18 low and 24 high, \nclosing at 21  . On the San Francisco Stock Exchange, \nwhere the company's stock enjoys unlisted trading \nprivileges, 17,874 shares were traded at prices ranging \nbetween a low of 17 and a high of 25%, with a \nclosing price of $22 a share. \nAt the annual meeting of shareholders, held in Los \nAngeles on April 21, 1955, approximately 92 per cent \nof all outstanding stock was represented in person or \nby proxy. \n personnel \nReflecting a record year of expansion and growth, the \npersonnel rosters of Western Air Lines at the close of \n19 5 5 carried the names of 2,130 employes, comprising \nthe largest payroll in nine years. \nAverage length of employe service is 5 .5 years, while \nflight captains have an average seniority record of 13 .5 \nyears. Twenty-one per cent of all employes have been \nwith the company for more than 10 years; 39 per cent \nhave served for more than five years. \nSeventy-two per cent of Western personnel are men, \n28 per cent are women. For each employe, the com- \npany, on December 31, had a gross investment of \n$11,000 in property and equipment as compared with \n$4,500 in 1946. \nAt the close of the year, 78 per cent of eligible \nemployes were participating in the company-wide con- \ntributory retirement program, a plan inaugurated in \n1952 when Western made arrangements to pay past- \nservice premiums. During 1955, the company contrib- \nuted $444,032 to the retirement program while par- \nticipating employes remitted $283,196 for their por- \ntion of current-service premiums. \nA majority of employes also availed themselves of \nprotection offered in the company's group insurance \nprogram, a plan considered one of the finest available. \nSubject to extension and revision in line with economic \ndevelopments, the program is available to all employes \nand is financed jointly by the company and its personnel. \nbrlel statement of Income \nfronl1 1955 191 \nAt the end of the year, 87 per cent of Western \nemployes subscribed to the accident and sickness insur- \nance provided in the group plan, 89 per cent availed \nthemselves and their families of the hospitalization \ncoverage, and 68 per cent carried group life insurance. \nIn addition to these insurance programs, the com- \npany maintains a liberal free-transportation policy for \nemployes and their families, both on Western's system \nand on routes of other scheduled airlines with which \nthe company has reciprocal agreements. An average \nof approximately 1,000 space-available passes were \nissued monthly during 1955. If computed at first-class \nrates, this transportation could have cost employes \nnearly $1 ,500,000 during 1955. \nThe Company Progress Council, an employe-man- \nagement forum established in 1954, continued to work \nconstructively toward increased efficiency of personnel \nand procedures during the year. Membership includes \nthe vice-presidents in charge of the company's divi- \nsions, officials of labor unions representing employe \ngroups, and representatives of other personnel \norganizations. \n With 77 per cent of employes as members, the \nWesternaire Federal Credit Union, operated by and for \nemployes, reported its most successful year. Showing \na net profit of $47,079, the WFCU provided person- \nalized loan service to company personnel and paid a \n5 per cent dividend on shares (savings). The organi- \nzation closed the year with total assets of $899,156. \nApproximately 88 per cent of all employes were \nrepresented by seven labor unions, three of which were \nseeking new contracts at the close of 1955. \nCAB proceedings \nA major stride in the company's long-range program \nof regional route development was taken on November \n14, when Western won authority from the Civil Aero- \nnautics Board to provide competitive service over the \n980-mile route linking San Francisco-Oakland with \nDenver, via Reno and Salt Lake City. Flights over the \nnew skyway are scheduled to begin as soon as possible \nin 1956 and are expected to prove popular and profit- \nable. In addition, the route offers great potential advan- \ntages in scheduling, integration of equipment and \nfuture services. \nsharehold equllw \ndollars r share \n1850 1951 1952 1953 1954 1955 \nSoaring to an all-time record, Western in 1955 \ncarried more than one million air travelers \nto cities in 12 states and Canada. \nThe forty-fifth city on Western's route system was \nadded on July 16 when service was inaugurated at \nSioux Falls, S.D., population and economic center of \neastern South Dakota. \nIn a CAB decision of December 15, the company \nwas authorized to eliminate Richfield and St. George, \nUtah, from Route 13. Neither city ever has qualified \nfor trunkline air service, nor has Chadron, Neb., which \nthe company also is seeking to remove from Route 35. \nTwo mail-rate cases of importance affected the com- \npany during the year. In a CAB decision of June 7, \nthe board instituted a multi-element rate for Western \nbased on \"line-haul\" fees paid for actually flying air \nmail plus a sliding-scale \"terminal charge\" to compen- \nsate for ground-handling costs. The new subsidy-free \nrate became effective October 1 and preliminary figures \nindicate it will result in mail service revenues of \napproximately 40.6 cents a mail-ton mile. \nThe second case involved a hearing on the experi- \nmental carriage of 3-cent surface mail by air between \ncities selected by the Post Office Department. The \ncompany has taken the position that it is willing to \ncontinue carrying this mail, on a space-available basis, \nat the present rate of 18.98 cents a ton-mile. \nThe CAB is expected to schedule for hearings early \nin 1956 the company's application to make permanent \nthe temporary authority granted in 1952 to operate the \nSalt Lake City-Casper-Rapid City \"cutoff\" route, an \naward which has permitted Western to provide one- \nstop service between Minneapolis-St. Paul and Los \nAngeles as well as improved service to the key route \ncities. The company is confident that its operating \nexperience on this route will justify the permanent \nauthority it seeks. \n ..--. \n- I \n- I \n \n \n \n \n \n \n \n \n \n- \n- \n- \n- \n- \n- \n- \n- \n- \n- \n- \nOf major importance in the future development of \nthe company's routes is the Phoenix Service Case, \ninvolving the entire pattern of air service to the im- \nportant Arizona center. Western is seeking a complex \nof new routes which would off er direct flights from \nPhoenix to Denver, Salt Lake City, Las Vegas, Palm \nSprings, San Diego and Los Angeles. Hearings on this \ncase are expected to be scheduled in mid-1956 by the \nCAB. \nAlso due for hearing in 1956 is a consolidated pro- \nceeding which includes the company's petition to pro- \nvide service to Sacramento, California's capital, from \nSan Francisco-Oakland, Portland, Seattle, Reno and \nLos Angeles. \nInvolving a complete re-appraisal of the local air \nservice needs of the area roughly bounded by Great \nFalls, Casper, Denver, Kansas City, Chicago and the \nCanadian border, the Seven States Area Case also \nprobably will go before the CAB in 1956. Involved in \nthis inclusive case is the possible-transfer of Western's \noperating authority to local-service carriers at several \ncities now served by the company, including Alliance, \nScottsbluff, Chadron, Hot Springs, Spearfish, Brook- \nings, Mankato, Rochester, Cut Bank-Shelby and \nLewistown. \nWestern's 1954 applications to provide additional \nservice to the Pacific Northwest still await action by \nthe federal board. One petition is for authority to \noperate a 570-mile route from Portland to Calgary, \nvia Spokane; the second is for permission to serve \nSpokane as an intermediate point between Portland \nand Seattle on the company's coastal route. \nA pair of international cases drew considerable at- \ntention during the year and show promise of being \nresolved during 1956. Still lacking approval by the \nCanadian government is the company's 10-year-old \nU.S. certificate to serve Calgary on the Western route \nbetween Great Falls and Edmonton; and, still under \nconsideration-and the subject of strong civic support \n-is the company's 1946 U.S. permit to inaugurate Los \nAngeles-Mexico City flights which must be approved \nby bilateral agreement between the United States and \nMexico. \nWestern, as well as nearly every other scheduled \nairline in the nation, has filed for judicial review of the \nheadlined CAB decision of November 15 which, in \neffect, created an entire new class of transport, \"the \nsupplemental air carriers'.' The company considers this \nunprecedented board action a grave threat to the sound \ndevelopment of U.S. commercial aviation and will, \nduring 1956, take an active part in seeking reversal of \nthis decision which grants broad privileges to 49 non- \nscheduled operators who have no obligation to provide \nregular service to any points whatsoever. \noutlook \nWestern Air Lines, now established as one of the West's \nessential utilities, operates under a federal mandate \noutlining the balanced development of a safe, adequate \nand dependable domestic air transportation system. \nThe board of directors and officers of the company, \npersonally representing every major region of the West, \nare dedicated to a studied program designed to insure \nsteady, constructive growth. \nAgainst a background of the West's soaring popula- \ntion, insatiable desire for improved service and steadily \nincreasing economic strength, Western's management \nlooks forward with confidence to a successful 1956. \n In line with the company's rapid development, new and modern sales offices were \nopened during 1955 in the major hotels of key cities on Western's 5,525-mile system. \nEach new installation features large, dominant neon signs and attractive company identi- \nfication in display areas. In addition to the offices pictured here, a new travel center now \nis under construction in downtown Seattle and will be opened early in 1956. Pending \ncompletion of permanent facilities, temporary offices were opened at Sioux Falls, Cal- \ngary and in the San Fernando Valley of southern California. In decor and color schemes, \nthese offices present the company's modern product for a modern West. LAS VEGAS: Riviera Hotel \nBEVERLY HILLS: Beverly Hilton Hotel SAN FRANCISCO: Sheraton-Palace Hotel \nDENVER: Cosmopolitan Hotel LONG BEACH: Wilton Hot \nSAN DIEGO: 241 Broadway SALT LAKE CITY: Hotel Utah \n Each of these people is a recognized expert in at least one important phase of modern \nairline management. They are the department heads - the \"operating directors\" -of \nWestern Air Lines. With a combined total of more than 3 7 5 years of airline experi- \nence, they are the specialists who combine skill and enthusiasm to assure the progress \nand development of Western. \nJessie L. Bathgate \nChief Stewardess \nCharles J. J. Cox \nAccounting \u0026 Taxation \nRobert Gallagher Jr. \nChief Flight Engineer \nEarnest H. Brown \nPersonnel \nRichard P. Ensign \nIn-Flight Services \nJohn I.Good \nCargo Service \nStanley J. Cavill \nChief Pilot \nAnton B. Favero \nMaintenance \nH. S. Gray \nBudget \nHarold W. Caward \nFlight Operations \nCharles S. Fisher \nFlight Schedules \nEdward L. Hallgren \nCustomer Relations \n Arthur L. Hewitt \nAgency \u0026 Interline Sales \nRonald A. Larson \nRegulations \u0026 \nOrganization Control \nPhilip E. Peirce \nStations \nKenneth 0. Smith \nPublic Relations \nCharles W. Holmes \nStores \nBert D. Lynn \nAdvertising \u0026 Sales \nPromotion \nNorman P. Rose \nFlight Control \nM. E. Sullivan \nTraffic \nJames M. Keefe \nProperties \nJames L. Mitchell \nResearch \nJack M. Slichter \nPassenger Services \nr::, \nI \nFrank H. Vosepka \nInspection \nKenneth W. Kendrick \nPurchasing \nThomas M. Murphy \nGovernmental Affairs \nArthur C. Smith \nSales Administration \nPeter P. Wolf \nCommunications \n a decade of growth \nfinancial summary 1955 1954 1953 1952 1951 1950 1949 1948 1947  1946 \nRevenues:* \nPassenger .......... $28,756 22,423 20,302 16,250 13,688 11,395 8,471 7,813 10,114 10,474 \nExpress, freight and excess baggage .... 1,185 968 846 662 507 497 313 483 410 318 \nMail .................................. 862 764 875 719 1,212 2,090 2,504 1,293 1,570 1,326 \nOther ................ 236 326 853 964 875 264 246 31 282 118 \nTotal Revenues .......... 31,039 24,481 22,876 18,595 16,282 14,246 11,534 9,620 12,376 12,236 \nOperating Expenses:* \nDepreciation ................ 2,151 1,761 1,718 1,019 998 1,124 1,335 1,164 1,845 1,369 \nPayroll ............... 11,057 9,239 8,367 7,067 6,084 5,353 4,855 4,973 5,773 5,916 \nOther ......................... 13,798 11,505 10,300 7,674 6,666 6,133 4,374 4,225 5,423 5,828 \nTotal Operating Expenses ........... 27,006 22,505 20,385 15,760 13,748 12,610 10,564 10,362 13,041 13,113 \nOperating Income* .................. 4,033 1,976 2,491 2,835 2,534 1,636 970 (742) (665) (877) \nOther Income* .......................... (201) 333 (56) (103) 280 (196) (258) (186) (192) \n3,832 2,309 2,435 2,732 2,814 1,440 712 (928) (857) (877) \nProvision for Federal Taxes on Income* ....... 1,850 850 1,250 1,500 1,425 690 391 (589) 88 (277) \nNet Income* ................. $ 1,982 1,459 1,185 1,232 750 321 (339) (945) (600) \n-- \nEarnings per sharet .................. $ 2.67 2.04 1.66 1.72 (1.80) (1.14) \nDividends paid per share ................... 0.90 0.60 0.60 0.60 \nWorking capital* ....................... $ 2,784 1,490 755 1,364 435 981 243 (315) 1,410 (4,557) \nlong-term debt* ......................... 3,484 3,755 2,072 2,903 1,924 2,231 3,113 3,551 3,800 287 \nProperties and equipment-net* .......... 11,208 13,146 9,844 9,702 6,588 6,621 7,171 8,094 6,292 7,581 \nShares outstanding* ....................... 743 716 715 715 550 525 525 525 525 525 \nShareholders' equity-total* ................ 12,430 10,786 9,746 8,991 6,396 5,045 4,295 3,974 4,314 3,665 \nShareholders' equity-a sharet ............. . $ 16.72 15.06 13.63 12.57 11.63 9.61 8.18 7.57 8.21 6.98 \noperating statistics 1955 1954 1953 1952 1951 1950 1949 1948 1947 1946 \nRoute Miles .............................. 5,525 5,525 5,525 5,016 5,016 5,016 4,727 4,727 4,725 4,808 \nAvailable Ton Miles* ....................... 100,015 80,261 68,580 48,557 43,036 44,515 32,034 29,534 35,757 35,831 \nRevenue Ton Miles* ....................... 54,999 42,669 38,088 31,434 27,549 24,697 16,383 14,660 20,887 22,877 \nPassengers and Tonnage Carried : \nRevenue passengers ..................... 1,092,578 834,910 838,732 774,079 691,322 619,624 422,193 353,569 491,680 602,302 \nMail tons ............................. 4,897 3,283 3,284 3,243 3,419 2,150 1,359 1,543 1,722 1,852 \nExpress and freight tons .................. 5,435 4,276 4,206 3,729 3,191 3,396 2,435 2,702 2,252 1,640 \nRevenue Miles Flown:* \nAirplane miles ......................... 18,335 15,842 14,450 12,631 11,487 11,783 9,496 8,707 9,607 10,594 \nPassenger seat miles .................... 870,596 721,255 613,814 453,332 401,720 414,169 299,503 243,771 312,615 301,856 \nPassenger miles ........................ 514,677 402,255 359,965 298,931 259,693 233,118 155,747 135,724 194,923 214,023 \nMail ton miles .......................... 2,621 1,669 1,610 1,358 1,449 978 567 574 733 706 \nExpress and freight ton miles .............. 3,207 2,556 2,100 1,524 1,282 1,442 926 1,089 912 635 \nOther Statistics: \nPassenger load factor ................... % 59.1 55.7 58.6 66.0 64.7 56.3 52.0 55.7 62.4 70.9 \nAverage length in miles per passenger trip .. 471 482 429 386 376 376 369 384 396 355 \nAverage revenue per passenger mile ........ $ .0559 .0557 .0564 .0544 .0527 .0489 .0544 .0576 .0519 .0489 \nNumber of employes end of year ........... 2,130 1,864 1,813 1,649 1,459 1,279 1,226 1,285 1,529 2,396 \n*000 omitted \ntbased on shares outstanding at close \nof respective years \n for the year ended \ndecember 31, 1955 \n(with comparative \nfigures for 1954) \nfor the year ended \ndecember 31, 1955 \nstatement of Income \nOperatlAI RevtRIIIS: \nPassen1er ....... \nExpress, freight and excess bagage ....... \nCharter and other transport services ..... \nMail ........................................ . \nIncidental revenue (net) .... \nDperatin1 Exptlll8S: \nflyiq operations ................. ~ . , .. , ....  \nGround os,erlitions ............... \nflipt equipment maintenance 4111irect\u003e      ..  .,. ... \nGeneral andadministrative .  . .. ............... .. \n\u0026nplQYe weifare .............................. . \nDepreciation                               \nOpe,atiq IIICOllle ......................... . \n.......... \nGain on dispositien of property ................... . \nother ............ -.......................... . \nNta-O,enti11 Chirps: \nInterest ..............................  \nAmortization of routes, contracts and leases ....... . \nOther ............... \nIncome before federal Taxes on Income ...... . \nPr1Ylsin fir Ftdtraf Taxn n  \u003cNote 1)  \nNetllCI ............................ . \n1955 \n$28,755,616 \n1,185,296 \n90,633 \n862,014 \n145,964 \n31,039,523 \n8,710,882 \n3,332,585 \n3,135,643 \n1,343,932 \n2,479,384 \n2,699,005 \n866,736 \n1,452,308 \n834,757 \n2,150,945 \n27,006,177 \n4,033,346 \n50,522 \n44,057 \n94,579 \n261,890 \n22,200 \n12,150 \n296,240 \n3,831,685 \n1,850,000 \n$ 1,981,685 \nstatement ol surplus \nAat1111tt u If Dtce11Hr 31, 1914 ........... \nNet income for 1955 .. \nExcess of proceeds over par value of \n27,250 shares of capital stock issued \nunder restricted stock option plan ....... \nDividends paid. in cash-$0.90 a share  \nAmtnt u If Dec,..., 31, 1915 (Note 2)  \nearned aurplua \n$ 5,491,621 \n1,981,685 \n7,473,306 \n667,391 \n$ 6,805,915 \n1814 \n22,423,388 \n968,487 \n79,932 \n763,586 \n245,386 \n24,480,779 \n7,311,395 \n2,980,759 \n2,682,66G \n1,197,139 \n1,743,498 \n2,204,549 \n723,049 \n1,251,832 \n747,927 \n1,761,589 \n22.505,103 \n1,975,676 \n507,520 \n27~14 \n5.15,134 \n160,196 \n22,200 \n19,715 \n202!111 \n2,308,699 \n850!000 \n1!458,699 \noapltal aurplua \n4,578,319 \n302.290 \n4,880,609 \n4,880,609 \n Current Assets~ \nCash ........................................... \nU. S. Government Securities at cost ......................... \nReceivables: \nTraffic balances ................................... \nU. S. and State Government Departments ............. \nOther (net of allowance for doubtful accounts $30,000) ..... \nMaterials and supplies ........................... \nPrepaid expenses ................................ \nTetal Current Assets . ............................... . \nSundry securities ........................................... \nProperties and equipment at cost (Note 2): \nFlight equipment .................................. \nBuildings on and improvements to leased property ........... \nOther property and equipment ............................ \nLess allowance for depreciation .............. \nDeposits on equipment purchase contracts (Note 3) ......... \nRoutes, contracts and leases, less amortization $180,060 ......... \nDeferred charges .......................................... \n1955 assets 1954 \n$ 3,955,618 \n1,988,280 \n1,815,974 \n571,713 \n217,815 \n2,605,502 \n317,455 \n744,668 \n9,611,523 \n15,591 \n17,950,247 \n3,419,722 \n2,007,967 \n23,377,936 \n12,170,197 \n11,207,739 \n2,290,107 \n22,225 \n185,019 \n$23,332,204 \n2,951,955 \n997,410 \n1,357,740 \n271,577 \n162,335 \n1,791,652 \n282,036 \n769,794 \n6,792,847 \n68,728 \n18,295,082 \n3,351,564 \n1,821,723 \n23,468,369 \n10,322,236 \n13,146,133 \n44,425 \n152,068 \n20,204,201 \n CbcD  cDITT@ @UL)@@[? as of December 31, 1955 \nwith comparative figures for 1954 \nCurrent Liabilities: \n1955 liabilities 1954 \nCurrent portion of long-term debt ........................... . \nAccounts payable ....................................... . \nAccounts payable - taxes collected from others ................ . \nAccrued salaries, wages, taxes, insurance and other ............. . \nAir travel plan deposits .................................... . \nUnused transportation ................ . ................... . \nFederal taxes on income (estimated) .......................... . \nTotal Current Liabilities . ............................. . \nLong-term debt-secured (net of current portion included \nin Current Liabilities) (Note 2) .............................. . \nDeferred federal taxes on income (Note 1) .......................... . \nCommitments and contingent liabilities (Note 3) \nRetirement plan (Note 4) \nShareholders' Equity: \nCommon stock - $1.00 par value per share \nAuthorized 2,000,000 shares (Note 5) \nIssued 743,463 and 716,213 shares respectively .......... . \nCapital surplus . .. ....... . ...... . . .. ......... .... .. . ..... . \nEarned surplus from December 31, 19 34 (Note 2) . .... . ......... . \n$ 1,850,000 \n853,998 \n338,239 \n1,348,244 \n283,475 \n733,430 \n1,420,524 \n6,827,910 \n3,484,307 \n590,000 \n743,463 \n4,880,609 \n6,805,915 \n12,429,987 \n$23,332,204 \n1,426,000 \n1,033,282 \n299,081 \n1,137,709 \n269,150 \n594,665 \n543,243 \n5,303,130 \n3,754,918 \n360,000 \n716,213 \n4,578,319 \n5,491,621 \n10,786,153 \n20,204,201 \n PE.AT, MARWIOK, MITCHELL \u0026 Go . \nCRRT f Pll~D PLJ'BLJO A COUNTANTS \nt l N ORPORATtNo T n OMPSON, Moss \u0026 Co.) \n610 SOUTO SPUINO STREET \nLOS A.NOE LES 14 , 0.ALll'Oll.N IA \nACCOUNTANTS I REPORT \nThe Board of Di.rectors \nWestern Air Lines, Inc.: \nWe have examined the balance sheet \nof Western Air Lines, Inc. as of December 31, \n1955 and the related statements of income and \nsurplus for the year then ended. Our examina- \ntion was made in accordance with generally \naccepted auditing standards, and accordingly \nincluded such tests of the accounting records \nand such other auditing procedures as we \nconsidered necessary in the circumstances. \nIn our opinion, the accompanying \nbalance sheet and statements of income and \nsurplus present fairly the financial position \nof Western Air Lines, Inc. at December 31, \n1955 and the results of its operations for the \nyear then ended, in conformity with generally \naccepted accounting principles applied on a \nbasis consistent with that of the preceding \nyear. \nLos Angeles, California \nFebruary 10, 1956 \n\"'\"'''\"\"''-'\" \nC0NflN[ NT\"' I..CV011'[ \nINOIA ' \nnotes to lln nclal tatements \nNote 1. Deferred,....,_, taxes - Inc Depreciation \nfor federal tax purposes will, through 1957, exceed that \nreported on the book of account as a result of deducting \naccelerated depreciation in tax returns. Accordingly, the \nfederal tax provision reftected on the tatement of income \nincludes $230,000 set aside in 1955 to offset the estimated \neffect on federal taxes which will occur in the years 19S8-61 \nwhen the depreciatiott recordable on the book of account \nwiJJ be more than that allowable for federal tax purposes. \nNote 2. Lo .. tenn clel,t (Secured). The not payable of \nS ,334,307 ($1,850,000 current and $3,484,307 long term) \ntoaether with future equipment purchase borrowings under \nthe credit agreement are repayabl in monthly amounts \naggregating $1,850,000 in 19-'6, increa ing to $2,880,000 \nin 19-'8, pl int r t at 3  % per annum with final ma- \nturity on pt mber I, 1962. The ind btedne is secured \nby pecified properf representing a total co of approxi- \nmat ly S 19 750 000, including the cost of three Douglas \nDC-4 and one Douala OC-3 airer ft Id in 1956 at \nub tantial profit. \nThe related bank credit agreement includes, among other \nthings, condition and requirements which effectively limit \nthe amount of earned surplu di tributable as cash divi- \ndend  The greatest amount  restricted by the require- \nment that cash dividends are not to exceed 50% of the \nearninp carried to surplus after January 1, 1954. F.arned \nurplus as of De4~l\u003eer 31 1~55, is Meenlingly restricted \nin the amount of SS,712,391, leavina Sl,023,$24 not so \nrestricted. \nNet 3. C \nI._...  cefl-- llulUta... The \ncompany bas orcfeted thirteen new Douslu DC-6B air \ncraft with delivery acheduled for  in 1,56 and seven in \n1957. n repteseats a commitment as of December 31, \n1955 of approximately $13,SOO,OOO in excess of the deposit \npayments already made. ArranpdJellts have bee\u0026 made \nUIIClcr tile bank credit agreement to provide the related \nfunds, for which the commitment fee is of 19' per annum. \nAs of December 31, 1955, the company was contingently \nliable for daims and law suits in which it is or may be a \ndefendant, but management and its counsel believe the \nultimate liability, if any, will not materially affect the \nfinancial statements. \nNete 4. .... ..._.. ,.__ The cost of the insured contribu- \ntory retirement plan as charged to operating expenses in \n1955 totaled $444,032 for both current and past services. \nManagement COIi~ that the remaining past service \ncosts will be funded over a period of approximately eight \nyears and will require annual payments of $106,000. \nNote S. ~ to pwcNH cpltt ... ck. Through \nDecember 31, 19.55, 28,250 shares have been issued under \na restricted stock option plan for officers and key employes, \napproved by the shareholders in 1951, at pnces ranging \nfrom $8.49 io $14.14 a share. Options for the 6,750 shares \nremaining under the plan are outstanding and are exercis- \nable within five years from the date granted, at prices \nranging from $8.19 to $18.17 a share. \nIIIIIJ to serve air travelers of the West, \n11ant DC-68 Is p0lsed on ramp at \ncompany's Los An1etes headquarters. \n board ol directors \nHugh W. Darling \nDarling, Shattuck \u0026 Edmonds, Attorneys-at-Law, \nLos Angeles, California \nTerrell C. Drinkwater \nPresident, \nWestern Air Lines, Inc. \nRobert E. Driscoll \nChairman of the Board of Directors, \nFirst National Bank of the Black Hills, \nRapid City, South Dakota \nHector C. Haight \nConsultant, Hughes Aircraft Co., \nCulver City, California \nMarvin W. Landes \nVice President-Service, \nWestern Air Lines, Inc. \nDonald H. McLaughlin \nPresident, Homestake Mining Co., \nSan Francisco, California \nL. Welch Pogue \nPogue \u0026 Neal, Attorneys-at-Law, \nWashington, D. C. \nJoseph F. Ringland \nPresident, Northwestern National Bank of Minneapolis, \nMinneapolis, Minnesota \nStanley R. Shatto \nVice Pres_ \nident-O perations, \nWestern Air Lines, Inc. \nJohn M. Templeton \nTempleton, Dobrow \u0026 Vance, \nNew York, New York \nHarry J. Volk \nVice-President for Western Operations, \nThe Prudential Insurance Co. of America, \nLos /J.ngeles, California \nJohn M. Wallace \nPresident, Walker Bank \u0026 Trust Co., \nSalt Lake City, Utah \nAlexander Warden \nPublisher, Great Falls Tribune-Leader, \nGreat Falls, Montana \nSidney F. Woodbury \nConsultant, Woodbury \u0026 Co., \nPortland, Oregon \nexecutive stall \nTerrell C. Drinkwater \nPresident \nStanley R. Shatto \nVice President-Operations \nMarvin W. Landes \nVice President-Service \nPaul E. Sullivan \nVice President-Administration and Secretary \nArthur F. Kelly \nVice President-Sales \nJ. Judson Taylor \nVice-President and Treasurer \nD.P.Renda \nVice President-Legal \nG. G. Brooder \nVice-President \nCharles J. J. Cox \nController and Assistant Treasurer \nEarnest H. Brown \nAssistant Secretary and Director of Personnel \nThomas M. Murphy \nAssistant to the President \ngeneral offices \nWestern Air Lines Building \n6060 A vion Drive, \nLos Angeles International Airport, \nLos Angeles 45, California \nregistrars \nCitizens National Trust \u0026 Savings \nBank of Los Angeles \n457 South Spring Street, \nLos Angeles 13, California \nThe Chase Manhattan Bank \n11 Broad Street, \nNew York 15, New York \nstock transfer agents \nSecurity-First National Bank of \nLos Angeles \n561 South Spring Street, \nLos Angeles 14, California \nNew York Trust Co. \n100 Broadway, \nNew York 15, New York \nstock listings \nListed and traded on \nNew York Stock Exchange \nand Los Angeles \nStock Exchange, \nTraded on San Francisco \nStock Exchange \ngeneral counsel \nDarling, Shattuck \u0026 Edmonds \nAttorneys-at-Law, \n523 West Sixth Street, \nLos Angeles 14, California \nauditors \nPeat, Marwick, Mitchell \u0026 Co. \n618 South Spring Street, \nLos Angeles 14, California \nannual meeting \nThird Thursday in April \nat General Offices \n  Fellow Stockholder: \nLos Angeles, California \nMarch 7, 1956 \nEnclosed is your personal copy of the 1955 Western Air Lines Annual Report \ncovering our 30th year of continuous operation in serving the West. \nAs a shareholder, you will find the report's contents of interest, and we believe \nyou will share our enthusiasm for the future growth and development of the com- \npany which is indicated in this review of a record year. \nMost of you know that the company's operations have been suspended since \nJanuary 9, 1956, because of a strike by the Brotherhood of Railway and Steamship \nClerks, Freight Handlers, Express and Station Employees (AFL), compounded by \nthe announced intention of immediate strike at that time by the Air Line Pilots \nAssociation (AFL). A review of our labor situation should be of interest to you. \nThe BRC is the bargaining agent for approximately 40 per cent of Western1s \nemployees. Negotiations with the BRC were conducted from June of last year until \nthe strike began. The BRC actually called a strike on December 16, 1955, but this \nstrike was prevented by an injunction issued by the United States District Court. \nThe principal issues in dispute are the BRC's initial demands for a wage increase \nof $50 a month for each employee covered by the contract, retroactive to July 1, \n1955, and a union shop agreement. The wage demand would increase costs by over \none-half million dollars annually. The company has made several wage proposals \nin an effort, first, to prevent the strike, and later, to end it. The most recent pro- \nposal offers to the employees a wage rate which is well above the average in the \ndomestic airline industry in practically all of the many classifications covered by \nthe contract. For most of the employees so covered, the increase would amount to \napproximately $30 a month. \nThe Brotherhood of Railway Clerks has no union shop agreement with any \ndomestic airline and Western has refused to accede to this demand, taking the firm \nposition that our employees must be guaranteed the right, but must not be com- \npelled, to join any union. None of Wcstern's six other union contracts has union \nshop provisions. Several hundred of our employees who e jobs are covered by the \nBRC contract have sent letters, telegram and petitions to the company clearly and \nforcefu1ly stating that they do not want a union shop. We are convinced that a \nmajority of all of our employees are against it in principle. A great many employees \nhave expressed the opinion that the company's wage propo al to end the strike i \nfair and reasonable and should be accepted by the union negotiators, who have \nrefused to submit this proposal to a vote of the employees affeckd, although they \nhave been requested to do so. \n The company's contract with the Air Line Pilots Association expired in May \nof last year. The principal issue raised by ALPA negotiations was the demand for \nadditional pension benefits of a variable annuity type over and above the benefits \npayable under Western's retirement plan for all employees which was voluntarily \nadopted by the company, with the approval of the shareholders, in 1952. Since the \nstrike started, negotiations have continued with the ALP A and we are now reason- \nably confident that the dispute with the pilots can be very promptly settled. \nThroughout December of last year, while negotiations were in progress, both \nthe BRC and the ALP A made almost daily public announcements of their intention \nto strike on short notice, and these announcements, together with the attempted \nstrike of the BRC on December 16, had an adverse effect upon the company's busi- \nness during December. \nIn October of last year, the company began negotiations with the International \nAssociation of Machinists (AFL) for a new contract. It is hoped that this contract \nwill soon be concluded under the direction of the National Mediation Board since \nthe company has made liberal wage proposals which compare favorably with any \nin the industry. \nWestern's employees are represented by seven unions. Signed contracts are in \neffect with all of the unions except the three with which we are presently negotiating. \nOfficers of the company have been meeting in Los Angeles with union nego- \ntiators in lengthy sessions conducted by Mr. Leverett Edwards, Chairman of the \nNational Mediation Board, in a constant attempt to end the strike and to restore \nservice as soon as possible. In all of our discussions, the paramount objective of \nthe company has been to arrive at union agreements, in accordance with the pro- \nvisions of the Railway Labor Act, which are fair and equitable to all concerned- \nour stockholders, our employees, and our customers. That objective is still our guide \nin all collective bargaining. \nAll possible steps have been taken to reduce expenses during the strike. On \nJanuary 1, 1956, there were 2,130 employees on the payroll. Today there are \n411 employees on duty. Of the remainder, some are on strike, most are on furlough \nwithout pay, a few are voluntarily taking accrued vacations, and some have been \nterminated. \nAs you have been advised, the company now has on order 13 Douglas DC-6B \naircraft, six scheduled for delivery this year and seven in 1957. The 1956 deliveries \nwill begin in May. At the time these aircraft were ordered, over a year ago, it was \nthe intention ultimately to dispose of our six Douglas DC-4 non-pressurized coach \naircraft. The market for this type of airplane is now exceptionally strong and, since \nthe strike started, the company has been able to sell three DC-4 Coachmasters and \none 22-passenger DC-3. These sales have resulted in very substantial profit which \nwill be sufficient to more than offset the operating losses incurred to date as a result \nof the strike. \n The Board of Directors and the management of the company are acutely aware \nof the hardships and inco.nvenience being suffered by employees, stockholders and \ncustomers during this strike, and are deeply appreciative of the many expressions \nof understanding and support that have been received. When operations are resumed,' \nwhich we believe will be soon, we are confident our service will be better than ever \nand we earnestly solicit our stockholders and their associates and friends to use \nWestern Air Lines flights when traveling or shipping in the West. \nSincerely yours, \nC\\ .  ....._ \nI ,. ,QCl\u003c:.. L \u003e ~ \nPresident \n EDMONTON \nWESTERN \nAIRLINES \nPRESENT AND l'ROPOSE0 ROUTES \n "},{"id":"delta_wal-ar_wal-ar-1954","title":"Western AirLines Annual Report 1954","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1955-02-18"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western AirLines Annual Report 1954"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1954"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1954"],"dcterms_temporal":["1954-01-01/1954-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"I \nI \nWESTERN : AIRLINES \nI \n1954: ANNUAL \n REPORT \nI \nI \n stock \ntransfer \nagents \nWestern Air Lines Building, 6060 Avion Drive \nLos Angeles International Airport  Los Angeles 45, California \nCitizens National Trust \u0026 Savings Bank  Los Angeles \nChase National Bank New York \nSecurity-First National Bank of Los Angeles  Los Angeles \nNew York Trust Company N ew York \nListed and traded on New York Stock Exchange \nand Los Angeles Stock Exchange \nTraded on San Francisco Stock Exchange \nthird Thursday in April  General Offices  Los Angeles \nGuthrie, Darling \u0026 Shattuck  Los Angeles \nPeat, Marwick, Mitchell \u0026 Co.  Los Angeles \n a year of growth. .1954 ,asa \nSeat Miles Produced .............. .-.. 721,255,000 613,814,000 \nSeat Miles Sold ..................... 402,255,000 359,965,000 \nTotal Operating Revenues ............ $24,480,779 22,876,797 \nNet Income ........................ 1,458,699 1,184,864 \nDividends Paid ..................... 429,277 429,128 \nCommon Stock Outstanding .......... 716,213 715,213 \nIncome per Share ................. 2.04 1.66 \nDividends per Share .............. . 0.60 0.60 \nCash and U.S. Government Securities .. $ 3,949,365 4,041,436 \nWorking Capital .................... 1,489,717 755,134 \nInvestment in Property and Equipment. 23,468,369 18,854,100 \nLong Term Debt .................... 3,754,918 2,072,244 \nTotal Shareholders' Equity ............ $10,786,153 9,746,451 \nShareholders' Equity per Share ........ 15.06 13.63 \nNumber of Employees ................ 1,864 1,813 \nWages and Salaries Paid .............. $ 9,239,386 8,367,963 \n 1954, the twenty-ninth year of America's senior \nairline, was successful from the standpoint of \nearnings, growth and expansion. This result was \nattained notwithstanding a disappointing first \nsix months common throughout the airline in- \ndustry. In June, Western inaugurated its now \nfamed \"Californian\" flights which have estab- \nlished unprecedented standards of passenger \nservice for domestic airlines. At the same time \nthe Company put into effect a no-deposit credit \nplan, \"Charge-A-Flight\", for travel on Western's \nsystem. In the fall, four Douglas DC-6B aircraft \nwere added to the fleet, making it possible to \nexpand and improve service throughout the \nCompany's system. Late in the year a six million \ndollar order was placed for five more of these \nairplanes for delivery in 1956. \nIn both transportation offered and transpor- \ntation sold, Western reached new high levels. \nAlthough the narrowing of the profit margin in \nthe first six months was an unfavorable factor, \nthis trend was reversed by mid-year. Operating \nprofit for the last six months of 1954 was accord- \ningly 18% in excess of that earned in the com- \nparable period in 1953. Contributing to the im- \nprovement were a resumption of the uptrend \nin general business conditions, inauguration of \nthe \"Californian\" flights, other refinements in \nservice, and f1.dditional schedules made possible \nby delivery of the four new airplanes. \nEarnings \nNet income for 1954, after taxes, amounted to \n$1,458,699 or $2.04 per share, as compared with \n$1.66 per share earned during 1953, and $1.72 \nper share in 1952. Gains on disposition of prop- \nerty were 52 per share in 1954 as compared \nwith 11 per share in 1953. \nFor several years the airlines have had to \nabsorb the cost increases inherent in an \ninflationary economy without the benefit of \nrelated increases in the level of fares which \nhave been sought by the industry but denied \n by the Civil Aeronautics Board. This remains a \nserious problem, and will continue to demand \nattention. Nevertheless, significant progress has \nbeen made in reducing Western,'s unit costs. \nThis has been accomplished through the intro- \nduction of additional modern and efficient air- \ncraft, increase in volume of traffic, and the \nattainment of greater efficiency and produc- \ntivity by the Company's personnel. \nDividends \nIn 1954, the Company paid four quarterly divi- \ndends of 15 each or a total of 60 per share, \nthe same as paid in the previous two years. At \nits first quarterly meeting in 1955, the Board \nof Directors declared a regular dividend of \n15 per share plus an extra dividend of 15 \nper share for a total of 30 per share payable \nMarch 15, 1955 to holders of record on March \n2, 1955. \nRevenues \nAll types of traffic reflected increases over the \nprevious year with the exception of mail and \nincidental revenues. Gross revenues were \n$24,480,779-up 7%. Passenger revenues for \nthe year 1954 were $22,423,388, an increase of \n10% over the previous year. Express, freight, \nand excess baggage revenues totaled $968,487, \nan increase of 15%. Mail revenue amounted \nto $763,586, representing only 3% of Western's \ntotal operating revenues. Like most of the other \nmajor domestic airlines, Western receives no \nsubsidy for carrying mail. Incidental revenues \ndecreased $530,952, as expected, due to the \ntermination of a maintenance contract with an \nair carrier engaged in the Korean airlift. \nSeveral things were responsible for the \nincrease in operating revenues. Integration of \nadditional DC-6Bs into the Company's fleet \nmade it possible for Western to improve service \non its entire system, and to offer the only all \nfour-engine flights on the Pacific Coast. DC-6B \nservice was extended to San Diego, linking that \narea and the Pacific Northwest with deluxe \nthrough flights. DC-6B schedules were also \nestablished between Los Angeles and Oakland \nvia San Francisco, and between Los Angeles \nand Las Vegas, Nevada. \nsales and production trend \nmllllons of seat miles \n1950 51 52 53 54 1950 51 52 53 54 \nseat mlles sold seat miles produced \nOn June 1, the Company inaugurated its \nDC-6B \"Californian\" service on the Pacific \nCoast. Featuring fine California champagne, \ngourmet meals, and reserved seats, these luxury \nflights at no extra fare have received wide \npublic acceptance. On September 26, the \n\"Californian\" service was extended to the \nCompany's direct route between Minneapolis/ \nSt. Paul and Los Angeles via Salt Lake City, \nand on non-stop flights between Seattle/ \nTacoma and Los Angeles. \nTo bring the advantages of modern credit to \nfrequent travelers in the West, the Company \nintroduced on June 1 a \"Charge-A-Flight\" \ncredit card plan. This no-deposit arrangement \nenables the cardholder to charge transporta- \ntion, extra baggage, or air freight shipments \nanywhere on Western's system on a thirty-day \naccount. Six thousand \"Charge-A-Flight\" cards \nhave been issued, developing substantial new \nrevenues. \nCoachmaster flights, pioneered by Western, \nare now being operated between all Pacific \nCoast cities served by W stern, between Los \nAngeles and Las Vegas, and between Los \nAngeles, Salt Lake City, and the Twin Cities. \nAir Coach produced 31% of the Company's \npassenger revenues during 1954, as compared \nwith 23% in 1953. \n Expenses \nOperating expenses for 1954 were $22,505,103, \nas compared with $20,385,466 for 1953, an \nincrease of 10%. Contributing to the increase \nwere 17% additional available ton miles flown, \nthe introduction of new aircraft, the inaugu- \nration of \"Californian\" luxury services, and the \nconstant rise in wage rates and costs of supplies, \nparts and equipment. \nThis increase is not considered unreasonable, \nhowever, in view of the progressive expansion \nand improvement in service offered. The unit \ncost of producing a revenue-ton-mile was de- \ncreased from 53.5 in 1953 to 52.7  in 1954. \nWestern again in 1954 had one of the lowest \n\"break-even load factors\" in the air transport \nindustry as reported by the Civil Aeronautics \nBoard. \nFinances \nThe financial position of the Company was \nconsiderably improved during 1954. At the \nyear end, cash and United States government \nsecurities totaled $3,949,365. Working capital \ntotaled $1,489,717, comparing with $755,134 at \nthe close of 1953. Additions to flight equipment \nand other properties during the year amounted \nto $5,450,000. The related expenditures, after \napplying deposits previously made, were \nfinanced by additional bank loans of $3,600,000 \nand by funds from other current sources. The \nCompany's long-term debt at December 31, \n1954, was $3,754,918 - an increase of only \n$1,682,674 over the amount at December 31, \n1953. Financing of the full purchase price of \nthe five DC-6B aircraft scheduled for delivery \nin 1956 has been arranged with several western \nbanks headed by the Bank of America. \nProperties and Equipment \nAt year end, the Company owned and operated \na fleet of 32 aircraft composed of eight 60-pas- \nsenger Douglas DC-6Bs, six 66-passenger \nDouglas DC-4 Coachmasters, nine 40-passenger \nConvair-240s and nine 22-passenger Douglas \nDC-3s. \nDuring the year, the Company's operations \nat San Francisco International Airport were \nmoved to a new Terminal Building. Operations \nat Portland International Airport were trans- \nsimplified balance sheet \nWestern owns: 1954 \nCash and U.S. Govt. securities. $ 3,949,365 \nOwed by others ......... . ... 1,791,652 \nMaterials and supplies ........ 282,036 \nBuildings and improvements, net 2,242,955 \nFlight and other equipment, net. 10,903,178 \nDeposits on new equipment .... \nPrepaid expenses ............ 769,794 \nDeferred charges ... . ........ 265,221 \n20,204,201 \nWestern owes: \nNotes payable .............. 5,180,918 \nAccounts payable ............ 2,739,222 \nIncome taxes ................ 903,243 \nTickets sold but not yet used ... 594,665 \n9,418,048 \nExcess of what is owned \nover what is owed, \nor shareholders' equity . ... $10,786,153 \nerred to a new and modem terminal building, \nproviding facilities for the handling of an \nincreased volume of traffic in the Pacific North- \nwest. In line with a policy of keeping all facili- \nties modern and efficient, new or remodeled \nsales offices were occupied during 1954 or will \nbe occupied during 1955 in Beverly Hills, Den- \nver, Las Vegas, Long Beach, Minneapolis, Palm \nSprings, Rapid City, San Diego, and Seattle. \nShareholders \nAs of December 31, 1954, there were issued and \noutstanding 716,213 shares of the capital stock \nof the Company, held by approximately 6,500 \nindividual shareholders residing in each of the \nforty-eight states. The shareholders' equity was \nincreased during the year from $9,746,451 to \n$10,786,153. This represents a book value for \neach share of stock outstanding of $15.06 at \nthe end of 1954, as compared with $13.63 at \nthe close of 1953, or $12.57 in 1952. \nDuring 1954, 440,000 shares were traded on \nthe New York Stock Exchange within a price \nrange of $8 low and $18 high. On the Los \n1953 \n4,041,436 \n1,639,492 \n383,575 \n2,322,383 \n7,521,714 \nl, 154,038 \n790,727 \n269,426 \n18,122,791 \n3,727,244 \n2,963,035 \n1,046,045 \n640,016 \n8,376,340 \n9,746,451 \n Angeles Stock Exchange 10,049 shares were \ntraded between a low of $8 7/s and a high of \n$17. On the San Francisco Stock Exchange \n9,464 shares were traded within a price range \nof $9 low and $18 high. The year end closing \nprice of the stock on the New York Stock Ex- \nchange was $18. \nAt the Annual Meeting of Shareholders in \nLos Angeles, on April 15, 1954, approximately \n80% of the outstanding stock was represented \nin person or by proxy. Appreciation is expressed \nto those shareholders who were so represented. \nThe Company solicits the support of its share- \nholders and hopes they will use its passenger \nand cargo services and will urge such use by \ntheir friends and associates. \nPersonnel \nOne of the greatest assets of Western Air Lines \nis its loyal and experienced personnel. At the \nend of 1954, the Company had 1,864 employees \n- 73% men, 27% women. For each individual \nemployee, the Company had a gross investment \nof $12,600 in property and equipment as com- \npared with $4,500 in 1946. The average length \nof service with the Company for all employees \nis six years. The average length of service of \npilot captains is 13 years. Seventeen per cent \nof the personnel have been with Western ten \nyears or more, 45% five years or longer, placing \nthe Company among the highest in the industry \nfor service longevity. \nApproximately 90% of the Company's em- \nployees are represented by seven labor unions. \nContracts with these unions were in effect at the \nend of 1954 and no negotiations were pending. \nFor a number of years the Company has \nmade available a voluntary employee Group \nInsurance Program under which life, accident \nand sickness and accidental death and dismem- \nberment insurance is provided for employees, \nand hospital insurance with medical and surgi- \ncal benefits is provided for employees and for \nmembers of their families. All employees are \neligible to participate in this insurance, the \ncost of which is borne jointly by the Company \nand the employees. Benefits under all coverages \nhave been broadened from time to time and \nthe program is now one of the finest available. \nApproximately 68% of the employees carry \ngroup life insurance, while about 89% have \navailed themselves of the accident and sickness \nand hospitalization coverages. \nEighty-six per cent of the eligible employees \nare participating in the Company-wide Con- \ntributory Retirement Program which was \nplaced in effect on July 1, 1952, at which time \nthe Company agreed to pay all past service \npremiums. During 1954, the Company con- \ntributed $408,857 to the Retirement Program, \nand collected and remitted to the insurance \ncompany $250,651 from participating em- \nployees for their portion of current service \npremiums. \nAnother \"first\" was added to Western Air Lines history \non June 1, 1954, when the Company introduced its \nnow-celebrated \"Californian\" flights. Establishing un- \nprecedented standards for luxury service by a domestic \nairline, the \"Californian\" schedules feature reserved \nseats, champagne, filet mignon dinners, vanda orchids \nfor the ladies, and select cigars for men passengers on \ndeplaning. These no extra-fare flights have won wide \nattention and public acceptance that made possible \nsteady expansion of the unique \"red-carpet\" service. \n le~s, Freight, \n~ age, 3. 9 % \nWESTER s revenue dollar \nThe Westernaire Federal Credit Union \noperated by the employees, of which 90% are \nmembers, had another successful year. A divi- \ndend of 5% was paid on savings accounts. The \nEmployees Suggestion System has been con- \ntinued with cash awards for suggestions which \nhave been accepted and adopted to improve \nthe efficiency of the Company. The Triple-E \nemployees' club in the Los Angeles area has \ncontinued to work closely with and co-sponsor \nactivities with such organizations as Boy Scouts \nof America, National Polio Foundation, and the \nBlood Bank program of the American Red Cross. \nThe Company maintains for its employees \none of the most liberal free transportation \npolicies in the industry. During 1954, Western's \npersonnel and their families were issued 6,994 \npasses on Western's system, and under arrange- \nments between Western and other scheduled \nairlines were issued 3,556 passes on the systems \nof other carriers for total space-available trans- \nportation which, computed on the basis of \nfirst class rates, would have cost employees \n$1,200,000. \nTo improve the operating safety and effi- \nciency of Western's personnel and procedures, \nto develop additional ways and means of \nincreasing revenues, and to provide a forum for \nthe exchange of ideas, a Company Progress \nCouncil was established in April, 1954. Its \nmembership consists of the six Vice Presidents \nof the Company, representatives of the seven \nlabor unions, and representatives of other \nemployee organizations. Regular meetings are \nheld during which problems facing the Com- \npany and their possible solutions are discussed. \nMany benefits have been and will be derived \nfrom the activities of this Council. \nIn 1954, a Legal Division was established in \nthe Company's organization. This new division \nis responsible for the Company's legal affairs, \nResearch, Route Development and Properties. \nIt is headed by Mr. D. P. Renda who was \nelected a Vice President. Mr. Renda has been \nan attorney for Western since 1946 and had \nserved as Assistant Secretary since 1947. Mr. \nEarnest H. Brown, a twenty-five year employee \nof the Company and its Director of Personnel \nsince 1942, was elected Assistant Secretary \nsucceeding Mr. Renda. \nCivil Aeronautics Board Proceedings \nDuring 1954 a number of steps were taken \nto strengthen Western's position as an inde- \npendent regional trunkline, and it is anticipated \nthat favorable results will be realized in 1955. \nWestern operates a 5,525 mile system serving \n44 cities located in 12 western states, and in \nthe Province of Alberta, Canada. A map show- \ning present and proposed routes appears on the \nback cover of this report. \nThe Civil Aeronautics Board has held hear- \nings in the so-called \"Denver Service Case,\" \nwhich includes Western's application for a new \n980 mile route between Denver and San \nFrancisco/Oakland via Salt Lake City. In \nDecember, the Civil Aeronautics Board's \nBureau of Air Operations recommended the \ngranting of Western's application, modified to \ninclude Reno, Nevada, as an intermediate point \nbetween Salt Lake City and San Francisco/ \nOakland. The final decision in this proceeding \nshould be forthcoming before the end of 1955. \nHearings were held in December, 1954, on \nthe Company's application for authority to \nserve Sioux Falls, South Dakota, as an inter- \n  \nI \nI \n \n~ \n- \nI \n= \nI \nI. \n \nWESTERN'S expe \nmediate point on its routes between Denver \nand Minneapolis/St. Paul, and between Rapid \nCity and the Twin Cities. The final decision \nin this case is expected in 1955. \nIn 1954, the Company filed two applications \nto provide additional service in the Pacifi'c \nNorthwest area. One application is for a \n570-mile route from Portland, Oregon, to \nCalgary, Alberta, Canada, via Spokane, Wash- \nington, and the other application is for author- \nity to serve Spokane, Washington, as an inter- \nmediate point between Seattle, Washington, \nand Portland, Oregon, on the Company's Pacific \nCoast route. The Company is endeavoring to \nhave these applications assigned for hearing \nin 1955. \nNo action has been taken by the Civil Aero- \nnautics Board on the Company's application \nfiled in 1953 for an 889-mile route between \nDenver, Colorado, and San Diego, California, \nvia Phoenix, Arizona. It is hoped that this \nmatter will be set for hearing before the end \nof 1955. \nsimplified statement of income \nWestern's income came from: 1954 1953 \nPassengers ................. $22,423,388 20,302,792 \nExpress, freight and baggage .. 968,487 846,063 \nMail ...................... 763,586 875,587 \nGain on disposal of property .. 507,520 137,814 \nOther income ............... 352,932 910,736 \n25,015,913 23,072,992 \nWestern's expenses were: \nWages and salaries .......... 9,239,386 8,367,963 \nSocial security, group insurance \nand retirement plan ...... 747,927 611,493 \nGasoline and oil ............ 3,627,644 3,219,067 \nMaterials and repair parts .... 1,960,041 1,754,256 \nDepreciation and obsolescence. 1,783,789 1,740,585 \nAdvertising ................. 681,597 708,847 \nFor service to passengers ...... 938,356 756,734 \nRentals and landing fees ...... 684,624 620,714 \nInsurance ... ......... ...... 801,640 759,276 \nInterest ................... . 160,196 188,447 \nTaxes ...................... 1,630,663 1,908,712 \nUtilities and services ......... 716,557 662,087 \nOther costs .. ...... ....... .. 584,794 589,947 \n23,557,214 21,888,128 \nNet Income ................... $ 1,458,699 _J_.J_ 84,864 \nWages and Salaries 42.4% \nIn a decision issued January 25, 1955, the \nCivil Aeronautics Board ordered the continued \nsuspension of the Company's operations at El \nCentro, California, and Yuma, Arizona, until \nDecember 31, 1957, and again denied the Com- \npany's application to extend its route from \nYuma to Phoenix, Arizona. \nThe Company is still anxious to activate its \ncertificate of public convenience and necessity \napproved by the President of the United States \nin 1946, for a route between Los Angeles and \nMexico City. Notwithstanding strong civic \nsupport in Southern California for this needed \nservice, the Governments of the United States \nand Mexico have not yet been able to resolve \na bilateral agreement which would make possi- \nble the inauguration of service over this route. \nSimilarly, although authorized in 1946 by \nthe United States Government to provide serv- \nice to Calgary on its route between Great Falls \nand Edmonton, Alberta, Canada, Western has \nbeen unable to inaugurate this service in the \nabsence of an agreement b tween the Govern- \nments of the United States and Canada. \nOutlook \nThe Civil Aeronautics Board through its d ci- \nsions has declared that a properly balanced \n Under a three-year contract effective January 1, 1955, between \ntwo of the West's pioneer companies, Union Oil Company of Cali- \nfornia will supply 55 million gallons of aviation gasoline for Western \nAir Lines flights along the Pacific Coast and between Southern \nCalifornia and Montana via Nevada, Utah, Idaho and Wyoming. \nsystem of domestic air transportation requires \nthe development of an independent trunk \nairline in the West to provide safe, adequate \nand dependable service in accordance with the \nbest interests of the public in that territory. \nFurthermore, that the overriding public interest \nnecessitates, \"the preservation of Western as a \nstrong carrier in the western part of our \ncountry.\" To develop the Company's services \nand route structure, the Board of Directors and \nManagement have undertaken a sound, long- \nrange program designed to follow this man- \ndate. \nThis program is being materially accelerated \nby the steady growth of the West. In less than \nten years the Los Angeles metropolitan area \nalone has absorbed a migration equal to the \ncombined population of the cities of Pittsburgh \nand Baltimore. Similar startling examples can \nbe cited in other areas served by Western. The \nrapid decentralization of industry, develop- \nment of natural resources, including water and \nminerals, and the emerging economic inde- \npendence of the West all contribute to the \nincreasing need for regional air transportation. \nWith the advent of coast-to-coast, non-stop \nflights, the four large transcontinental airlines \nmust devote their main attention to this highly \ncompetitive long-haul business. Their service \nto many intermediate cities is minimized. \nThus, the importance of the regional service \noffered by Western within its territory becomes \nmore and more apparent. The pending regional \nroute applications discussed elsewhere in this \nreport are a part of the program the Company \nhas adopted to provide and improve this inter- \nmediate type of air transportation. \nToward the end of 1954, the Postmaster \nGeneral started an experiment in transporting \nfirst-class mail by air, by Western and other \nairlines, between the major metropolitan \ncenters on the Pacific Coast. This experiment, \nwhich involves no payment of subsidy, is work- \ning well. It is expected that the public interest \nwill in the reasonably near future require all \ndomestic first-class mail to be carried by air \nwhere delivery can be thereby expedited, as \nis the case in many other nations. \nWith pride, announcement is made of the \nelection of Dr. Donald H. McLaughlin, of San \nFrancisco, President of the Homestake Mining \nCompany, to \\iVestern's Board of Directors. \nServing on this Board are outstanding civic and \nbusiness leaders from practically all sections \nof Western Air Lines' system. \nMost prognostications of business trends in \nthe West for 1955 are very optimistic. Western \nAir Lines, which is now one of the essential \npublic utilities of the West, shares this view. \nA healthy increase in traffic of all types is fore- \ncast. Constant effort will be made to maintain \nthe Company as the recognized leader offering \nthe best air transportation services in the West. \nMuch progress was made in 1954 by the West's \nown airline. More is expected in 1955. \nRespectfully submitted, \nI .. ,oa...c:.. ~~ \nPresident \nFebruary 18, 1955 \nLos Angeles, California \n statement ol inc \nOperating Revenues: 1954 1953 \nPassenger ......... . ........ . ... . ......... . $22,423,388 20,302,792 \nExpress, freight and excess baggage .... . .... . . 968,487 846,063 \nCharter and other transport services .......... . 47,418 43,503 \nMail ...................... . ............ . . . 763,586 875,587 \nIncidental revenue - net ................... . . 277,900 808,852 \n24,480,779 22,876,797 \nOperating Expenses: \nFlying operations ............... . .......... . 7,311,395 6,557,636 \nGround operations ....................... .. . 2,960,759 2,775,060 \nFlight equipment maintenance - direct ....... . 2,602,666 2,177,944 \nGround and indirect maintenance ............ . 1,197,839 1,116,157 \nPassenger service .......................... . 1,743,498 1,477,868 \nTraffic and sales ............................ . 2,204,549 2,044,680 \nAdvertising and publicity ................... . 723,049 749,434 \nGeneral and administrative .................. . 1,251,832 1,156,809 \nEmployee welfare .......................... . 747,927 611,493 \nDepreciation .............................. . 1,761,589 1,718,385 \n- - - - \n22,505,103 20,385,466 \nOperating Income .. . .................. . 1,975,676 2,491,331 \nNon-Operating Income: \nGain on disposition of property .............. . 507,520 137,814 \nOther .................................... . 27,614 58,381 \n535,134 196,195 \nNon-Operating Charges: \nInterest .. . ........................... . ... . 160,196 188,447 \nAmortization of routes, contracts and leases ... . 22,200 22,200 \nOther .................. . ................. . 19,715 42,015 \n202,111 252,662 \nIncome before Federal Taxes on Income .. . 2,308,699 2,434,864 \nProvision for Federal Taxes on Income ( Note 1) .. . 850,000 1,250,000 \nNet Income ................... . .... . . . . $ 1,458,699 1,184,864 \nI \nI \nI \nme \nfor the year ended \ndecember 31, 1954 \n(with comparative figures for 1953) \nstatement of surl,lus \nearned \nsurplus \nAmount as of December 31, 1953 . .. .... ........ . $ 4,462,199 \nNet income for 1954 . ....................... . 1,458,699 \nExcess of proceeds over par value of \n1,000 shares of capital stock issued \nunder restricted stock option plan . ..... . ... . \n5,920,898 \nDividends paid in cash - $0.60 a share . .. . .. .. . 429,277 \nAmount as of December 31, 1954 (Note 2) . . .. .. . $ 5,491,621 \ncapital \nsurplus \n4,569,039 \n9,280 \n4,578,319 \n4,578,319 \nfor the year ended \ndecember 31, 1954 \n balance sheet ......... . as ol December 31, 1954 \n(with comparative figures for 1953) \n-------assets--------------- --- - --------- ---- - - - ------- -- . ___ - - - - - -- - - - -- - - - - - - - - - - -- --- - --- - - -- - - I iabi I ities ----- - \nCurrent Assets: \n1954 1953 \nCurrent Liabilities: \n1954 195'3 \nCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,951,955 3,045,126 Current portion of long term debt ...................... $ 1,426,000 1,655,000 \nU.S. Government Securities at cost ..................... 997,410 996,310 Accounts payable .................................... 1,033,282 1,162,876 \nReceivables: Accounts payable - taxes collected from others .......... 299,081 342,107 \nTraffic balances ................................. 1,357,740 1,009,307 Accrued salaries, wages, taxes, insurance and other ....... 1,137,709 1,213,252 \nU.S. and State Government Departments ........... 271,577 355,616 \nAir travel plan deposits ............................... 269,150 244,800 \nOther (net of allowance for doubtful accounts $30,000) 162,335 274,569 \nUnused transportation ............................... 594,665 640,016 \n1,791,652 1,639,492 \nFederal taxes on income- estimated ................... 543,243 842,045 \nMaterials and supplies ................................ 282,036 383,575 Total Current Liabilities . .......................... 5,303,130 6,100,096 \nPrepaid expenses .................................... 769,794 790,727 Long term debt-secured (net of current portion included \nTotal Current Assets . ............................. 6,792,847 6,855,230 in Current Liabilities) (Note 2) ........................ 3,754,918 2,072,244 \nSundry securities ........................................ 68,728 16,377 Deferred Federal taxes on income (Note 1) .................. 360,000 204,000 \nProperties and equipment at cost (Note 2): \nCommitments and contingent liabilities (Note 3) \nFlight equipment .................................... 18,295,082 13,801,038 \nRetirement plan (Note 4) \nBuildings on and improvements to leased property ....... 3,351,564 3,294,762 \nOther property and equipment ........................ 1,821,723 1,758,300 Shareholders' Equity: \n23,468,369 18,854,100 Common stock - $1.00 par value per share \nLess allowance for depreciation ................... 10,322,236 9,010,003 Authorized 2,000,000 shares (Note 5) \n13,146,133 9,844,097 Issued 716,213 and 715,213 shares respectively ...... 716,213 715,213 \nDeposits on equipment purchase contracts .................. 1,154,038 Capital surplus ...................................... 4,578,319 4,569,039 \nRoutes, contracts and leases, less amortization $157,860 ....... 44,425 66,625 Earned surplus from December 31, 1934 ( Note 2) ....... 5,491,621 4,462,199 \nDeferred charges ........................................ 152,068 186,424 10,786,153 9,746,451 \n$20,204,201 18,122,791 $20,204,201 18,122,791 \n NEW YORK \nATLANTA \nl!!IALTIMORE \nl!IILLINOS \n!SOSTON \nl!!IU,.P-ALO \nCHARLOTTE \nCHICAGO \nCINCINNATI \nCLEVll!:L.AND \nCOLUMBUS \nDALLAS \nDC:NVEFt \nDETROIT \nORl!:ENSl!I0,-0 \nHOUSTON \n~~c~~~~a \nLOS ANOELl!:8 \nLOUISVILLE \nMEMPHIS \nMILWAUKEE \nMINNEA.-0Ll8 \nNASHVILLE \nNEWARK \nNEW ORLltAN8 \nOKLAHOMA CITY \nOMAHA \nPHIL.ADELPHIA \nPITT81!!1UROH \nPORTLAND \nRICHMOND \nST. LOUIS \nir,!i~co \nPEAT, MARWICK, MITCHELL \u0026 Go. \nCERTIFIED PUBLIC .ACCOUNT.ANTS \n616 SOUTH SPRINO STREET \nLOS AN6ELES 14, CALIF, \nACCOUNTANTS' REPORT \nA,-RICA \nAUSTRALIA \nCANADA \nCONTINENTAl. EUROPE \nGREAT BRITAIN \nHONG KONG \nINOIA \nJAPAN \nME)(ICO \nSOUTH AMEAICA \nThe Board of Directors \nWestern Air Lines, Inc.: \nWe have examined the balance sheet of Western Air \nLines, Inc. as of December 31, 1954 and the related statements of \nincome and surplus for the year then ended. Our examination was \nmade in accordance with generally accepted auditing standards, \nand accordingly included such tests of the accounting records and \nsuch other auditing procedures as we considered necessary in the \ncircumstances. \nIn our opinion, the accompanying balance sheet and \nstatements of income and surplus present fairly the financial \nposition of Western Air Lines, Inc. at December 31, 1954 and the \nresults of its operations for the year then ended, in conformity \nwith generally accepted accounting principles applied on a basis \nconsistent with that of the preceding year. \nLos Angeles, California \nFebruary 18, 1955 \nNote 1. Deferred Federal Taxes on Income. Depreciation for Federal tax purposes \nwill, through 1957, exceed that reported on the books of account as a result of deducting \naccelerated depreciation in tax returns. Accordingly, the Federal tax provision reflected \non the Statement of Income includes $156,000 set aside in 1954 to offset the estimated \neffect on Federal taxes which will occur in the years 1958-1961 when the depreciation \nrecordable on the books of account will be more than that allowable for Federal tax \npurposes. \n  \nNote 2. Long Term Debt-Secured. The notes payable of $5,180,918 ($1,426,000 \ncurrent and $3,754,918 long term) are repayable in monthly amounts aggregating \n$1,305,000 annually plus interest at 3 % per annum with final maturity on December \n31, 1960. Additional principal is to be repaid on or before each April 1 in amount equal \nto 33  % of net income of the preceding calendar year after adjustments for gains on \ndisposition of property when the related proceeds are remitted to the lender. The in- \ndebtedness is secured by specified properties representing a total cost of approximately \n$19,750,000. \nThe related bank credit agreement includes, among other things, conditions and re- \nquirements which effectively limit the amount of earned surplus distributable as cash \ndividends. The greatest amount is restricted by the requirement that the excess of \ncurrent assets over current liabilities ( exclusive of the current portion of long term \ndebt) shall not be less than $1,300,000. Earned surplus as of December 31, 1954 was \naccordingly restricted in the amount of $3,875,904 leaving $1,615,717 not so restricted. \nIn 1955 the credit agreement was amended to provide an additional $6,000,000 to be \nused for the acquisition of the Douglas DC-6B aircraft referred to in Note 3. The com- \nmitment fee is  of 1 % per annum. \nNote 3. Commitments and Contingent Liabilities. The Company has ordered five \nnew Douglas DC-6B aircraft with delivery scheduled to commence in May 1956. \nThis represents a commitment as of December 31, 1954 of approximately $6,000,000 . \nAs of December 31, 1954 the Company was contingently liable for claims and law \nsuits in which it is or may be a defendant but management and its counsel believe the \nultimate liability, if any, will not materially affect the financial statements. \nNote 4. Retirement Plan. The cost of the insured contributory retirement plan as \ncharged to operating expenses in 1954 totaled $408,857 for both current and past \nservices. Management contemplates that the remaining past service costs will be funded \nover a period of approximately nine years and will require annual payments of $106,000. \nNote 5. Options to Purchase Capital Stock. As of December 31, 1954 34,000 shares \nwere reserved under a Restricted Stock Option Plan approved by the shareholders in \n1951 for officers and key employees; in 1954 an option was exercised for 1,000 shares. \nOf the reserved shares 30,000 have been allocated and related options have been \ngranted for 29,500 shares at prices ranging from $8.19 to $14.14 a share. The term \nof each option granted shall be five years from the date granted and the right to grant \noptions under this plan shall terminate April 9, 1956. \n G. G. Brooder \nAssistant to the President \nWestern Air Lines, Inc. \nDenver, Colorado \nWESTERN AIRLINES \nboard ol directors \nand \nexecutive stall \nStanley R. Shatto \nVice President-Operations \nand Director \nWestern Air Lines, Inc. \nEarnest H. Brown \nAssistant Secretary and \nPersonnel Director \nWestern Air Lines, Inc. \nArthur F. Kelly \nVice President-Sales \nWestern Air Lines, Inc. \nPaul E. Sullivan \nVice President-Administration \nand Secretary \nWes tern Air Lines, Inc. \nC. J. J. Cox \nController and \nAssistant Treasurer \nWestern Air Lines, Inc. \nMarvin W. Landes \nVice President-Service \nand Director \nWestern Air Lines, Inc. \nJ. Judson Taylor \nVice President and Treasurer \nWestern Air Lines, Inc. \nHugh W. Darling \nDirector \nGuthrie, Darling \u0026 Shattuck, \nAttorneys at Law \nLos Angeles, California \nDonald H. Mclaughlin \nDirector \nPresident, Homestake Mining \nCompany \nSan Francisco, California \nHarry J. Volk \nDirector \nVice President for \nWestern Operations \nThe Prudential Insurance \nCompany of America \nLos Angeles, California \n---------------------------------------------------------- \n Terrell C. Drinkwater \nPresident and Director \nWestern Air Lines, Inc. \nThomas M. Murphy \nAssistant to the President \nWestern Air Lines, Inc. \nLos Angeles, California \nJohn M . Wallace \nDirector \nPresident, Walker Bank \n\u0026 Trust Company \nSalt Lake City, Utah \nRobert E. Driscoll \nDirector \nChairman of the Board \nFirst National Bank of the \nBlack Hills \nRapid City, South Dakota \nL. Welch Pogue \nDirector \nPogue \u0026 Neal, Attorneys at Law \nWashington, D.C. \nAlexander Warden \nDirector \nPublisher, Great Falls \nTribune-Leader \nGreat Falls, Montana \nHector C. Haight \nDirector \nConsultant \nHughes Aircraft Company \nCulver City, California \nD. P. Renda \nVice President-Legal \nWestern Air Lines, Inc. \nSidney F. Woodbury \nDirector \nChairman of the Board \nWoodbury \u0026 Company \nPortland, Oregon \nJoseph F. Ringland \nDirector \nPresident, Northwestern \national Bank of Minneapolis \nMinneapolis, Minnesota \n------------------------------WESTERN AIRLINES------ \n a decade of growth ... \n------- financial summary ----------------------------------- \n1954 1953 1952 1951 1950 1949 1948 1947 1946 1945 \nRevenues:* \nPassenger ..................... $22,423 20,302 16,250 13,688 11,395 8,471 7,813 10,114 10,474 5,654 \nMail .......................... 764 875 719 1,212 2,090 2,504 1,293 1,570 1,326 1,239 \nExpress, freight and excess baggage . 968 846 662 507 497 313 483 410 318 206 \nOther ......................... 326 853 964 875 264 246 31 282 118 132 \n- - - - - - - - \nTotal Revenues ............... 24,481 22,876 18,595 16,282 14,246 11,534 9,620 12,376 12,236 7,231 \nOperating Expenses:* \nDepreciation ................... 1,761 1,718 1,019 998 1,124 1,335 1,164 1,845 1,369 555 \nPayroll ........................ 9,239 8,367 7,067 6,084 5,353 4,855 4,973 5,773 5,916 3,110 \nOther ......................... 11,505 10,300 7,674 6,666 6,133 4,374 4,225 5,423 5,828 3,187 \nTotal Operating Expenses . . . . . . . 22,505 20,385 15,760 13,748 12,610 10,564 10,362 13,041 13,113 6,852 \nOperating Profit* .................. 1,976 2,491 2,835 2,534 1,636 970 (742) (665) (877) 379 \nOther Income* ................... 333 (56) ( 103) 280 ( 196) (258) ( 186) (192) (20) \n- - - - - - \n2,309 2,435 2,732 2,814 1,440 712 (928) (857) (877) 359 \nProvision for Federal Taxes on Income* 850 1,250 1,500 1,425 690 391 (589) 88 (277) 169 \n- - \nNet Income* ................... $ 1,459 1,185 1,232 1,389 750 321 (339) (945) (600) 190 \n* * * - - - - - -- \nEarnings per sharef ................ $ 2.04 1.66 1.72 2.52 1.43 0.61 (0.65) ( 1.80) ( 1.14) 0.46 \nDividends paid per share ........... 0.60 0.60 0.60 0.50 \n* * * \nWorking capital* .................. $ 1,490 755 1,364 435 981 243 (315) 1,410 (4,557) 764 \nLong-term debt* .................. 3,755 2,072 2,903 1,924 2,231 3,113 3,551 3,800 287 170 \nProperties and equipment- net* ..... 13,146 9,844 9,702 6,588 6,621 7,171 8,094 6,292 7,581 1,631 \nShares outstanding* ............... 716 715 715 550 525 525 525 525 525 410 \nShareholders' equity - total,:, ........ 10,786 9,746 8,991 6,396 5,045 4,295 3,974 4,314 3,665 2,009 \nShareholders' equity-a share f ....... $ 15.06 13.63 12.57 11.63 9.61 8.18 7.57 8.21 6.98 4.90 \n------- operating statistics ----------------------------------- \nRoute Miles. . . . . . . . . . . . . . . . . . . . . . 5,525 5,525 5,016 5,016 5,016 4,727 4,727 4,725 4,808 3,117 \nAvailable Ton Miles':' . . . . . . . . . . . . . . 80,261 68,580 48,557 43,036 44,515 32,034 29,534 35,757 35,831 \nRevenue Ton Miles* . . . . . . . . . . . . . . . 42,669 38,088 31,434 27,549 24,697 16,383 14,660 20,887 22,877 \nPassengers and Tonnage Carried: \nRevenue passengers .............. 834,910 838,732 774,079 691,322 61~,624 422,193 353,569 491,680 602,302 303,931 \nMail tons . . . . . . . . . . . . . . . . . . . . . . 3,283 3,284 3,243 3,419 2,150 1,359 1,543 1,722 1,852 3,347 \nExpress and freight tons. . . . . . . . . . 4,276 4,206 3,729 3,191 3,396 2,435 2,702 2,252 1,640 754 \nRevenue Miles Flown:* \nAirplane miles.. . . . . . . . . . . . . . . . . 15,842 14,450 12,631 11,487 11,783 9,496 8,707 9,607 10,594 7,279 \nPassenger seat miles ............. 721,255 613,814 453,332 401,720 414,169 299,503 243,771 312,615 301,856 138,852 \nPassenger miles ................. 402,255 359,965 298,931 259,693 233,118 155,747 135,724 194,923 214,023 117,106 \nMail ton miles. . . . . . . . . . . . . . . . . . 1,669 1,610 1,358 1,449 978 567 574 733 706 1,120 \nExpress and freight ton miles. . . . . . 2,556 2,100 1,524 1,282 1,442 926 1,089 912 635 307 \nOther Statistics: \nPassenger load factor ...... .. ..... % 55.7 58.6 66.0 64.7 56.3 52.0 55.7 62.4 70.9 84.3 \nAverage length in miles per \npassenger trip ................ 482 429 386 376 376 369 384 396 355 385 \nAverage revenue per passenger mile $ .0557 .0564 .0544 .0527 .0489 .0544 .0576 .0519 .0489 .0483 \nNumber of employees end of year .. 1,864 1,813 1,649 1,459 1,279 1,226 1,285 1,529 2,396 1,674 \n*000 omitted \nt based on shares outstanding at close \nof respective years \n vacation areas \nin 1Neslern America \nPuget Sound Playgrounds \nMt. Rainier National Park \nOlympic National Park \nColumbia River Gorge \nMt. Hood National Forest \nRedwood Empire \nGolden Gate-Bay Area \nCalifornia Beaches - Santa Monica and Malibu \nHollywood - Pasadena \nSanta Catalina Island \nSan Diego - La Jolla \nTijuana - Mexico \nPalm Springs - Desert Resorts \nLas Vegas - Lake Mead \nBryce and Zion National Parks \nCedar Breaks National Monument \nGrand Canyon National Park \nGreat Salt Lake Beaches - Mormon Temple Square \nSun Valley \nGrand Teton National Park- Jackson Hole Dude Ranches \nYellowstone National Park \nGlacier National Park \nWaterton International Peace Park \nCanada's Banff and Lake Louise \nJasper National Park \nMontana and Wyoming Dude Ranches \nRocky Mountain National Park \nMt. Rushmore National Monument \nThe Black Hills \nMinnesota's \"Land of 10,000 Lakes\" \nserved by \nWESTERN AIRLINES \n_- \n-- \n_ \n--- - I/ \n--:--:. \n~~ \n~ \n  \n \n \ns  \nPHOENIX \nWESTERN AlkUNES \nPresent and Proposed Routes \n "},{"id":"delta_wal-ar_wal-ar-1953","title":"Western Air Lines Annual Report 1953","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1954-02-26"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1953"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1953"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1953"],"dcterms_temporal":["1953-01-01/1953-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" 1953 1952 \nSeat Miles Flown ..................... 613,814,000 453,332,000 \nSeat Miles Sold ....................... 359,965,000 298,931,000 \nPassengers Carried .................... 838,732 774,079 \nTotal Operating Revenues ............. $22,876,797 18,595,063 \nNet Income .......................... 1,184,864 1,232,114 \nDividends Paid ....................... 429,128 404,369 \nCommon Stock Outstanding ........... 715,213 715,213 \nIncome per Share ................... 1.66 1.72 \nDividends per Share ................ 0.60 0.60 \nCash and U.S. Government Securities ... $ 4,041,436 5,090,998 \nWorking Capital ...................... 755,134 1,307,994 \nInvestment in Property and Equipment .. 18,854,100 17,430,349 \nNotes Payable to Bank ................ 3,727,244 4,618,837 \nTotal Shareholders' Equity ............ $ 9,746,451 8,990,715 \nShareholders' Equity per Share \nof Common Stock ................... 13.63 12.57 \nNumber of Employees ................ 1,813 1,649 \nWages and Salaries Paid ............... $ 8,708,869 7,436,27-5 \n WESTERN AIR LINES \nThis is the twenty-eighth annual report of \nAmerica's Oldest Airline. The year 1953 was a \nperiod of transition, and continued growth and \ndevelopment for your Company. A fleet of new \nDouglas DC-6B' s, one of the most modern and \nefficient airliners flying today, was placed in \nservice early in the year. A new, direct service \nwas inaugurated between Minneapolis/ St. Paul \nand Los Angeles, via Rapid City, Casper, and \nSalt Lake City, and major improvements were \neffected in service offered on the Company's \nother routes. \nThe traffic handled by Western in passen- \ngers, mail and cargo during 1953 substantially \nexceeded the volume for any other year in \nits history. Total operating revenues increased \n23% to an all-time record. Operation of the new \nroute and introduction of the DC-6B's added \napproximately 35% to the seat-miles flown by \nthe Company during the year. As a result of \nthis increase in service offered to the public, \ntogether with increased costs for wages, mate- \nrials and other items, total operating expenses \nwere approximately 29% above the previous \nyear. Although rising costs are of constant con- \ncern, it should be pointed out that during 1953 \nthe Company was able to reduce its unit costs \nmaterially. \nEarnings \nNet income for th year, aft r taxes, amount d \nto $1,184,864 or $1.66 per share of capital stock \noutstanding. This compar d with $1,232,114 or \n$1.72 per share for 1952. Although net earnings \ndid not quite equal those of the year preceding, \nthe integration of new aircraft, inauguration \nof a new route and additional services, coupled \nwith a decrease in unit costs, place your Com- \npany in an improved competitive position for \nfuture traffic and earnings. \nOne of the most serious problems facing the \nair transportation industry in recent years has \nbeen the necessity for absorbing the cost in- \ncreases inherent in an inflationary economy \nwithout _ \ncorresponding increase in the level of \nfares. This industry is one of the few segments \nof our nation's business that has absorbed \nsubstantially higher costs with no material \nincrease in the price of its product. The fare \npaid by Western's passengers during 1953 \naveraged 5.(34 cents per passenger-mile, or \nslightly less than the average level of 5.76 \ncents paid in 1948. During the same five years \nthe cost-of-living index rose steadily. Neverthe- \nless, Western in that period reduced its unit \noperating costs from 35.0 cents per available \nton-mile in 1948 to 29.7 cents for 1953. This \nachievement was made possible by the intro- \nduction of more modern and efficient aircraft, \ngreater efficiency of op ration, teamwork of \nthe Company's personnel, and a steadily \nincr asing volume of traffic. \nDividends \nIn 1953 the Company paid four quarterly divi- \ndends of 15 cents each, or a total of 60 cents \nper har , the same as paid in the previous \ny ar. At its first quarterly meeting in 1954, the \n 24 \n21 \n18 \n15 \n3 \nBoard of Directors declared a dividend of 15 \ncents per share, payable March 15, 1954, to \nshareholders of record March 1, 1954. \nFinances \nThe financial condition of the Company re- \nmains fundamentally sound. Cash and United \nStates Government securities as of December \n31, 1953, totaled $4,041,436. During the year \nWestern increased its investment in fixed assets \nby $1,423,751, completed progress payments \namounting to $479,301 on four additional \nDC-6B airplanes to be delivered in the fall of \n1954, and reduced notes payable by $891,593. \nAs a result, net working capital decreased from \n$1,307,994 at the close of 1952 to $755,134 at \nthe end of 1953. The balance of the purchase \nprice of the DC-6B aircraft which are on order \nwill be financed by additional borrowings of \n$3,600,000 at time of delivery in accordance with \nterms of the existing bank credit agreement. \nEquity of the shareholders increased from \n$8,990,715 at the close of 1952 to $9,746,451 at \nthe end of 1953, representing a gain in book \nvalue per share from $12.57 to $13.63. The \nshareholders' equity as of the close of 1952 was \npassenger revenue \nI \nI I \nI I \n1949 so 51 52 53 \n\"' \n\"' \n0 \n! \n\"' \nI,, \n;: \n.: \n\" \n0 \n0 \n\"\" \ntotal revenue \n \nI \nI I \nI I I \nI I I I \nI I I \n1949 50 51 52 53 \n0 \n~ \nC \n0 \nC \nrevised to reflect a charge to earned surplus \nof $190,820 necessitated by an adverse decision \nof the United States Supreme Court in connec- \ntion with a 1948 mail compensation case which \nhad been pending for . several years. \nRevenues \nTotal operating revenues increased from \n$18,595,063 in 1952 to $22,876,797 for 1953, \nan increase of 23%, and a new record for the \nCompany. Contributing substantially to this \ngain were the normal growth of air travel, the \neconomic growth of the areas served, the \ninauguration of service over the new route \nbetween Minnesota and California, and the \nimproved and augmented service made pos- \nsible by the new DC-6B equipment. \nThe number of passengers carried increased \nfrom 774,079 in 1952 to 838,732 for 1953. \nPassengers carried by Western during 1952 \ntraveled an average distance of 386 miles and \npaid an average of $20.99 for their tickets, \nexclusive of federal transportation tax. During \n1953 the average distance traveled increased \nto 429 miles and the average passenger paid \n$24.19 for his ticket, exclusive of tax. The Com- \npany's average revenue per passenger-mile \nduring 1953 amounted to 5.64 cents as com- \npared with 5.44 cents the prior year. The \ngreater yield per passenger-mile resulted from \nthe fact that the Company's principal increase \nin service during the year was in first-class \nrather than air coach schedules. Although pas- \nsenger traffic is by far the most important \nsource of revenue to Western, representing \n89% of total revenues in 1953, substantial gains \nwere also experienced in express, freight, and \nexcess baggage. These categories totaled \n$846,063, as compared with $661,987 for 1952, \nan increase in these revenues of 28%. \nExpenses \nOperating expenses for 1953 totaled $20,385,466 \nas compared with $15,759,745 for the year pre- \nceding, an increase of 29%. The increase in \nexpenses was largely the result of the additional \nservice made possible by the DC-6B aircraft, \ntrend of operating revenues \nmilllons of dollars \n simplified s tatement ol Income \nalthough increased cost of wages, materials and \nother expense items was a substantial factor. \nTotal aircraft operating expenses, which in- \nclude flying operations, the direct cost of main- \ntaining flight equipment, and depreciation on \nthis equipment, increased during the year by \n$3,010,233 or 42%. All ground and indirect \nexpenses increased $1,615,488 or 19%. For the \nyear 1952, total operating expenses per avail- \nable ton-mile flown amounted to 32.5 cents. \nIn 1953 however, this unit cost was reduced to \n29.7 cents per available ton-mile. At the same \ntime, Western's passenger breakeven load fac- \ntor was reduced from 54.9% in 1952 to 51.6% \nfor 1953. \nAircraft and Facilities \nIn addition to the new DC-6B aircraft which \nwere placed in scheduled service during 1953 \nby the Company on its Pacific Coast route and \nbetween Minnesota and California, important \nadditions and improvements were made in \nother flight equipment and ground facilities. \nThis continuing program resulted in comple- \ntion during the year of the following important \nprojects, most of which had been started in \n1952: The Company's five Douglas DC-4 air- \ncraft which are utilized in air coach service \nwere scheduled through the maintenance shops \nand received complete overhaul, including re- \nfurbishing of the cabin interiors. Interiors of \nthe nine Douglas DC-3 and ten Convair air- \ncraft were likewise modernized in keeping with \nthe new cabin decor of Western's fleet. Engines \nused on the Convairs were modified to permit \ninterchange with engines of t):ie new DC-6B \naircraft. In addition to improving the operat- \ning characteristics of the Convair-Liners, this \nchange also afforded the benefits of mainte- \nnance efficiency and economy which result \nfrom the highest practical degre of standardi- \nzation. Another area of improvement which \ninvolved substantial expenditur was the in- \nstallation of latest types of radio and naviga- \ntional equipment on all aircraft, including \nengine analyzers on ach of the four D -6B's. \nTo meet operating r quirements of its \nDC-6B's in the Pacific Northw st and the in- \nWhere our Income came from: 1953 \nPassengers ................. $20,302,792 \nMail ....................... 875,587 \nExpress, freight and baggage .. 846,063 \nGain on disposal of property .. 137,814 \nOther income ................ 1,752,423 \n23,914,679 \nAnd how It was used: \nWages and salaries ........... 8,708,869 \nSocial security, group insurance \nand retirement plan ...... 523,285 \nGasoline and oil ............. 3,219,067 \nMaterials, supplies \nand repair parts ......... 2,255,037 \nDepreciation and obsolescence. 1,740,585 \nAdvertising .................. 708,847 \nFor service to passengers ...... 756,734 \nRentals and landing fees .... . . 620,714 \nInsurance .................. 759,276 \nInterest . ................... 188,447 \nTaxes other than income taxes .. 658,712 \nUtilities and services .......... 662,087 \nOther costs .................. 678,155 \nTotal .................. 21,479,815 \nAmount remaining before \nFederal taxes on Income . .. 2,434,864 \nLess Federal taxes on Income . 1,250,000 \nNet Income ................... $ 1,184,864 \ncreased service offered to that area, the Com- \npany during 1953 completed a new hangar \nbuilding at the Seattle-Tacoma International \nAirport and a new passenger terminal building \nat Portland International Airport. At the same \ntime, sales, reservations, and passenger han- \ndling facilities were improved to meet the \nsteady increase in traffic. Streamlined and \ncentralized reservations control procedures \nwere established during the year; efficient, \nautomatic ticketing machines were placed in \nservice at key terminals; and downtown and \nairport ticket offices in a number of the major \ncities were modernized for greater operating \nutility and customer appeal. \nIt is anticipated that delivery of four addi- \ntional DC-6B's in the fall of 1954, one of which \nis a r plac m nt for th DC-6B lost in April of \n1953, may nabl the Company to retire some \nf its old r and less efficient aircraft. With nine \n22-pa s ng r DC-3 aircraft still in servic , it \n1952 \n16,250,201 \n719,266 \n661,987 \n26,154 \n1,927,190 \n19,584,798 \n7,436,275 \n335,012 \n2,104,793 \n1,977,205 \n1,082,344 \n512,284 \n588,809 \n535,936 \n515,788 \n108,539 \n533,278 \n573,732 \n548,689 \n16,852,684 \n2,732,114 \n1,500,000 \n1,232,114 \n simplified balance sheet \nis planned ultimately to replace as many as \npossible of these airplanes with the more mod- \nern and efficient pressurized Convair-Liners \nwherever traffic potential and airport conditions \nwarrant. \nMail Pay and Taxes \nMail compensation received by the Company \nincreased 21.7% during the year to $875,587. \nThis amounted to only 3.8% of Western's total \noperating revenues, and included no el~ment \nof subsidy. The increase in total compensation \nwas due to greater ton-mileage of mail carried, \nsince the service rate of 53 cents per ton-mile \nreceived by the Company remained unchanged \nduring both 1952 and 1953. \nLate in 1953, the Civil Aeronautics Board \ninstituted a proceeding to review the Com- \npany's mail rate as of January 1, 1954, together \nwith another proceeding to investigate the air- \nmail rate structure of the thirteen domestic \ntrunk lines. \nAlthough it is impossible to predict the final \nservice rate which the Civil Aeronautics Board \nwill establish for the Company, it is believed \nunlikely that the proceedings will result in \nany material reduction in the Company's mail \ncompensation. \nIn addition to the provision for federal in- \ncome taxes for 1953 in the amount of $1,250,000, \nWestern paid directly to the federal govern- \nment $325,186 in fuel and lubricant taxes, and \ncollected for the federal government the sum of \n$2,550,209 in transportation taxes on persons \nand property. There is some possibility that \nPassenger Revenue , \nAir Coach . 20.3.% . \n,;- \n'?other 3.?% \nWe own: 1953 \nCash and U.S. Govt. securities $ 4,041,436 \nOwed to us by others ......... 1,639,492 \nMaterials and supplies ........ 383,575 \nBuildings and improvements, net 2,322,383 \nFlight and other equipment, net. 7,521,714 \nDeposits on new equipment .... 1,154,038 \nPrepaid expenses ............ 790,727 \nDeferred charges, net ......... 65,426 \n17,918,791 \nWe owe: \nNotes payable ............... 3,727,244 \nAccounts payable ............ 2,963,035 \nIncome taxes ................ 842,045 \nTickets sold but not yet used .... 640,016 \n8,172,340 \nExcess of what we own over \nwhat we owe, \nor shareholders' equity .... $ 9,746,451 \nthe 15% transportation tax will be reduced \nduring the coming year. This levy initially was \nenacted primarily to discourage civilian use of \ntransportation facilities during World War II, \nand its repeal or reduction should have a \nstimulating effect on air travel. \nAir Coach Services \nPassenger revenue produced by the Company's \nair coach services during 1953 increased only \n$118,815 or 2.6%, due primarily to the fact that \nequipment was not available for additional \nCoachmaster schedules until late in the year. \nAs a result, virtually the entire increase in pas- \nsenger revenues during the year was attribut- \nable to first-class services. \nDuring 1952 air coach service produced \n27.9% of the Company's passenger revenues. \nWith the substantial increase in first-class serv- \nices in 1953, air coach revenues for that year \namounted to but 22.9%. Although Western did \nnot materially increase its air coach schedules \nduring 1953, the Company believes that the \ndemand for coach services between major \npopulation centers will continue to grow. \nTo meet requirements for additional \nfrequency and an economy-fare service, 66- \npassenger DC-4 Coachmaster flights were in- \nrevenue dollar \n1952 \n5,090,998 \n1,434,403 \n305,950 \n2,172,103 \n7,530,367 \n674,737 \n812,166 \n208,351 \n18,229,075 \n4,618,837 \n3,034,074 \n1,071,882 \n513,567 \n9,238,360 \n8,990,715 \n augurated on December 15 with a daily round- \ntrip between Minneapolis/St. Paul and Los \nAngeles, making one stop at Salt Lake City. \nEconomy flights are also operated with \nCoachmasters between all major cities on the \nPacific Coast, and between Los Angeles and \nLas Vegas, Nevada. On December 15, 1953, the \nCompany introduced a new excursion flight \nwith a special round-trip fare between San \nDiego and Las Vegas, via Palm Springs, Calif., \nlinking these famous resort centers for the first \ntime with direct air service. \nRoute Structure \nAt the close of 1953 the Western Air Lines \nsystem consisted of 5525 route miles, serving \n44 cities in twelve Western states and the Prov- \nince of Alberta, Canada. \nOn February 1, 1953, operations were started \nwith Convair-Liners over the important new \nroute between Minneapolis/St. Paul and Los \nAngeles, with intermediate stops at Huron, \nPierre, and Rapid City, South Dakota; Casper, \nWyoming; Salt Lake City, Utah, and Las Vegas, \nNevada. On March 1, 1953, an additional first- \nclass service was inaugurated with DC-6B \nequipment on a one-stop schedule. \nEarly in 1953 the Company filed with the \nCivil Aeronautics Board applications for a \nroute between Denver, Colorado, and San \nFrancisco-Oakland, California, via Salt Lake \nCity, Utah; and between Denver and San \nDiego, California, via Phoenix, Arizona. Strong \ncivic support is being extended on behalf of \nWestern's applications to provide vitally \nneeded regional trunkline air service between \nthese areas. The first-mentioned application has \nbeen consolidated in the \"Denver Service Case\" \nand hearings in that case are scheduled to \nbegin in May, 1954. \nSuspension of operations at El Centro, Cali- \nfornia, and Yuma, Arizona, ordered by the Civil \nAeronautics Board in 1952, remains in effect. \nThe Company has asked the Board to lift this \nsuspension and approve the extension of service \nfrom Yuma into Phoenix. \nThe certificate of public convenienc and \nnee ssity issued to Western by the Civil A ro- \nW ESTERN 'S \nnautics Board and approved by the President \nof the United States in 1946 for a route between \nLos Angeles and Mexico City remains inactive \nin the absence of a bilateral agreement be- \ntween the Governments of the United States \nand Mexico allowing reciprocal airline routes. \nThe status of this operation and its future \ndevelopment remains uncertain. \nAlthough the Company is still anxious to \nserve the city of Calgary in the Province of \nAlberta, Canada, a service which is needed, this \nservice cannot be provided until an agreement \nis reached between our Government and that \nof Canada. Conferences contemplating review \nof the existing bilateral agreement between the \ntwo countries are scheduled to be held in the \nnear future, but it is impossible to predict what \nthe outcome of these conferences may be. \nPersonnel \nThroughout the past year the Company has \nenjoyed excellent employee relations, and \nwishes to acknowledge the loyal and efficient \nservice of its personnel. At the end of the year, \nemployees totaled 1,813, of whom about 90% \nwere represented by the seven labor unions \nwhich have been certified as bargaining repre- \nsentatives for various employee groups. Nego- \ntiations presently are underway with respect to \nseveral proposed new contracts. Contract \nnegotiations in 1953 generally\"resulted in higher \nwage rates. \nThe Company's group insurance program \ncontinues to receive good acceptance. Of the \neligible employees, some 65% carry the life \n Twenty-five years of continuous service with Western Air Lines \nwas completed during 1953 by veteran employees (left to right), \nW. Edgar Eatchel, general foreman, Frank Eastman, dispatcher, \nand Fred Kelly, captain. \ninsurance coverage, 86% the sickness and acci- \ndent coverage, and 83% the hospitalization \nbenefits. This latter coverage was increased \nand broadened at the start of 1954. Effective \nJuly 1, 1952, with the approval of the share- \nholders, a Company-wide contributory Retire- \nment Plan was placed in effect. Approximately \n90% of eligible employees are now participat- \ning in this program. \nEmployees and their families have continued \nto utilize the Company's liberal policy with \nrespect to emergency and vacation transporta- \ntion on a space-available basis. \nDuring 1953 the Triple- Club, an educa- \ntional and entertainment organization of em- \nployees in the Los Angeles area, sponsored a \nnumber of successful activities. The Western- \naire Federal Credit Union, an employee organi- \nzation chartered in 1948, continued its progress \nduring the year. As of December 31, 1953, \nmembers' savings amounted to $535,000, and \noutstanding loans totaled $520,000. Since 1949 \nthe Credit Union has paid a dividend of 5% \nper year to depositing members. \nOutlook \nWestern Air Lines is fortunate to be located in \nand to serve the most promising and rapidly \ngrowing area of the United States. Many of \nthe 44 cities on the Company's system have \nmade record gains in population and industrial \nactivity during the past few years, and there is \nevery indication this trend will continue. As \nthe West continues its economic development \nin the years ahead, the demand for air transpor- \ntation will likewise increase, and your Company \nproposes to share in that growth as the regional \ntrunk airline for the Western states and the \nProvince of Alberta, Canada, which it is \nprivileged to serve. \nThe Company is owned by some 6500 share- \nholders, of whom a large proportion live in the \nWest. Grateful acknowledgment is made of the \nextent to which they have availed themselves \nof Western's services, and have encouraged \ntheir friends and associates to do so. \nConsiderable attention currently is being \ndevoted by many airlines and manufacturers \nto the development and utility of jet aircraft \nand helicopters. The Company is keeping in \nc~os_e touch with these developments. The jet \na1rlmers presently being designed for commer- \ncial service are intended for long-range opera- \ntions, and it does not appear likely there will be \na place for this type of aircraft in Western's \nequipment program for many years to come. \nDevelopment of the helicopter is along lines \nof short-haul, intracity, and airport shuttle \noperation, and in this type of air service the \n~elicopter probably will play an increasingly \nimportant role. \nDuring 1954 your Company will devote its \nefforts to increasing the dependability and effi- \nciency of its operation, improving its service to \nthe public, and providing the finest air trans- \nportation available in Western America. \nRespectfully submitted, \nPresident \nFebruary 26, 1954 \nWestern Air Lines Building \nLos Angeles International Airport \nLos Angeles 45, California \n Operating Revenue: \nPassenger ................................. . \nExpress, freight, excess baggage and other .... . \nCharter and other transport services ........... . \nIncidental revenue - net (Note 2) ............ . \nMail ..................................... . \nOperating Expenses: \nFlying operations ........................... . \nGround operations .......................... . \nFlight equipment maintenance - direct ........ . \nGround and indirect maintenance ............ . \nPassenger service ........................... . \nTraffic and sales ............................ . \nAdvertising and publicity .................... . \nGeneral and administrative .................. . \nDepreciation ............................... . \nOperating Income ................. ... .. . \nNon- Operating Income : \nGain on disposition of property ............... . \nOther .... . ......................... ... . . . . \nNon- Operating Charges: \nInterest ................................... . \nAmortization of routes, contracts and leases ..... . \nOther .................................... . \nIncome before Federal Taxes on Income ... . \nProvision for Federal Taxes on Income ( Note 3) .. . \nNet Income ......... . .................. . \nAmount reported as of December 31, 1952 ......... . \nDeduct retroactive mail pay adjustment ( Note 6): \nProvision for refund of 1948 mail pay ......... . \nRelated Federal tax credit ...... . ............ . \nProvision for contingencies created in 1951. . . . . \nAdjusted amount as of December 31, 1952 .......... . \nNet Income for 1953 ............... ...... ....... . \nDividends paid in cash - $0.60 a share ............ . \nAmount as of December 31, 1953 ( Note 1) ..... .... . \n1953 \n$20,302,792 \n846,063 \n43,503 \n808,852 \n22,001,210 \n875,587 \n22,876,797 \n6,557,636 \n2,775,060 \n2,177,944 \n1,116,157 \n1,477,868 \n2,044,680 \n749,434 \nL768,302 \n1,718,385 \n20,385,466 \n2,491,331 \n137,814 \n58,381 \n196,195 \n188,447 \n22,200 \n42,015 \n252,662 \n2,434,864 \n1,250,000 \n$ 1,184,864 \n$ 781,639 \n390,819 \n390,820 \n200,000 \n1952 \n16,250,201 \n661,987 \n8,766 \n954,843 \n17,875,797 \n719,266 \n18,595,063 \n4,658,975 \n2,478,858 \n1,739,368 \n960,103 \n1,179,019 \n1,684,652 \n554,454 \n1,485,680 \n1,018,636 \n15,759,745 \n2,835,318 \n26,154 \n32,319 \n58,473 \n108,539 \n21,240 \n31,898 \n161,677 \n2,732,114 \n1,500,000 \n1,232,114 \n$3,897,283 \n190,820 \n3,706,463 \n1,184,864 \n4,891,327 \n429,128 \n$4,462,199 \nPOii TH  Y  AII  ND D \nD C  M  II 31 0 \n1953 \n(with comparative figures for 1952) \nPOii TH  YAII ND D \nD C M  II a1. 1953 \n balance sheet .... \nc     as ol December 31, 1953 \n(with revised comparative figures for 1952-Note 6) \n1953 1952 1953 1952 \nCurrent Assets: Current Liabilities: \nCash ............ . .... . ........ . ..... . .. . ........... $ 3,045,126 2,603,698 Current portion of long term notes ................... $ 1,655,000 1,716,000 \nU.S. Government Securities at cost. ............ . . . ... . . 996,310 2,487,300 Accounts payable .................................. 1,162,876 1,491,627 \nReceivables: Accounts payable - taxes collected from others ........ 342,107 266,953 \nTraffic balances ....... . .. .... .. . ... . ....... . .. . .. 1,009,307 791,560 \nAccrued salaries, wages, taxes, insurance and other .... 1,213,252 1,045,569 \nU. S. and State Government Departments ........... 355,616 386,216 \nAir travel plan deposits ........... . ................. 244,800 229,925 \nOther ( net of allowance for doubtful accounts $25,000) 274,569 256,627 \nUnused transportation ............... . .............. 640,016 513,567 \n1,639,492 1,434,403 \nInventory of parts and supplies at the lower Federal taxes on income - estimated .. . . ............. 842,045 1,071,882 \nof cost or replacement market . ... . ............. . .. 383,575 305,950 Total Current Liabilities ....... . ................. 6,100,096 6,335,523 \nPrepaid expenses ... . . . .. ........ . . . . ... . . . . . ... .. . .. 790,727 812,166 Notes payable - secured ( net of current portion included \nTotal Current Assets . ..... . .. .. . .. .. . .. . .......... 6,855,230 7,643,517 in Current Liabilities) (Note 1) . ................... 2,072,244 2,902,837 \nSundry securities ... .. ............. . .......... . .......... 16,377 17,421 \nDeferred Federal taxes on income (Note 3) ............... 204,000 \nProperties and equipment at cost ( Note 1): \nShareholders' equity: \nFlight equipment . ... . . . ......... . . . . . . . . . . . . . ...... 13,801,038 12,757,010 \nBuildings on and improvements to leased property .. . . . .. 3,294,762 3,014,066 \nCommon stock - $1.00 par value per share \nOther property and equipment .. . .... . ... . .. . .... . . .... 1,758,300 1,659,273 Authorized 2,000,000 shares ( Note 4) \n18,854,100 17,430,349 Issued 715,213 shares .... . .. . .. . . .. ............ 715,213 715,213 \nLess allowance for depreciation .......... . .. ... . .. 9,010,003 7,727,879 Capital surplus ( no change during year) ............. 4,569,039 4,569,039 \n9,844,097 9,702,470 Earned surplus from December 31, 1934 ( Note 1) ...... 4,462,199 3,706,463 \nDeposits on equipment purchase contracts (Note 2) . ....... . . 1,154,038 674,737 9,746,451 8,990,715 \nRoutes, contracts and leases, less amortization $135,660 ... . ... 66,625 88,825 Commitments and contingent liabilities ( Note 2) \nDef erred charges .. ... . .. .. . .. . .... . . . ................... . 186,424 102,105 Retirement plan ( Note 5 ) \n$18,122,791 18,229,075 $18,122,791 18,229,075 \n , Rf.PORT \n~NTANTS ---- \nCalifornia \nLos Angeles, 26 1954 \nfebruarY ' \n... ,. .. ,c ... \n.-.us1\"-'1..1 \n\" \n~~:,.~:t:N'TAI.. Uf'OPI. \n~~::,. eRt'f-'IN \n1-40NG KONO \n1N0 1-' \nJ-'1\"-'M \n:~~~~O \n-'--'t:f'ICA \nNote 1. Notes Payable-Secured. The long term notes payable of $3,727,244 together \nwith the related equipment purchase borrowings to be obtained in 1954 of $3,600,000 \nare repayable in monthly amounts aggregating $1,305,000 annually plus interest at \nthe rate of 3  % per annum. Additional principal is to be repaid on or before each \nApril 1 in amount equal to 33  % of net income of the preceding calendar year. \nThe indebtedness is secured principally by aircraft, engines, propellers and the Los \nAngeles hangar and office building representing a total cost of approximately $14,750,000. \nThe related bank credit agreement includes, among other things, conditions and require- \nments which effectively limit the amount of earned surplus distributable as cash dividends. \nThe greatest amount of earned surplus is restricted by the requirement that the excess \nof current assets over current liabilities ( exclusive of the current portion of long term \ndebt) shall not be less than $1,000,000 or a greater amount measured by average monthly \nexpense ( exclusive of depreciation), which greater amount as of December 31, 1953 \napproximated $1,625,000. Earned surplus as of December 31, 1953 was accordingly \nrestricted in the amount of $3,677,065 leaving $785,134 not so restricted. \nIn 1953 the credit agreement was amended to provide $2,700,000 of the equipment- \npurchase borrowings above referred to and arrangements were made to increase this \n amount to $3,600,000 to be used for the acquisition of the Douglas DC-6B aircraft \nreferred to in Note 2. The maximum indebtedness is limited to $6,500,000. The commit- \nment fee on the unused portion is  of 1 % per annum. \nNote 2. Commitments and Contingent Liabilities. The Company is acquiring in 1954 \nfour new Douglas DC-6B aircraft with delivery scheduled to commence in August which \nrepresent a commitment at December 31, 1953 of approximately $4,800,000 as to which \nadvance payments of $1,154,038 were made. \nThough provision has been made for all known income tax liabilities, the Federal income \ntax returns ~or the years 1952 and 1953 are subject to examination by the U. S. Treasury \nDepartment. The Company has not been subject to the excess profits .tax. \nUnder applicable Federal statutes incidental revenues of the Company for 1951, 1952 \nand 1953 in respective gross amounts of $1,050,000, $1,700,000 and $1,500,000 are \nsubject to renegotiation. In the opinion of management the ultimate refund, if any, will \nnot have a materially adverse effect on the financial statements of the Company. \nAs of December 31, 1953 the Company was contingently liable for claims and law suits \nin which it is or may be a defendant but management and its counsel believe the ultimate \nliability, if any, will not materially affect the financial statements. \nNote 3. Deferred Federal Taxes on Income. The necessity certificates which covered \nfour DC-6B aircraft and the new Seattle hangar permit the deduction for Federal tax \npurposes of accelerated depreciation during the first five years. The additional depre- \nciation deduction, which is in excess of the depreciation recorded on the books of account, \nresults in 1953 in a deferral of Federal taxes on income of $124,000. The Federal tax so \ndeferred is included in the Federal tax provision reflected on the Statement of Income \nand is being set aside to offset the estimated Federal tax effect in those future years when \nthe depreciation recordable on the books of account will be more than that amount \nallowable for Federal tax purposes. \nThere is also included in the deferred tax account the amount of $80,000 which repre- \nsents the tax deferral occasioned by the involuntary gain resulting from the loss of a \nDouglas DC-6B aircraft. \nNote 4. Options to Purchase Capital Stock. 35,000 shares were reserved as of Decem- \nber 31, 1953 under a Restricted Stock Option Plan. 31,000 shares have been allocated, \nas of February 15, 1954, to twelve officers and key employees; options have been issued \nfor 30,000 of the allocated shares with option prices ranging from $8.49 to $14.14 a \nshare. The term of each option granted shall be five years from the date granted and \nthe right to grant options under this plan shall terminate April 9, 1956. \nNote 5. Retirement Plan. The cost of the insured contributory retirement plan as \ncharged to operating expenses in 1953 totaled $361,552 for both current and past serv- \nices. Management contemplates that the remaining past service cost will be funded over \na period of approximately ten years and will require annual payments of $106,000. \nNote 6. 1948 Mail Pay. The United States Supreme Court on February 1, 1954 affirmed \na decision of the United States Court of Appeals for the District of Columbia Circuit \nwhich will require a gross refund of mail pay for 1948 in the amount of $781,639 \n($334,639 has been previously recaptured); the case was remanded to the Civil o- \nnautics Board and under its administrative procedures the Compan might r~ re 1e \nbut not in excess of $447,000. Earned surplus has been charge w1tJi am~t of tqe \nmail pay involved less an applicable Federal tax credit. The relate rovisioh for o(_n- \ntingencies created in 1951 has been restored to earned surplus. (The compara v~l\u003ealan \nsheet figures as of December 31, 1952 have been accordingly rev1scu.--~--.J1.,--...-a.._ \n~~zi.f!i~~-fiE~~~~~ \n_ _. \n-- \n-- \n,r' \n,_..,,.,._ \n,,.-;,,,- - . \n;;,,;~\"!f; ~::._ \n-- \n.. -:,_;_ ; ---~ -.:I - - ~ \n Revenues:* \nPassenger ..................... $ \nMail .......................... \nExpress, freight and excess baggage. \nOther ......................... \nTotal Revenues ............... \nOperating Expenses: * \nDepreciation ................... \nOther ......................... \nTotal Operating Expenses ....... \nOperating Profit (Loss)* ........... \nOther Income or (Charges) * ........ \nProvision for Federal Taxes on Income':' \nNet Income (Loss)* ............. $ \nEarnings per sharef ................ $ \nDividends paid per share ........... $ \nRoute Miles ..................... . \nAvailable Ton Miles':' ............. . \nRevenue Ton Miles,;, .............. . \nPassengers and Tonnage Carried: \nRevenue passengers .... ......... . \nMail tons ..................... . \nExpress and freight tons ......... . \nRevenue Miles Flown:* \nAirplane miles . . ............... . \nPassenger seat miles ............ . \nPassenger miles ................ . \nMail ton miles ................. . \nExpress and freight ton miles ..... . \nOther Statistics : \nPassenger load factor ............ % \nAverage length in miles per \npassenger trip ................ . \nAverage revenue per passenger mile $ \nNumber of employees end of year .. \n* 000 omitted \nt based on shares outstanding at close \nof respective years. \n1953 1952 \n20,302 16,250 \n875 719 \n846 662 \n853 964 \n- - \n22,876 18,595 \n1,718 1,019 \n18,667 14,741 \n20,385 15,760 \n2,491 2,835 \n(56) ( 103) \n2,435 2,732 \n1,250 1,500 \n1,185 1,232 \n1.66 1.72 \n0.60 0.60 \n5,525 5,016 \n68,580 48,557 \n38,088 31,434 \n838,732 774,079 \n3,284 3,243 \n4,206 3,729 \n14,450 12,631 \n613,814 453,332 \n359,965 298,931 \n1,610 1,358 \n2,100 1,524 \n58.6 66.0 \n429 386 \n.0564 .0544 \n1,813 1,649 \n1951 1950 \n13,688 11,395 \n1,212 2,090 \n507 497 \n875 264 \n16,282 14,246 \n998 1,124 \n12,750 11,486 \n13,748 12,610 \n2,534 1,636 \n280 (196) \n2,814 1,440 \n1,425 690 \n1,389 750 \n2.52 1.43 \n0.50 \n5,016 5,016 \n43,036 44,515 \n27,549 24,697 \n691,322 619,624 \n,'.3,419 2,150 \n3,191 3,396 \n11,487 11,78,'.3 \n401,720 414,169 \n259,693 2,'.33,118 \n1,449 978 \n1,282 1,442 \n64.7 56.3 \n,'.376 376 \n.0527 .0489 \n1,459 1,279 \n1949 1948 1947 1946 1945 1944 \n8,471 7,813 10,114 10,474 5,654 3,169 \n2,504 1,293 1,570 1,326 1,239 837 \n313 483 410 318 206 155 \n246 31 282 118 132 130 \n- - \n11,534 9,620 12,376 12,236 7,231 4,291 \n1,335 1,164 1,845 1,369 555 321 \n9,229 9,198 11,196 11,744 6,297 3,677 \n- - \n10,564 10,362 13,041 13,113 6,852 3,998 \n970 (742) (665) (877) 379 293 \n(258) ( 186) (192) (20) 6 \n712 (928) (857) (877) 359 299 \n391 (589) 88 (277) 169 147 \n- - \n321 (339) (945) (600) 190 152 \n0.61 (0.65) ( 1.80) (1.14) 0.46 0.37 \n4,727 4,727 4,725 4,808 3,117 2,962 \n32,034 29,534 35,757 35,831 \n16,383 14,660 20,887 22,877 \n422,193 ,'.353,569 491,680 602,302 303,931 147,854 \n1,359 1,543 1,722 1,852 3,347 2,267 \n2,435 2,702 2,252 1,640 754 472 \n9,496 8,707 9,607 10,594 7,279 4,057 \n299,503 243,771 312,615 301,856 138,852 73,101 \n155,747 13.5,724 194,92,'.3 214,023 117,106 63,073 \n567 574 733 706 1,120 905 \n926 1,089 912 635 307 222 \n52.0 55.7 62.4 70.9 84.3 86.3 \n369 ,'.384 396 355 385 427 \n.0544 .0576 .0519 .0489 .0483 .0502 \n1,226 1,285 1,529 2,396 1,674 1,120 \n board of directors \nHugh W. Darling \nGuthrie, Darling \u0026 Shattuck, Attorneys at Law \nLos Angeles, California \nTerrell C. Drinkwater \nPresident, Western Air Lines, Inc. \nRobert E. Driscoll \nChairman of the Board of Directors \nFirst National Bank of the Black Hills \nRapid City, South Dakota \nHector C. Haight \nLos Angeles, California \nMarvin W. Landes \nVice President, Western Air Lines, Inc. \nL. Welch Pogue \nPogue \u0026 Neal, Attorneys at Law \nWashington, D. C. \nexecutive staff \nTerrell C. Drinkwater, President \nStanley R. Shatto, Vice President - Operations \nMarvin W. Landes, Vice President- Service \nPaul E. Sullivan, Vice President - \nAdministration and Secretary \nArthur F. Kelly, Vice President - Sales \nJ. Judson Taylor, Vice President and Treasurer \nD. P. Renda, Attorney and Assistant Secretary \nC. J. J. Cox, Controller and Assistant Treasurer \nG. G. Brooder, Assistant to the President \nThomas M. Murphy, Assistant to the President \nWESTERN AIR Lt. \nNES \nJoseph F. Ringland \nPresident, Northwestern National Bank \nof Minneapolis \nMinneapolis, Minnesota \nStanley R. Shatto \nVice President, Western Air Lines, Inc. \nHarry J. Volk \nVice President for Western Operations \nThe Prudential Insurance Company \nof America \nLos Angeles, California \nJohn M. Wallace \nPresident, Walker Bank \u0026 Trust Company \nSalt Lake City, Utah \nAlexander Warden \nPublisher, Great Falls Tribune-Leader \nGreat Falls, Montana \nSidney F. Woodbury \nChairman of the Board of Directors \nWoodbury \u0026 Company, Portland, Oregon \ngeneral ottices \nWestern Air Lines Building, 6060 Avion Drive \nLos Angeles International Airport \nLos Angeles 45, California \nregistrars \nCitizens National Trust \u0026 Savings Bank \nLos Angeles \nChase National Bank \nNew York \nstock transfer agents \nSecurity-First National Bank of Los Angeles \nLos Angeles \nNew York Trust Company \nNew York \ngeneral counsel \nGuthrie, Darling \u0026 Shattuck \nLos Angeles \nauditors \nPeat, Marwick, Mitchell \u0026 Co. \nLos Angeles \n EGAS y \n## \nSPRINGS \n# \n~s ..._# \nCH~ .... \n-.,PHOENIX \nWESTERN AIR LINES \nPresent and Proposed Routes \n "},{"id":"delta_wal-ar_wal-ar-1952","title":"Western Air Lines Annual Report 1952","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1953-03-02"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1952"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1952"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1952"],"dcterms_temporal":["1952-01-01/1952-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" WESTERN AIR LINES \nBoard of Directors \nHugh W. Darling \nGuthrie, Darling \u0026 Shattuck, Attorneys at Law \nLos Angeles, California \nTerrell C. Drinkwater \nPresident, Western Air Lines, Inc. \nRobert E. Driscoll \nChairman of the Board of Directors \nFirst National Bank of the Black Hills \nRapid City, South Dakota \nHector C. Haight \nLos Angeles, California \nMarvin W. Landes \nVice President, Western Air Lines, Inc. \nL. Welch Pogue \nPogue \u0026 Neal, Attorneys at Law \nWashington, D. C. \nExecutive Staff \nTerrell C. Drinkwater, President \nStanley R. Shatto, Vice President- Operations \nMarvin W. Landes, Vice President- Service \nPaul E. Sullivan, Vice President- \nAdministration and Secretary \nArthur F. Kelly, Vice President- Sales \nJ. Judson Taylor, Vice President and Treasurer \nD. P. Renda, Attorney and Assistant Secretary \nC. J. J. Cox, Controller and Assistant Treasurer \nG. G. Brooder, Assistant to the President \nThomas M. Murphy, Assistant to the President \nJoseph F. Ringland \nPresident, .Northwestern National Bank of Minneapolis \nMinneapolis, Minnesota \nStanley R. Shatto \nVice President, Western Air Lines, Inc. \nHarry J. Volk \nVice President for Western Operations \nThe Prudential Insurance Company of America \nLos Angeles, California \nJohn M. Wallace \nPresident, Walker Bank \u0026 Trust Company \nSalt Lake City, Utah \nAlexander Warden \nPublisher, Great Falls Tribune-Leader \nGreat Falls, Montana \nSidney F. Woodbury \nChairman of the Board of Directors \nWoodbury \u0026 Company, Portland, Oregon \nGeneral Offices \nWestern Air Lines Building, 6060 Avion Drive \nLos Angeles International Airport \nLos Angeles 45, California \nRegistrars \nCitizens National Trust \u0026 Savings Bank \nLos Angeles \nChase National Bank \nNew York \nStock Transfer Agents \nSecurity-First National Bank of Los Angeles \nLos Angeles \nNew York Trust Company \nNew York \nGeneral Counsel \nGuthrie, Darling and Shattuck \nLos Angeles \nAuditors \nPeat, Marwick, Mitchell \u0026 Co. \nLos Angeles \n TO THE STOCKHOLDERS OF \nWESTERN AIR LINES, ITS CUSTOMERS AND PERSONNEL \nEarnings \nThe .year 1952, twenty-seventh year of continuous \noperation by Western Air Lines, was a period of \ncontinued growth and development. The Company \nestablished new records in passenger traffic and \noperating revenue. Net income, after taxes and all \ncharges, was $1,232,114, as compared with earnings \nof $1,389,300 in 1951 (which included substantial \nnon-recurring profits from the sale of fixed assets), \nand $750,200 in 1950. Net income from all sources, \nper share of capital stock outstanding amounted to \n$1.72 for 1952, against $1.94 the preceding year, \nand $1.05 in 1950.,:, Net income for 1951 included \n$.52 per share derived from the sale of fixed assets. \nOperating income for the year was a record \n$2,835,318, as compared with $2,533,761 for 1951, \nand $1,635,761 in 1950. \nDividends \nDuring 1952 the Company increased its dividends \n* Earnings per share for all years are computed on \nthe 715,213 shares of capital stock outstanding as \nof December 31, 1952. \nTREND OF \nMAIL \nNON-MAIL \n1936 1948 1949 \nto 60 cents per share, which was paid in four \nquarterly dividends of 15 cents each. This com- \npared with two semi-annual payments of 25 cents \neach or a total of 50 cents per share for 1951. Prior \nto that year the last dividend to stockholders had \nbeen paid in 1936. At its first quarterly meeting \nfor 1953, 'the Board of Directors declared a dividend \nof 15 cents per share payable March 16, 1953 to \nshareholders of record March 2, 1953. \nFinances \nContinued improvement was made in the Com- \npany's financiaJ position during the year. At the \nclose of 1952, current assets (including $5,090,998 \ncash and government securities) totaled $7,643,517. \nCurrent liabilities were $6,279,342, leaving net \nworking capital of $1,364,175. During the year, \nproperty, plant, and equipment were increased \napproximately $4,000,000. This included the receipt \nof three new four-engine Douglas DC-6B aircraft \nand related equipment. Two additional DC-6Bs \nwere delivered by Douglas Aircraft Company in \nJanuary of 1953, completing a $6,000,000 purchase \n1950 1951 1952 \n18,595,063 \n15,000,000 \n10,000,000 \n5,000,000 \n2,000,000 \n500,000 \n10,000 \n by Western of the latest and finest airliners. \nThe Company's increase in net working capital \nand funds for the purchase of new airplanes and \nequipment were provided from three sources: earn- \nings retained in the business, increases in bank \nloans, and the sale of additional capital stock. In the \nspring of 1952, the Company sold 165,049 shares \nof capital stock to the public with net proceeds of \n$1,766,663. Bank indebtedness was increased dur- \ning the year by $1,833,837. As a result of earnings \nretained in the business, after dividends paid to \nstockholders, the net book value per share of stock \noutstanding at the end of 1952 increased to $12.84 \nper share. This compares with net book value per \nSimplified Balance Sheet \n1952 1951 \nWe own: \nCash and U.S. Government securities ... $ 5,090,998 \nOwed to us by others. . . . . . . . . . . . . . . . 1,434,403 \nMaterials and supplies . . . . . . . . . . . . . . . 305,950 \nBuildings and improvements, net... . . . 2,172,103 \nFlight and other equipment, net. . . . . . . 7,530,367 \nDeposits on new equipment.... . . . . . . . 674,737 \nPrepaid expenses. . . . . . . . . . . . . . . . . . . . 812,166 \nDeferred charges less provision for \ncontingencies . . . . . . . . . . . . . . . . . . 342,990 \nWe owe: \nNotes payable ..................... . \nAccounts payable .................. . \nInco1ne taxes ...................... . \nTickets sold but not yet used ......... . \nExcess of what we own over what we owe, \n18,363,714 \n4,618,837 \n2,587,077 \n1,462,701 \n513,564 \n9,182,179 \nor stockholders' equity . ................ $ 9,181,535 \n3,222,954 \n1,485,382 \n323,873 \n2,271,299 \n4,317,060 \n1,313,375 \n484,121 \n184,408 \n13,602,472 \n2,785,000 \n2,345,081 \n1,454,891 \n430,378 \n7,015,345 \nM87,127 \nshare of $11.97 at the close of 1951. \nIn anticipation of future requirements for addi- \ntional schedules and service, the Company recently \nplaced an order for three more DC-6B aircraft, to \nbe delivered in 1954. Funds for the additional \nplanes will be provided for through a credit agree- \nment with the Bank of America, which will be par- \nticipated in by a group of western banks on the \nCompany's system. \nRevenues and Expenses \nOperating revenues for the year totaled $18,595,063, \nan increase of 14.2% over 1951, and a new record for \nthe Company. Passenger revenues were up 18.7% \nover the previous year. Reflecting Western's non- \nsubsidy status, mail compensation at the same time \ndecreased 40.7%. Mail pay during 1952 represented \nonly 3.9% of total operating revenues, as compared \nwith 21.7% in 1949. \nDuring 1952 passenger traffic was at the highest \nlevel in ~Vestern's history, with a total of 774,079 \npassengers carried an average distance of 386 miles. \nThese passengers paid, exclusive of Federal trans- \nportation tax, an average of $20.99 for their tickets, \nequivalent on the average to 5.44 cents per mile. \nBy comparison, the average per mile ticket cost on \nthe Western Air Lines system in 1951 was 5.27 \ncents per mile. \nAirline fares are one of the very few commodities \nwhich are available to the public at a lower cost \ntoday than prevailed four years ago. Moreover, \n between 1940 and 1952, although the cost-of-living \nindex soared 89.2%, Western increased its average \npassenger fares by only 14%. \nTotal operating expenses f9r the year amounted \nto $15,759,745, an increase of 14.6% over 1951. The \nincrease in operating expense was attributable to \nseveral factors - important among them being an \nincrease of 12% in the number of passengers carried \nand an increase of 9.8% in total miles flown. But in \naddition to the expanded scope of operations, the \ncost of wages, materials, and nearly everything \nrequired in the Company's activities reflected \nincreases during the year. Per revenue ton mile \nflown operating expenses were 50.1 cents, as com- \npared with 49.9 cents per revenue ton mile flown in \n1951. \nThe airline industry's ability to maintain fares \nat approximately comparable levels during the past \ndecade has been due primarily to incr~ased volume \nof traffic, increased efficiency, and the use of \nincreasingly modern equipment. But unless the \ninflationary spiral of wages, materials, and services \nis checked, it is likely that a point will be reached \nwhen increased costs can no longer be absorbed by \nincreased voJume, and can be met only by an \nincrease in fares. \nPersonnel \nNo airline in the industry has a finer group of \nskilled and experienced personnel than Western. \nThe successful operations of the Company in 1952 \nwere due to the loyalty and hard work of these \npeople, who numbered 1649 at the close of the year. \nThey serve in five major divisions of the Company: \n( 1) Operations, which includes flight, maintenance, \nengineering and communications; ( 2) Service, \nwhich includes stations, reservations, in-flight \nservice, cargo, and stewardesses; ( 3) Sales, which \nincludes traffic, advertising, and public relations; \n( 4) Treasury, which includes accounting, purchas- \ning, stores, and budget control; and ( 5) Adminis- \ntration, which includes corporate, legal, insurance, \npersonnel, and office management. \nIn 1952, to complet the employees' insuranc \nprogram, a company-wide contributory retirement \nplan was approved by the shareholders and placed \nin effect. It was accepted by about ninety per \ncent of the eligible employees. Participation in the \nCompany's group accident and sickness insurance, \ngroup hospitalization insurance, and group life \ninsurance increased materially during the year. The \nCompany's liberal policy of emergency and vaca- \ntion transportation on a space-available basis for \nall personnel and their families was continued and \nused extensively. \nWesternaire Federal Credit Union - an \nemployees' organization - had a very successful \nyear. Total employees' savings on deposit at the \nend of the year exceeded $384,000. A dividend of \nfive per cent was paid to all depositing members \nby the Credit Union. \nNew Aircraft and Facilities \nFive new DC-6B aircraft costing approximately \n$6,000,000 are now being operated by Western be- \ntween leading cities on the Pacific Coast, and on \nSimplified Statement of Income \n1952 1951 \nIncome was derived from : \nPassengers ......................... $16,250,201 \nMail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719,266 \nExpress, freight and baggage. . . . . . . . . . 661,987 \nOther income . . . . . . . . . . . . . . . . . . . . . . 1,927,190 \nGain on disposal of property.. . . . . . . . . 26,154 \nTotal Income . . . . . . . . . . . . . . . . . . . 19,584,798 \nThe costs of doing business were : \nWages and salaries ....... . ....... . 7,436,275 \nSocial security, group insurance and \nretirement plan . . . . . . . . . . . . . . . . . 335,012 \nGasoline and oil. . . . . . . . . . . . . . . . . . . . . 2,104,793 \nMaterials, supplies and repair parts. . . . . 1,977,205 \nDepreciation and obsolescence . . . . . . . . 1,082,344 \nAdvertising and publicity. . . . . . . . . . . . . 512,284 \nFor servic to passengers. . . . . . . . . . . . . .588,809 \nRentals and landing f es. . . . . . . . . . . . . 535,936 \nInsurance . . . . . . . . . . . . . . . . . . . . . . . . . 515,788 \nInterest . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,539 \nTaxes other than income taxes. . . . . . . . . 533,278 \nUtilities and servic s. . . . . . . . . . . . . . . . . 573,732 \nOther costs. . . . . . . . . . . . . . . . . . . . . . . . . 548,689 \nTotal Costs ..... . ............ . . - 16,852,684 \nAmount remaining before Federal Income taxes. . 2,732,114 \nLess Federal taxes on Income. . . . . . . . . . . . . . . . 1,500,000 \nNet Income . ............ . ..... . ...... . ... $ 1,232,114 \n13,687,903 \n1,211,975 \n506,715 \n1,367,140 \n480,435 \n17,254,168 \n6,389,012 \n250,210 \n1,772,690 \n1,343,147 \nl ,04, \n'3,467 \n542,940 \n510,270 \n488,565 \n486,181 \n123,801 \n408,213 \n509,436 \n571,936 \n14:-,i39,868 \n2,814,300 \n1,425,000 \n1]89,300 \n its new, direct route between Minnesota and Cali- \nfornia. These airplanes were ordered from the \nmanufacturer in the spring of 1951, with deliveries \nbeginning in late 1952. Western's DC-6Bs are the \nmost advanced version of the world-famous \nDouglas airliners, and are equipped with every \nmodern development for safety, speed and comfort. \nTheir interiors feature typically Western fabrics, \nMore than 35% of Western's passengers during 1952 \nwere women and children. \ndesigns and colors. Initial reaction among travelers \nto the inauguration of DC-6B service by the Com- \npany has been gratifying, and it is anticipated that \nthe present fleet, augmented by the three additional \nDC-6Bs now on order, will be important factors in \nWestern's competitive position and in its service \nto the public. \nAs part of the Company's continuing pro~ram of \nimprovement and modernization, engines used on \nits fleet of Convair-liners are being converted to \nthe same type of power plant employed in the \nDC-6Bs. This work is being done by Western in its \nown maintenance shops. The conversim1 will pro- \nvide uniform and interchangeable engines for both \ntypes of aircraft, with resultant benefits in operating \nand maintenance efficiency and economy. \nTo gear its service and sales facilities for the \nsteady increase in traffic being experienced, the \nCompany has added to its teletype communications \nsystem on the new route, has centralized and \nstreamlined reservations control on a system-wide \nbasis, and has underway a program for improve- \nment of city ticket offices and airport passenger \nhandling facilities. The Company has just com- \npleted construction of a new hangar building at \nthe Seattle-Tacoma International Airport at a cost \nof approximately $210,000 to meet DC-6B operat- \ning requirements. \nThe maintenance and headquarters facilities \ncompleted in 1947 by Western at Los Angeles Inter- \nnational Airport at a cost of $2,500,000 have been \nprogressively modernized. The Company now has \none of the most complete and best-integrated main- \ntenance and overhaul bases in the West, with suffi- \ncient capacity to absorb continued expansion in the \nCompany's operations. During 1952, Western per- \nformed in these shops a substantial amount of con- \ntract maintenance work for other air carriers which \nwere engaged in international operations and in \nthe Korean airlift. \nMail Pay and Taxes \nThe Civil Aeronautics Act of 1938 as amended \nprovides that the compensation paid airlines for \ncarrying the United States mails should be at a \nrate which will cover the cost of the service fur- \nnished and in addition give the airline, under effi- \ncient management, a reasonable rate of return on \nthe investment of its stockholders. The goal of the \nscheduled trunk airlines for many years has been \nto reach a point of self-sufficiency where the amount \npaid for carrying the mail was not in excess of the \ncost of the service rendered the Post Office Depart- \nment. That point has been reached by Western Air \nLines and since October 1, 1951, Western has re- \nceived but 53 per ton mile of mail carried. This \n rate has been determined by the Civil Aeronautics \nBoard to contain no element of subsidy. \nHaving emerged, for the first time in its history, \nfrom being a subsidized air carrier to Western' s \npresent position where no subsidy is received, it \nis highly important that everything possible be \ndone to strengthen that position. In order to main- \ntain Western's status as a permanently self-sufficient \ncarrier, far-sighted and intelligent government reg- \nulation of the industry by the Civil Aeronautics \nBoard is essential. \nThe Company and the industry must be per- \nmitted to earn through their own endeavors suffi- \nciently liberal profits as will maintain stability and \nestablish the confidence of the investing public, \nthus making airline securities attractive as a sound, \nlong-range investment. The ability of the airline \nindustry to maintain low fares in an inflationary \neconomy has been due in no small part to the \nreplacement of aircraft and other airline equipment \nwith modern and more efficient airplanes and facili- \nties. In order for this pattern of progress to continue, \nlarge additional investments by the airline industry \nwill have to be made in the years ahead. \nThe question has been raised as to whether the \nairlines are paying their fair share of the cost of \ngovernment airway facilities used jointly by the air- \nlines, military, and various other airplane operators. \nThe facts are that the scheduled airlines pay more \nthan their fair pro-rata share for their use of such \nfacilities. Airline use, incidentally, is small com- \npared with the utilization of these facilities by non- \nairline aircraft. For the calendar year 1952, Western \npaid directly to the Federal government for fuel \nand lubricant taxes the sum of $234,970. In addi- \ntion to the Company's Federal income taxes for \nthat year in the amount of $1,500,000, the Com- \npany remitted to the Federal government for trans- \nportation taxes on passengers and property the sum \nof $2,068,659. \nAir Coach Services \nWestern was the first scheduled, certificated air- \nline to inaugurate air coach service on the Pacific \nCoast. This phase of Western's operations, in bring- \ning the benefits of dependable, economical air \nCOACH \n-e- DELUXE \ntransportation to as many travelers as possible, has \nbecome increasingly important both to the Com- \npany and to the industry. Western now operates \neconomy-fare flights between all major cities on \nthe Pacific Coast, and between Los Angeles and \nLas Vegas, Nevada. During 1952, air coach passen- \ngers constituted more than 35% of the Company's \ntraffic, compared with 30% for 1951. These opera- \ntions are conducted by the Company exclusively \nin Douglas DC-4 Coachmasters. To be operated \nefficiently and profitably at this stage of its deve\\op- \nment, economy coach service must be offered only \nbetween traffic centers of - \nsubstantial population, \nand the flights must be flown with aircraft contain- \ning higher-density seating than is normally used \nfor deluxe services. Within these limitations \nWestern anticipates continuing and substantial \nincrease in this type of service. \n400,000 \n300,000 \n200,000 \n100,000 \n50,000 \n Route Structure \nSince its creation in 1938, at which time it inherited \na patchwork system of \"grandfather routes,\" the \nCivil Aeronautics Board has developed a pattern \nof domestic scheduled airlines comprising three \ngeneral types of carriers, with functional overlap- \nping in some instances. \nFirst, the coast-to-coast trunk airlines, whose \nmajor operation is the long-haul, transcontinental \nbusiness. These four larger carriers receive no \nsubsidy. In 1952, they, together with the. largest \nregional trunk line in the East, did over 77% of \nthe total domestic trunkline passenger business, \nthe balance being divided in varying proportions \namong the remaining ten certificated trunk airlines. \nSecond, the regional trunk airlines, which is \nWestern Air Lines' category. Most of these regional \ncarriers, including Western, receive no subsidy. The \nfunction of the primary regional carriers, in the \nregions they serve, is to transport passengers, prop- \nerty, and mail - principally between major metro- \npolitan areas. Some of the regional trunk lines are \ncompetitive on portions of their routes with rela- \nWESTERN'S \nEXPENSE \nDOLLAR \nI ' \n~ \nTaxes \n11.1% \ntively short segments of the coast-to-coast carriers. \nThird, the local service, or \"feeder\" airlines, \nwhich are engaged in the short-haul traffic to and \nfrom small cities generally in groupings around \nlarge metropolitan areas. Airlines in this third class \nreceive a substantial subsidy in order to permit \ntheir useful but necessarily high-cost operation to \nbe conducted at a profit. \nLooking ahead, there are many reasons to be- \nlieve that the delineation between these three \nclasses of carriers will, in the future, become even \nmore marked than it has been in the past. An impor- \ntant influence on this trend may be anticipated from \nthe new coast-to-coast, non-stop aircraft presently \nbeing manufactured for the transcontinental air- \nlines, which probably will be followed into service \nby long-range jet transports. \nWestern is in the fortunate position of being \nwell-established as the regional trunk airline for the \nWest. There is no other major trunk airline exclu- \nsively serving this western area. This is in marked \ncontrast with the situation existing in the eastern \nportion of the country, where the number of \nAIJ Other \nExpenses \n20.2% \nWages and Salaries \n{l \n111 [[I [IJI I IJ] \n regional trunk lines is being reduced with approval \nof the Civil Aeronautics Board through mergers. \nWestern has no plan or intention to merge with \nany other carrier. The route structure of Western \nAir Lines today consists of 5525 miles, serving 44 \ncities in 12 western states and the Province of \nAlberta, Canada. \nTo meet the rapidly increasing demands for air \ntransportation in the western area it serves, Western \nhas filed applications for authority to operate direct \nair routes between Denver, Colorado, and San \nFrancisco-Oakland, California, via Salt Lake City, \nUtah, and between Denver and San Diego, Cali- \nfornia, via Phoenix, Arizona. All of these cities, with \nthe exception of Phoenix, are now served by \nWestern on its existing routes. Favorable action on \nthese two petitions, which will soon be heard by \nthe Civil Aeronautics Board, will enable the Com- \npany to provide vitally needed additional regional \ntrunk line service in rapidly growing and impor- \ntant areas. The 1,869 new route miles sought by \nWestern in these applications will, as shown on the \nmap in this report, aid in the sound integration of \nWestern' s existing regional system. \nThe Company also has on file with the Civil \nAeronautics Board an application to furnish serv- \nice on a direct route between San Francisco and \nLas Vegas, Nevada, and an application to include \nSioux Falls, South Dakota, on its route connect- \ning Minneapolis-St. Paul, Rapid City, and Denver. \nOther matters are pending before the Civil Aero- \nnautics Board, of major importance, whereby \nWestern is seeking a more orderly pattern of its \nroutes by eliminating, where feasible to do so, un- \nnecessary and uneconomic service. \nDuring 1952, by order of the Civil Aeronautics \nBoard, the cities of Yuma, Arizona, and El Centro, \nCalifornia, were suspended from Western's certifi- \ncates and given to a \"feeder airline\" to be operated \non a local service, subsidized basis. \nOn April 10, 1952 the Company's former sub- \nsidiary, Inland Air Lines, Inc., was dissolved and \nits routes and operations transferred to the parent \ncompany. \nAt the close of 1952 Western was granted by the \nCivil Aeronautics Board a very important new route \nbetween Salt Lake City and Rapid City, South \nDakota, via Casper, Wyoming. This new route, \nwhich closes a long-existing gap in Western's sys- \ntem, not only permits the Company to provide \nmuch-needed one-carrier service between these \nUtah, Wyoming, and South Dakota cities with \nConvair aircraft, but also makes possible entirely \nnew one-stop direct service with Douglas DC-6Bs \nbetween Minneapolis-St. Paul and Southern Cali- \nfornia, via Salt Lake City. The Company antici- \npates substantial and growing traffic over this route \nlinking key areas of the West. \nSince 1946, Western has had a certificate of public \nconvenience and necessity issued by the Civil Aero- \nnautics Board and approved by the President of the \nUnited States, for a route between Los Angeles and \nMexico City. Service over this route has been and \nstill is delayed because of the absence of a bilateral \nagreement between the Governments of the United \nStates and Mexico allowing reciprocal airline routes \nbetween the two countries. During 1952 no progress \nwas made in this regard and its status and future \ndevelopment at the present time is uncertain. \nWestern is continuing to urge that it be per- \nmitted to serve the city of Calgary, located midway \nbetween the cities of Lethbridge and Edmonton \nin the Province of Alberta, Canada, which latter \ntwo cities are presently served by the Company. \nAlthough strong civic support is being extended in \nbehalf of Western Air Lines service for Calgary, \nthis is a matter that can be resolved only by our \nown Government and that of Canada. \nThe West \nThe 12 western states and the Province of Alberta, \nCanada, served by the Company comprise a sub- \nstantial portion of the new economic frontier of \nNorth America. The emergence of the West from \nits traditional position as an economic colony of the \nEast strongly points toward increased demands for \nfour-directional air transportation in this region. \nThe amazing population growth during the last \ndecade of virtually every city served by Western, \nthe increasing decentralization of industry and of \ngovernment, and the rapid expansion of new west- \n WESTERN Announces \nNJ~\\r Dlll/Jl'l1 ll()lJlE \n1JU11~~~UN L()S Al\\f (JJ~IJ~S \nJ\\1\\fl) l\\iINNl~\\P()JJS Sl:Pl\\lJl \nNow -for the first time -you can fly \nbetween Southern California and the Twin Cities \nwithout changing planes! \n. . ~ . d the long-needed \n: . . Western's new route prov1 es t l \n. . skyway for business and pleasure rave \nthe great metropolitan centers \n . between . 1 \nnd Los Angeles. \n. . of Minneapolis-St. Pau a \n 3 flights daily \non Western's New \nDirect Skyway \nfrom the \nUpper Midwest \nto California \nr--------------------------, \nNOW/ P . \nDC6B $E.f\u003cV!CE. \nONE-srop \nBetween L \nand Minne os Angeles \napolis/St. Paul \nNON-STop \nFron, S I \nto Minne a t L?ke City \napol,s/St p \nand L  au/ \n. os Angeles \n NOW! \nTHROUGH SERVICE to California \nSy filling In the\"Missing (.ink\" \nPresident Terrell C. Drinkwater with Western Air Lines \ndirectors John M. Wallace, Salt Lake City; Robert E. \nDriscoll, Rapid City; and Joseph F. Ringland, Minneapolis; \nat civic event honoring Western's new route. \nem industries and markets all carry with them the \nneed for additional airline service designed spe- \ncifically for western travel. The western states are, \nfor the most part, not laced with concentrated net- \nworks of competitive surface carriers, and western \ncities generally are farther apart than are eastern \ncities. For these reasons among others, air travel \nper capita in the West is considerably higher than \nin the East. \nWestern Air Lines proposes to grow and develop \nas a stable, unsubsidized public utility to meet these \nnew requirements. The Company holds no ambi- \ntions to become a coast-to-coast airline. Western's \nBoard of Directors is now composed of outstanding \nWestern leaders from a number of the key cities \nserved. A very high percentage of Western's 6,500 \nstockholders live in the West. Western's stock offer- \ning in 1952 was, by agreement with the under- \nwriters, distributed almost entirely to the public \nin the cities on Western's routes. All of Western's \nfinancing and practically all of its purchasing is \ndone in the West. All of the key people in Western's \nmanagement are Westerners. Western's local per- \nsonnel participate in civic activities in every city \non the system. With this background and planned \nprogram for sound development, the outlook can \nbe nothing but optimistic for the future of America's \nOldest Airline. \nIt is with pleasure that announcement is made \nof the election of Joseph F. Ringland, President of \nthe Northwestern National Bank of Minneapolis, \nto the Board of Directors of the Company, and of \nthe election of J. Judson Taylor, formerly Treasurer, \nto the office of Vice President and Treasurer. \nRespectfully submitted. \nMarch 2, 1953 \nWestern Air Lines Building \nLos Angeles International Airport \nLos Angeles 45, California \nPresident \n Statement of Income \nFor the Year Ended December 31, 1952 \n(with comparative figures for 1951 l \nOperating Revenue: \n1952 \nPassenger ... . ............. . .......................... . $16,250,201 \nExpress, freight, baggage and other ..................... . 661,987 \nCharter and other transport services ..................... . 8,766 \nIncidental revenue - net (Note 6) ................ . ...... . 954,843 \n17,875,797 \nMail ...........................................  .. .... . 719,266 \n18,595,063 \nOperating Expenses: \nFlying operations ..................................... . 4,658,975 \nGround operations .................................... . 2,478,858 \nFlight equipment maintenance - direct .................. . 1,739,368 \nGround and indirect maintenance .............. . ........ . 960,103 \nPassenger service . . . . . . . . . . . . . . . . . . . . . . . ...... . ....... . 1,179,019 \nTraffic and sales ................................... . ... . 1,684,652 \nAdvertising and publicity .............................. . 554,454 \nGeneral and administrative ............................. . 1,485,680 \nDepreciation ......................................... . 1,018,636 \n15,759,745 \nOperating Income ................................ . 2,835,318 \nNon-Operating Income: \nGain on disposition of property . . .... . ..... . ............ . 26,154 \nOther .........................  . ..................... . 32,319 \n58,473 \nNon-Operating Charges: \nInterest ................................ . ... . ......... . 108,539 \nAmortization of routes, contracts and leases ............... . 21,240 \nOther ..... . ......................................... . 31,898 \n161,677 \nIncome before Federal Taxes on Income ............. . 2,732,114 \nProvision for Federal Taxes on Income (excess profits tax - none) 1,500,000 \nNet Income (Notes 6 and 7) ..... . ......... . ........ . $ 1,232,114 \nStatement of Surplus \nFor the Year Ended December 31, 1952 \nAmount as of December 31, 1951: \nOf the Company ....... .. ............ . ......... . .... . . . \nOf the dissolved subsidiary (Note 7) .. . . . ....... ... ...... . \nAdd: Net income for the year 1952 .. . ................... . .. . \nExcess of cash proceeds over par value of 165,049 shares \nof common stock issued during the year .......... . ... . \nEarned \nSurplus \n$ 2,403,192 \n666,346 \n3,069,538 \n1,232,114 \n4,301,652 \nDeduct: Dividends paid in cash - $0.60 a share. . . . . . . . . . . . . . . 404,369 \nExpenses incurred in connection with issuance of \n165,049 shares of common stock .......... . ........ . \nAmount as of December 31, 1952 (Note 1) ... . ............. . ..  $ 3,897,283 \n1951 \n13,687,903 \n506,715 \n131,368 \n743,553 \n15,069,539 \n1,211,975 \n16,281,514 \n4,016,622 \n2,330,450 \n1,345,389 \n817,576 \n1,036,101 \n1,384,410 \n586,227 \n1,232,699 \n998,279 \n13,747,753 \n2,533,761 \n480,435 \n21,237 \n501,672 \n123,801 \n18,828 \n78,504 \n221,133 \n2,814,300 \n1,425,000 \n1,389,300 \nCapital \nSurplus \n2,967,425 \n2,967,425 \n1,733,014 \n4,700,439 \n131,400 \n4,569,039 \n Balance Sheet \nAssets  \nCurrent Assets: 1952 \nCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,603,698 \nU.S. Government Securities at cost ...................... . \nReceivables: \nU.S. and State Government Departments ............ . \nTraffic balances ................................... . \nOther ( net of allowance for doubtful accounts $25,000) . \nInventory of parts and supplies at the lower \nof cost or replacement market ............ ............ . \nPrepaid expenses ...................................... . \nTotal Current Assets . .......................... . \nSundry securities .......................................... . \nProperties and equipment at cost ( Note 1): \nFlying equipment ..................................... . \nBuildings on and improvements to leased property. , ..... . \nOther property and equipment ......................... . \nLess allowance for depreciation ..................... . \nDeposits on equipment purchase contracts ( Note 2) ........... . \nRoutes, contracts and leases, less amortization $113,460 ........ . \nDeferred charges: \nClaim for recaptured mail pay ( Note 3) ................. . \nOther ............................................... . \n2,487,300 \n386,216 \n791,560 \n256,627 \n1,434,403 \n305,950 \n812,166 \n7,643,517 \n17,421 \n12,757,010 \n3,014,066 \n1,659,273 \n17,430,349 \n7,727,879 \n9,702,470 \n674,737 \n88,825 \n334,639 \n102,105 \n436,744 \n$18,563,714 \n1951 \n3,222,954 \n475,140 \n739,804 \n270,438 \n1,485,382 \n323,873 \n484,121 \n5,516,330 \n16,962 \n8,831,906 \n2,989,534 \n1,626,032 \n13,447,472 \n6,859,113 \n6,588,359 \n1,313,375 \n96,459 \n126,000 \n144,987 \n270,987 \n13,802,472 \n As of December 31, 19, 2 \n(with comparative figures for 19511 \nCurrent Liabilities: \nCurrent portion of long term notes ...................... . \nAccounts payable ..................................... . \nAccounts payable - taxes collected from others ........... . \nAccrued salaries, wages, taxes, insurance and other ........ . \nAir travel plan deposits ................................ . \nUnused transportation ................................. . \nFederal taxes on income - estimated .................... . \nTotal Current Liabilities . ........................... . \nNotes payable - secured (net of current portion ~ncluded \nin Current Liabilities) (Note 1) ......................... . \nProvision for contingencies (Note 3) ......................... . \nShareholders' equity: \nCommon stock - $1.00 par value per share \nAuthorized 2,000,000 shares ( Note 4) \nIssued 715,213 and 550,164 shares respectively ....... . \nCapital surplus ....................................... . \nEarned surplus from December 31, 1934 ( Note 1) ......... . \nCommitments and contingent liabilities ( Note 2) \nRetirement plan ( N ot_ \ne 5 ) \n1952 \n$ 1,716,000 \n1,044,627 \n266,953 \n1,045,569 \n229,925 \n513,567 \n1,462,701 \n6,279,342 \n2,902,837 \n200,000 \n715,213 \n4,569,039 \n3,897,283 \n9,181,535 \n$18,563,714 \n1951 \n861,000 \n887,417 \n246,095 \n1,001,619 \n209,950 \n430,373 \n1,454,891 \n5,091,345 \n1,924,000 \n200,000 \n550,164 \n2,967,425 \n3,069,538 \n6,587,127 \n13,802,472 \n _,...,n.,'l'l'~~ \n~ \nNotes to Financial Statements \nNote 1. Notes Payable-Secured. The long term notes payable of $4,618,837 \ntogether with the loans obtained in January 1953 of $1,800,000 are repayable \nin monthly amounts aggregating $1,305,000 annually. Additional principal \nis to be repaid on or before each April 1 in amount equal to 331/3 % of net \nincome of the preceding calendar year. The indebtedness is secured principally \nby aircraft, engines, propellers and the Los Angeles hangar and office building \nrepresenting a total cost of approximately $15,300,000 including $2,100,000 \nfor two Douglas DC-6B aircraft delivered in January 1953. \nThe related bank credit agreement includes, among other things, conditions \nand requirements which effectively limit the amount of earned surplus dis- \ntributable as dividends. The greatest amount of earned surplus is restricted \nby the requirement that the excess of current assets over current liabilities \n(exclusive of the current portion of the long term debt) shall not be less than \n$1,000,000 or a greater amount determined by projecting average monthly \nexpense (exclusive of depreciation) which greater amount as of December 31, \n1952 approximated $1,300,000. Accordingly, earned surplus as of December \n31, 1952 was restricted in the amount of $2,117,108 leaving $1,780,175 \nnot so restricted. \n In December 1952 arrangements were made to amend the credit agreement \nto provide for an additional borrowing in 1954 of $2,700,000 to be used for \nthe acquisition of three Douglas DC-6B aircraft referred to in Note 2. The \nmaximum indebtedness will continue to be limited to $6,500,000 with the \ncommitment fee on the unused portion remaining at  of 1 % per annum; \ninterest on the total indebtedness is to be increased, effective in 1953, from \n3% to 3% per annum. \nNote 2. Commitments and Contingent Liabilities. In December 1952 \nthe Company contracted for three additional Douglas DC-6B aircraft with \ndelivery scheduled to commence in August 1954. These three aircraft together \nwith the two like aircraft acquired in January 1953 represented a total \ncommitment at December 31, 1952 of approximately $5,600,000 as to which \nadvance payments of $674,737 were made; additional advance payments on \nthe aircraft ordered in December 1952 are to be made in 1953 on or before \nMay 1 in amount of $696,000. \nThough provision has been made for all known income tax liabilities the \nFederal income tax returns for the years 1950 through 1952 are subject to \nexamination by the U. S. Treasury Department. \nAs of December 31, 1952 the Company was contingently liable for claims \nand law suits in which it is or may be a defendant but management and its \ncounsel believe the ultimate liability, if any, will not materially affect the \nfinancial statements. \nNote 3. Claim for Recaptured Mail Pay. The Post Office Department in \n1951 and 1952 recaptured $334,639 of mail revenue related to the period \nprior to January 1, 1949. This action was taken in view of an Opinion and \nOrder issued by the Civil Aeronautics Board under date of October 12, 1951. \nManagement is of the opinion that the position of the Civil Aeronautics Board \nas taken in such order is legally wrong and should not be sustained in an \nappeal for review now pending before the United States Circuit Court of \nAppeals. The Post Office Department has also filed an appeal from the Board's \norder in which they assert that the Company should be required to refund \nan additional $447,000. Pending the final outcome of this matter the Company \nhas established a provision for contingencies of $200,000 measured by the \namount recaptured ( as set forth under Deferred Charges) net of a related \nFederal tax credit. \nNote 4. Options to Purchase Capital Stock. 35,000 shares were reserved \nas of December 31, 1952 under a Restricted Stock Option Plan. 31,000 \nshares have been allocated, as of March 2, 1953, to twelve officers and \nkey employees; options have been issued for 27,750 of the allocated shares \nwith option prices ranging from $10.28 to $14.14 a share. The term of each \noption granted shall be five years from the date granted and the right to \ngrant options under this plan shall terminate April 9, 1956. \nNote 5. Retirement Plan. A contributory retirement plan for all eligible \nemployees including officers, implemented by a group annuity insurance \ncontract, was placed into effect on July 1, 1952. The plan, which is cancellable \nby the Company, was submitted to and approved by the stockholders on \nApril 8, 1952. The cost of the plan as charged to operating expenses in 1952 \ntotaled $153,632 for both current and past service costs. Management con- \ntemplates that the unrecorded cost for past service benefits of approximately \n$1,060,000 will be funded over an 11 year period requiring annual payments \nof $106,000, the first of which was made in December 1952. \nNote 6. Revenue Subject to Renegotiation. Under applicable Federal \nstatutes incidental revenues of the Company in gross amount of approximately \n$1,050,000 for 1951 and $1,600,000 for 1952 are subject to renegotiation. \nIn the opinion of management the ultimate refund, if any, will not have a \nmaterially adverse effect on the financial statements of the Company. \nNote 7. Dissolution of Subsidiary Company. Effective April 10, 1952, \nthe Company's 99% owned subsidiary, Inland Air Lines, Inc. (previously \nconsolidated from June 1, 1944, date of acquisition, through December 31, \n1951) was dissolved and its assets, liabilities and operations were transferred \nto the Company with a cash provision being made for the outstanding minority \nshares. Accordingly, the Statement of Income for 1952 includes Operating \nRevenue and Net Income of the dissolved subsidiary for the period January 1 \nthrough April 9, 1952 in the respective amounts of $812,441 and $7,022; \nalso, the Statement of Earned Surplus includes the prior earnings which were \napplicable to the Company's investment in the subsidiary. ~ ... \n Revenues:* 1944 1945 1946 1947 1948 1949 1950 1951 1952 \nPassenger ......... , ............. $ 3,169 5,654 10,474 10,114 7,813 . 8,471 11,395 13,688 16,250 \nMail ............................ . 837 1,239 1,326  1,570 1,740 2,504 2,090 1,212 719 \nExpress, Freight and Excess Baggage 155 206 318 410 483 313 497 507 662 \nOther ........................... 130 132 118 282 31 246 264 875 964 \n- - - - \nTotal Revenues ................. $ 4,291 7,231 12,236 12,376 10,067 11,534 14,246 16,282 18,595 \nOperating Expenses: * \nDepreciation ..................... $ 321 555 1,369 1,845 1,164 1,335 1,124 998 1,019 \nOther ........................... 3,677 6,297 11,744 11,196 9,198 9,229 11,486 12,750 14,741 \nTotal Operating Expenses ......... $ 3,998 6,852 13,113 13,041 10,362 10,564 12,610 13,748 15,760 \nOperating Profit (Loss)* .............. $ 293 379 (877) (665) (295) 970 1,636 2,534 2,835 \nOther Income or ( Charges) * .......... ~ (20) ( 192) (186) (258) (196) 280 ( 103) \n$ 299 359 (877) (857) (481) 712 1,440 2,814 2,732 \nProvision for Federal Taxes on Income* $ 147 169 (277) 88 ( 333 ). 391 690 1,425 1,500 \n- - - - \nNet Income (Loss)* ............... $ 152 190 (600) (945) (148) 321 750 1,389 1,232 \n- - - - - - \nOperating Statistics \nRoute Miles ........................ 2,962 3,117 4,808 4,725 4,727 4,727 5,016 5,016 5,016 \nAvailable Ton Miles':' ................ n/a n/a 35,831 35,757 29,534 32,034 44,515 43,036 48,557 \nRevenue Ton Miles* ................. n/a n/a 22,877 20,887 14,660 16,383 24,697 27,549 31,434 \nPassengers and Tonnage Carried \nRevenue Passengers ................ 147,854 303,931 602,302 491,680 353,569 422,193 619,624 691,322 774,079 \nMail Tons ........................ 2,267 3,347 1,852 1,722 1,543 1,359 2,150 3,419 3,243 \nExpress and Freight Tons ........... 472 754 1,640 2,252 2,702 2,435 3,396 3,191 3,729 \nRevenue Miles Flown* \nAirplane Miles . . . . . . . . ............ 4,057 7,279 10,594 9,607 8,707 9,496 11,783 11,487 12,631 \nPassenger Seat Miles ............... 73,101 138,852 301,856 312,615 243,771 299,503 414,169 401,720 453,332 \nPassenger Miles ................... 63,073 117,106 214,023 194,923 135,724 155,747 233,118 259,693 298,9,'.31 \nMail Ton Miles ................... 905 1,120 706 733 574 567 978 1,449 1,358 \nExpress and Freight Ton Miles ...... 222 307 635 912 1,089 926 1,442 1,282 1,524 \nOther Statistics: \nPassenger Load Factor (%) ......... 86.3 84.3 70.9 62.4 55.7 52.0 56.3 64.7 66.0 \nAverage Length in Miles per \nPassenger Trip .................. 427 385 355 396 384 369 376 376 386 \nAverage Revenue per Passenger Mile $ .0502 .0483 .0489 .0519 .0576 .0544 .0489 .0527 .0544 \nNumber of Employees End of Year ... 1,120 1,674 2,396 1,529 1,285 1,226 1,279 1,459 1,649 \n* 000 omitted n/a not available \n ... from Los Angeles \nand San Francisco to \nSeattle-Tacoma and Portland! \n~ \nWestern's DC-6B is the most advanced version of the \n~ world-famous Douglas airliners- newer, bluer, faster! \n CITY \nGAS \n# \nPRINGS \n~ # # \n-()PHOENIX \n~ \n~\\') \n~~\u003c,'-, ~,;:.\u003c::, \n.~r::.\\r::,_\u003c:i .ff MINNEAPOLIS \n~\" 'Ii -----,ST.PAUL \nROCHESTER \nWESTERN AIR LINES ., \nPresent and Proposed Routes \n "},{"id":"delta_wal-ar_wal-ar-1951","title":"Western Air Lines Annual Report 1951","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1952-03-01"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1951"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1951"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1951"],"dcterms_temporal":["1951-01-01/1951-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" Terrell C. Drinkwater \nStanley R. Shatto \nMarvin W. Landes \nPaul E. Sullivan \nArthur F. Kelly \nJ. J. Taylor \nD. P. Renda \nC. J. J. Cox \nI. W. Burnham II, New York City \nHugh W. Darling, Los Angeles \nRobert E. Driscoll, Rapid City, South Dakota \nHector C. Haight, Los Angeles \nL. Welch Pogue, Washington, D. C. \nHarry J. Volk, Los Angeles \nJohn M. Wallace, Salt Lake City \nAlexander Warden, Great Falls, Montana \nSidney F. Woodbury, Portland, Oregon \nGENERAL OFFICES \nWestern Air Lines Building, 6060 Avion Drive \nREGISTRARS \nCitizens National Trust \u0026 Savings Bank \nChase National Bank \nSTOCK TRANSFER AGENTS \nSecurity-First National Bank of Los Angeles \nNew York Trust Company \nGENERAL COUNSEL \nGuthrie, Darling and Shattuck \nAUDITORS \nPeat, Marwick, Mitchell \u0026 Co. \nPresident and Director \nVice President - \nOperations and Director \nVice President - \nService and Director \nVice President - \nAdministration and Secretary \nVice President - \nSales \nTreasurer \nAssistant Secretary and Attorney \nController and Assistant Treasurer \nDirector \nDirector \nDirector \nDirector \nDirector \nDirector \nDirector \nDirector \nDirector \nLos Angeles International Airport, Los Angeles 45, California \nLos Angeles \nNew York \nLos Angeles \nNew York \nLos Angeles \nLos Angeles \n TO THE STOCKHOLDERS OF \nWESTERN AIR LINES, ITS CUSTOMERS AND PERSONNEL \nThe year 1951, during which Western \nAir Lines, Inc.*, celebrated its Silver \nAnniversary, was one of continued development \nand progress for the Company. New records for \ntraffic and net income were established. Net in \ncome for the year, after taxes and all other charges, \namounted to $1,389,300 or $2.52 per share, includ \ning approximately 68^ per share realized from the \nsale of assets. This compares with adjusted net \nincome of $750,200, or $1.36 per share, for 1950 \nand $320,806 or 58^ per share, earned during 1949, \nbased upon 550,164 shares of capital stock outstand \ning on December 31, 1951. \nDuring the year 1951, 691,322 passengers were \ncarried a distance of 260,000,000 revenue passenger \nmiles over the Company's 5,016-mile route system. \nTotal operating revenues were $16,281,514, an in \ncrease of 14% over the preceding year, despite the \nfact that over 5% of the Company's scheduled air \nplane miles in 1951 were cancelled due to a 15-day \nMechanics' Union strike during the third quarter. \nPassenger revenues increased 20% and mail com \npensation decreased $878,056, or 42%, as compared \nwith 1950. \nCoach operations, pioneered by Western, have \nbecome increasingly important to the Company \nand to the industry generally. During 1951, coach \npassengers constituted 30% of the total revenue pas \nsengers carried by the Company. Western recently \nhas added daylight coach service on its route north \nof San Francisco-Oakland, thus making daylight \neconomy flights available for the first time, border \nto border, from San Diego to Seattle-Tacoma. \nTotal operating expenses during 1951 were \n$13,747,753, as compared with $12,610,732 for the \nyear 1950, an increase of 9% reflecting the con \ntinuing rising costs of payrolls, taxes, parts and \nsupplies. Of the total revenue dollar, 37% was ex \npended for wages and salaries and 27% for materials, \ngasoline and depreciation. \n0 Throughout this report, the operations of the Company's sub \nsidiary, Inland Air Lines, Inc., are consolidated with those \nof the parent Company, except where otherwise indicated. \n Although direct taxes accounted for but 12% of \nthe Company's revenue dollar during 1951, it is \napparent that substantial additional indirect taxes \nwere included in the price paid by the Company \nfor practically everything it bought. \nThe Company also collected from its customers \nand employees approximately $2,600,000 in trans \nportation, payroll and withholding taxes for re \nmittance to the Federal and State Governments. \nProbably one-third of the price of each ticket sold \nby the scheduled airlines represents tax payments \nin one form or another. \nDuring its 25th year of service, the Company \ncompleted 98.25% of all miles scheduled throughout \nits system (excluding flights cancelled during the \nmechanics' strike). Western carried an average of \n1,975 revenue passengers during each day of opera \ntion. These passengers traveled an average of 376 \nmiles and paid, exclusive of the Federal transporta \ntion tax, an average of $19.80 for their tickets. \nSHAREHOLDERS \nWestern is owned by approximately 5,000 share \nholders holding a total of 550,164 shares of out \nstanding capital stock. The stock is listed and traded \nCONDENSED COMPARATIVE BALANCE SHEET \n($000 omitted) \nASSETS \n(What we own) \nAs of December 31 \n1951 1950 1949 \nCurrent assets: \nCash $ 3,223 $ 1,635 $ 1,401 \nAccounts receivable.. \n. \n1,485 1,363 1,021 \nInventories 324 245 210 \nPrepaid expenses 484 482 461 \nTotal 5,516 3,725 3,093 \nSundry securities 17 11 11 \nProperties and \nequipment 13,448 12,934 12,598 \nLess allowance \nfor depreciation (6,859) (6,313) (5,427) \nDeposits on equipment \npurchase contracts . .. . \n1,313 - - \nRoutes, contracts \nand leases 96 113 127 \nDeferred charges 271 186 176 \nTotal assets $13,802 $10,656 $10,578 \nLIABILITIES \n(What we owe) \nAs of December 31 \n1951 1950 1949 \nCurrent Liabilities: \nNotes payable $ 861 $ 440 $ 773 \nAccounts payable .... \n916 847 583 \nAir travel plan deposits 210 203 206 \nAccrued salaries, \nwages and expenses. 1,209 333 326 \nUnused transportation. 430 264 174 \nFederal taxes on income 1,455 890 694 \nTotal 5,081 2,977 2,756 \nNotes payable -- \nlong term 1,924 2,231 3,113 \nProvision for \ncontingencies 200 200 200 \nMinority stockholders \ninterest 10 12 23 \nShareholders equity: \nCapital stock 550 525 525 \nCapital surplus 2,967 2,768 2,768 \nEarned surplus 3,070 1,943 1,193 \nTotal 6,587 5,236 4,486 \nTotal liabilities $13,802 $10,656 $10,578 \nShareholders' equity \nper share $11.97 $9.97 $8.54 \n on the New York Stock Exchange and on the Los \nAngeles Stock Exchange. It also is traded on the \nSan Francisco Stock Exchange. During 1951, \n369,800 shares of stock were traded on the New \nYork Stock Exchange within a price range of $11% \nlow and $16 high; on the Los Angeles Stock \nExchange 36,240 shares were traded between a low \nof $12 and a high of $15%. The year-end closing \nprice of the stock on the New York Exchange was \n$15/8. The net book value per share of the stock as \nof December 31, 1951 was $11.97, as compared with \n$9.97 per share, as adjusted, on December 31, 1950. \nFor the first time since 1936, stockholders received \na dividend in 1951 consisting of two payments of \n25 cents each or a total of 50 cents per share. It is \nthe hope of the Board of Directors and Manage- \nment of the Company that earnings will \npermit the continuation of regular divi \ndend payments to shareholders. \nThe Company solicits the support of its share \nholders in furnishing modern air transportation to \n45 cities in 13 Western states and Canada. Western \nhopes its stockholders will use its passenger, mail \nand cargo services and will urge such use by their \nfriends and associates. \nFINANCES \nIn the Spring of 1951, the Company arranged for \na bank credit totaling $8,000,000 but limited to \n$6,500,000 at any one time. During the year, the \nCompany borrowed $3,500,000 against this credit, \nof which $2,500,000 was used to retire the \nCompany's loan from the Reconstruction Finance \nCorporation and the balance was used for progress \npayments on the five Douglas DC-6B aircraft which \nare on order. As at December 31, 1951, these bor \nrowings had been reduced to $2,785,000. It is \nanticipated that additional borrowings will be made \nunder the credit agreement during 1952 to complete \nthe purchase of the five Douglas DC-6B aircraft. \nIn order to improve Western's working capital \nposition and to provide additional funds for general \ncorporate purposes, the Board of Directors has \nunder active consideration the issuance of addi \ntional capital stock with rights to be made available \nto existing stockholders. The time of issuance will \ndepend upon market and general business condi \ntions, and when and if action is taken in this regard \nall stockholders will be promptly notified. \nCONDENSED COMPARATIVE \nSTATEMENTS OF INCOME \n($000 omitted) \nFor Calendar Year \n1951 1950 1949 \nOperating revenues: \nPassenger $13,688 $11,395 $ 8,471 \nMail 1,212 2,090 2,504 \nOther 1,382 761 559 \nTotal 16,282 14,246 11,534 \nOperating expenses: \nDepreciation 998 1,124 1,335 \nOther 12,750 11,486 9,229 \nTotal 13,748 12,610 10,564 \nOperating profit 2,534 1,636 970 \nNon-operating (income) \najid expense (280) 196 258 \nFederal income taxes \nor (credits) 1,425 690 391 \nNet income $ 1,389 $ 750 $ 321 \nPer share based on \n550,164 shares $2.52 $1.36 $0.58 \n PERSONNEL \nSincere appreciation on behalf of the Board of \nDirectors is expressed to the loyal and hard-working \nWestern employees for their individual contribu \ntions to the successful operation of the Company \nin its Silver Anniversary year. The experience, train \ning, knowledge, skill and judgment of its 1,459 \nemployees is Western's principal asset. Being the \noldest continuously operated airline in the nation, \nWestern is fortunate in the long service record of \nits personnel. For example, the average length of \nCompany service of Flight Captains exceeds 11 \nyears. During 1951, the average monthly turnover \nin Western's personnel amounted to but 2.4%. \nEighty-four per cent of the employees carry \nWestern's group accident and sickness insurance; \n84% carry group hospitalization insurance for them \nselves and their families; and 70% of those eligible \ncarry Company group life insurance. During the \npast year, benefit payments in excess of $126,000 \nwere made under these policies. \nTo supplement the existing employees' insurance \nprograms, the Board of Directors currently is sub \nmitting to the stockholders for approval an \nemployees' Company-wide contributory pension or \nretirement plan, which, if approved by the stock \nholders and accepted by the requisite number of \neligible employees, soon will be made effective. \nUnder this plan, the Company will pay the cost \nof past service benefits and will share with the \nemployees the cost of future service benefits. \nWestern maintains for its employees one of the \nmost liberal emergency and vacation free transpor \ntation policies in the Industry. In 1951, Western \npersonnel and their families were issued 4,500 passes \non Western's system, and by virtue of arrangements \nbetween Western and other scheduled airlines, were \nissued 3,000 passes on the systems of those airlines \nfor total \"space available\" air transportation valued \nat $692,000. \nDuring the past year, the employees' Western- \naire Federal Credit Union continued to grow. \nMembership increased from 821 to 1,015. In 1951, \n1,282 loans were made to employees aggregating \n$271,670, an increase of 25% over 1950. Total em \nployees' savings on deposit exceed $242,000. A divi \ndend of 5% was earned and paid to the shareholders \nof the Credit Union. \n EQUIPMENT \nPassenger, mail, express and freight serv \nice over the Company's 5,016-mile route \nsystem was operated during 1951 with a fleet con \nsisting of 10 Convair-Liner, 10 Douglas DC-3, and \n5 Douglas DC-4 aircraft. This fleet will be aug \nmented, beginning in the Fall of 1952, by the addi \ntion of 5 Douglas DC-6B aircraft, which, together \nwith spare parts and equipment, have been ordered \nat a total cost exceeding $6,000,000. The addition of \nthese new and improved 66-passenger, pressurized \nluxury liners will enable the Company to provide \nmore service over its principal routes with the finest \nequipment flying today. \nWestern's complete maintenance and overhaul \nshops have continued the program of progressive \nmodernization of its fleet. Among major projects \nin this category were the installation of omni \ndirectional aircraft radio equipment, and extensive \nconversions of engines and airframes for improved \noperating efficiency. \nThe Company's gross investment during the past \nfour years in property and equipment has been \napproximately $10,000 per employee, as compared \nwith an average investment per employee in 1946 \nof $4,500 and an average investment per employee \nin 1936 of approximately $3,600. \nCIVIL AERONAUTICS \nBOARD PROCEEDINGS \nThe Company has pending before the Civil Aero \nnautics Board a very important route application \nto provide scheduled service between Salt Lake \nCity, Utah, and Rapid City, South Dakota, via \nCasper, Wyoming. It is expected that a final de \ncision will be forthcoming in this proceeding during \nthe summer of 1952. The new franchise, if granted, \nwill permit the Company to supply much-needed \nregional air service between points in Utah, \nWyoming, and South Dakota, and will permit far \nbetter operating integration of the Company's sys \ntem. The proposed route extension also will enable \nthe Company to furnish one-carrier, one-plane, \npassenger, mail and air express service between \nSouthern California and the Minneapolis-St. Paul \narea, which will be an important improvement over \nthe existing service. \nShortly after the close of 1951, the CAB denied \nWestern's application for an extension of its routes \nfrom the present terminal, Yuma, Ariz., to Phoenix, \nAriz., and issued an order undertaking to force the \nDIVISION OF WESTERN'S INCOME \nTotal Operating Revenues.. .$16,282,000 100% \n suspension of the Company's operations at Yuma, \nAriz., and at El Centro, Calif. Counsel for the \nCompany is of the opinion that the CAB exceeded \nits statutory authority in this regard and therefore \nthis case has been appealed to the United States \nCircuit Court of Appeals. The only other trunk \nroute application Western has pending with the \nCAB is for a new direct route between San \nFrancisco-Oakland and Las Vegas, Nev. \nBy order of the Civil Aeronautics Board, effec \ntive October 1, 1951, the mail rates for Western \nAir Lines, Inc., and Inland Air Lines, Inc., were \nopened for review. Since the issuance of that order, \nWestern has indicated to the CAB its willingness \nto accept a non-subsidy mail rate of 53 cents per \nton mile of mail carried. The proposed rate, re \ngarded by the CAB as a service rate for Western, \nshould be established soon. The mail rate for \nWestern's subsidiary, Inland Air Lines, Inc., from \nOctober 1, 1951, forward also remains to be de \ntermined by the CAB. The question of the mail \nrate for Western for the retroactive period prior \nto January 1, 1949, has been appealed from the \norder of the CAB to the United States Circuit Court \nof Appeals where the matter is pending. \nProgress has been made toward the dissolution \nof Inland Air Lines, Inc., and the merger of its \nproperties and franchises into the parent Company, \nWestern, which owns more than 99% of the out \nstanding stock of the subsidiary. It is expected that \nthis dissolution and merger can be concluded pur \nsuant to orders of the CAB before the summer of \n1952 with resultant savings in costs. \nSince 1946, Western has had a certificate of public \nconvenience and necessity issued by the Civil Aero \nnautics Board and approved by the President of \nthe United States to provide service from Los \nAngeles to Mexico City, D. F., and to La Paz, Baja \nCalifornia. Service over this route has been delayed \nbecause of the absence of a bilateral agreement \nbetween the governments of the United States and \nMexico covering reciprocal air rights between the \ntwo countries. During 1951, further discussions took \nplace between the two governments, but as yet no \nagreement has been reached. It is hoped that during \n1952 this matter will be settled so that Western will \nbe in a position to provide service to Mexico. \nWestern presently serves the cities of Edmonton \nand Lethbridge in the Province of Alberta, Canada. \nAlthough the Company has a franchise from the \nCivil Aeronautics Board to serve Calgary, the gate \nway to world-famous Banff and Lake Louise, situ- \n ated midway between Lethbridge and Edmonton, \nthe Canadian Government has not yet granted \nauthority to serve Calgary. Western is urging that \nappropriate arrangements be made between the \nGovernments of the United States and Canada in \norder that service to Calgary soon may \nbe inaugurated. \nOUTLOOK \nWestern's forecast for 1952 indicates an increase in \noperating revenues over 1951. Such anticipated in \ncrease is predicated upon the expanding utilization \nof air transportation by the public and the expected \ncontinued prosperity and industrial development in \nthe general territory served. Operating expenses are \nexpected to continue the inflationary rise. In order \nto meet these higher costs and insure reasonable \nearnings, it is not unlikely that a modest industry \nwide increase in first-class fares will become neces \nsary during 1952. An airline ticket is one of the \nfew commodities which has not yet become more \nexpensive with inflation. \nDuring 1951, the Company played its part in the \nmobilization program. Some of its personnel and \naircraft were engaged in the Korean Airlift. Other \nmilitary tasks were performed. Western, in common \nwith the entire scheduled air transport industry, \nwill continue to stand ready to do its part in this \nprogram. \nIn order to obtain additional outstanding repre \nsentation in the West, the Board of Directors was \nincreased to 12 members during 1951 by the addi \ntion of Mr. Harry J. Volk of Los Angeles, Vice- \nPresident in charge of the Western Home Office of \nthe Prudential Insurance Company of America; and \nMr. Robert E. Driscoll of Rapid City, South Dakota, \nChairman of the Board of The First National Bank \nof the Black Hills. \nWestern Air Lines notes with sorrow the death \nof Mr. Robert H. Purcell, Controller and Assistant \nTreasurer. This office has been filled by the election \nof Mr. Charles J. J. Cox. \nThe Board of Directors and Executive Staff of \nWestern Air Lines look to the future with confi \ndence and faith in the sound development of air \ntransportation as an essential public utility, and be \nlieve that this Company is privileged to serve the \nfinest and fastest-growing section of our Country. \nRespectfully submitted, \nI A \njJLSL C.. \nPresident \nMarch 1, 1952 \nWestern Air Lines Building \nLos Angeles International Airport \nLos Angeles 45, California \n  EDMONTON \n1EWISTOWN \nMINNEAPOLIS \nPAUL \nBILLINGS \n^SHERIDAN \nWYO \nCASPER \nCHEYENNE \nSAN FRANCISCO \n} OAKLAND \nSEATTLE *ash \nTACOMA -im \nPORTLAND \nMp mS \nidAHO \nLETHBRIDGE \nCUT BANK \nMONT. \nGREAT FALLS \ncalif. \nSEgHELENi \nBUTTI \nJACKSON \nIDAHO FALLS \nPOCATELLO! \nLOGANf \nOGDEN1 \nNEBR. \nAPRIL 17, 1926 \nTO MEXICO CITY \nTwenty-five years have seen Western \nAir Lines grow from a 670-mile route serving \nthree cities to a 5000-mile system linking \n45 cities in 13 western states and Alberta, Canada, with \nfast, frequent passenger, mail, express and freight service. \nWESTERN AIR LINES \nAMERICA'S OLDEST AIRLINE \n CONSOLIDATED BALANCE SHEE \n(WITH COMPARATIVE FIGURES FOR 1950) \nASSETS \nCurrent Assets: 1951 1950 \nCash in banks and on hand $ 3,222,954 $ 1,634,673 \nAccounts receivable: \nUnited States Post Office Department 139,851 355,508 \nOther United States and State Government Depts. 335,289 308,254 \nInterline and agents' traffic balances 540,187 440,229 \nCustomers' accounts receivable 199,617 168,965 \nOther 295,438 104,930 \n1,510,382 1,377,886 \nLess allowance for doubtful accounts 25,000 14,661 \n1,485,382 1,363,225 \nInventory of parts and supplies at the lower of \ncost or replacement market 323,873 245,315 \nPrepaid expenses 484,121 482,010 \nTotal Current Assets 5,516,330 3,725,223 \nSundry securities \nProperties and equipment at cost (Note 1): \n16,962 11,187 \nFlying equipment 8,831,906 8,392,621 \nBuildings on and improvements to leased property.... 2,989,534 2,984,093 \nOther property and equipment 1,626,032 1,557,444 \n13,447,472 12,934,158 \nLess allowance for depreciation 6,859,113 6,313,139 \n6,588,359 6,621,019 \nDeposits on equipment purchase contracts (Note 2) 1,313,375 -- \nRoutes, contracts and leases, less amortization $92,220.... \nDeferred charges: \n96,459 112,939 \nUnamortized overhaul and pre-operational \nexpense of aircraft 119,347 158,454 \nClaim for recaptured mail pay (Note 3) 126,000 \nOther 25,640 27,746 \n270,987 186,200 \n$13,802,472 $10,656,568 \n! \nLIABILITIES \nCurrent Liabilities: 1951 1950 \nCurrent portion of long term notes \nAccounts payable \nAccounts payable -- taxes collected from others \nAir travel plan deposits \nAccrued salaries, wages, taxes, insurance and other... \nUnused transportation \nFederal taxes on income -- \nestimated \nTotal Current Liabilities \n$ 861,000 \n669,987 \n246,095 \n209,950 \n1,208,730 \n430,373 \n1,454,891 \n5,081,026 \n$ 440,500 \n642,527 \n204,270 \n202,725 \n332,845 \n264,141 \n889,764 \n2,976,772 \nNotes payable -- \nSecured (Note 1) \nLess amount due within 12 months \nAmount due after 12 months \n2,785,000 \n861,000 \n1,924,000 \n2,671,597 \n440,500 \n2,231,097 \nProvision for contingencies (Note 3) 200,000 200,000 \nMinority stockholders' interest in subsidiary 10,319 12,468 \nShareholders' Equity: \nCommon stock -- \n$1.00 par value per share \nAuthorized 2,000,000 shares (Note 4) \nIssued 550,164 and 525,164 shares respectively... 550,164 525,164 \nCapital surplus 2,967,425 2,768,247 \nEarned surplus from December 31, 1934 (Note 1) 3,069,538 1,942,820 \n6,587,127 5,236,231 \n$13,802,472 $10,656,568 \nCommitments and contingent liabilities (Note 2) \n STATEMENT OF CONSOLIDATED INCOME \nFOR THE YEAR ENDED DECEMBER 31,1951 \n(WITH COMPARATIVE FIGURES FOR 1950) \nOperating Revenue: \nPassenger \nMail \nCharter and other transport services \nExpress, freight and baggage \nIncidental revenue --net (Note 5) \nOperating Expenses: \nFlying operations \n-- \nGround operations \nFlight equipment maintenance -- \ndirect \nGround and indirect maintenance \nPassenger service \nTraffic and sales \nAdvertising and publicity \nGeneral and administrative \nDepreciation \nOperating Income \nNon-operating Income: \nGain on disposition of property \nOther \nNon-operating Charges: \nInterest \nAmortization of routes, contracts and leases \nAmortization of pre-operational expense \nOther \nIncome before Federal Taxes on Income \nProvision for Federal Taxes on Income (excess profits tax--none) \nLess Minority interest in subsidiary \nNet Income (Note 5) \nSTATEMENT OF CONSOLIDATED EARNED SURPLUS \n1951 1950 \n$13,687,903 $10,865,079 \n1,211,975 2,090,031 \n131,368 730,557 \n506,715 497,028 \n743,553 63,798 \n16,281,514 14,246,493 \n4,016,622 3,842,598 \n2,330,450 2,066,144 \n1,345,389 1,184,305 \n817,576 801,796 \n1,036,101 894,083 \n1,384,410 1,177,997 \n586,227 476,492 \n1,232,699 1,043,190 \n998,279 1,124,127 \n13,747,753 12,610,732 \n2,533,761 1,635,761 \n480,435 15,646 \n21,237 2,322 \n501,672 17,968 \n123,801 153,531 \n18,828 18,180 \n26,361 25,464 \n51,385 13,176 \n220,375 210,351 \n2,815,058 1,443,378 \n1,425,000 689,704 \n1,390,058 753,674 \n758 3,474 \n$ 1,389,300 $ 750,200 \nAmount as of December 31, 1950: \nAs reported at December 31, 1950 $ 2,374,927 \nLess: Additional Federal income taxes for years 1948-1950 194,107 \nProvisions for contingencies including \nrecapture of 1948 mail pay (Note 3) 200,000 \nRefund of 1948 mail pay by subsidiary company \nnet of applicable Federal tax credit 38,000 \n432,107 \nAs adjusted 1,942,820 \nAdd Net income for year ended December 31, 1951 1,389,300 \n3,332,120 \nDeduct Dividends paid in cash, $0.50 a share 262,582 \nAmount as of December 31, 1951 (Note 1) $ 3,069,538 \nSTATEMENT OF CONSOLIDATED CAPITAL SURPLUS \nAmount as of December 31, 1950 $ 2,768,247 \nAdd Excess of proceeds over par value of 25,000 shares \nof Common Stock issued upon exercise of option 209,375 \n2,977,622 \nDeduct Expenses incurred in connection with issuance 10,197 \nAmount as of December 31, 1951 $ 2,967,425 \n NOTES TO FINANCIAL STATEMENTS \nNote 1. Long Term Notes. During 1951 the Company borrowed \n$3,500,000 from the Bank of America under a credit agree \nment which, though authorizing a total borrowing of \n$8,000,000, limits maximum outstanding indebtedness at any \none time to $6,500,000. The proceeds of additional loans \nunder the credit agreement are to be used solely for the pur \nchase of new Douglas DC-6B aircraft referred to in Note 2. \nThe debt is secured by certain property and equipment \n(principally aircraft, engines, propellers and the Los Angeles \nhangar and office building, having a cost value of approxi \nmately $9,000,000, together with a variable portion of the \nrelated spare parts) and by the shares of Inland Air Lines, \nInc. evidencing the Company's investment therein. \nThe credit agreement provides, among other \nthings, that dividends to be paid shall be limited \n1 the extent of consolidated net income realized \nsubsequent to June 30, 1950, that minimum consolidated net \nworth shall be $5,000,000 plus 50% of the annual consolidated \nearnings subsequent to December 31, 1950, and that the \nexcess of consolidated current assets over consolidated current \nliabilities, exclusive of the current portion of long term debt, \nshall not be less than $1,000,000 or a greater amount deter \nmined by projecting average monthly expenses (exclusive of \ndepreciation), which greater amount as of December 31, 1951 \napproximated $1,125,000. The combined effect of the afore \nmentioned minimum consolidated net worth requirement and \nthe limitation on the payment of dividends to earnings real \nized subsequent to June 30, 1950 is to restrict earned surplus \nas of December 31, 1951 in the amount of $2,177,061 leaving \nthe balance of $892,477 as unrestricted; the amount of unre \nstricted earned surplus is, however, subject to a further limi \ntation which issues from the above cited requirement to main \ntain minimum working capital. As of December 31, 1951 the \nworking capital requirement operates to restrict an additional \namount of $721,173, leaving $171,304 available for dividends. \nThe indebtedness bears interest at 3%% per annum; in \naddition, a commitment fee of t of 1% per annum is required \nuntil July 1, 1953 on the unused portion of $6,500,000. The \nprincipal is payable monthly in stipulated amounts aggre \ngating $652,500 for the year 1952 and $1,305,000 annually \nin subsequent years. Additional principal payments are to be \nmade annually on or before April 1 of each year commencing \nwith 1952, in amounts equal to 33%% of consolidated net \nincome after taxes of the preceding calendar year after ad \njustments for property sales when related proceeds are \nremitted to the lender (for 1951 such payment shall be \nmeasured by net income for the period from April 1 to \nDecember 31, 1951). Accordingly, as of December 31, 1951 \nan amount of $208,500 is included in the current portion of \nlong term notes. Final maturity of all loans is December \n31, 1957. \nNote 2. Commitments and Contingent Liabilities. In March, 1951 the \nCompany contracted for five new Douglas DC-6B aircraft \nand 7 spare engines at an approximate cost of $5,500,000; \nthe first aircraft is scheduled for delivery in September, 1952. \nRelated financing has been arranged as commented upon in \nNote 1 above; as of December 31, 1951 contract advance \npayments of $1,313,375 had been made. \nThe minimum annual rental liability under long term leases \ncovering real property leased to the Company and its sub \nsidiary amounted to approximately $190,000 as of December \n31, 1951. \nAs of December 31, 1951 the Company and its subsidiary \nwere contingently liable for claims and lawsuits in which they \nare or may be defendants and for asserted fines and penal \nties but the management and its counsel believe the ultimate \nliability, if any, will not materially affect the financial position. \nThough provision has been made for all known income tax \nliabilities, the Federal income tax returns of the Company for \n1950 and 1951 and of the Subsidiary for the year ended \nJune 30, 1951 are subject to examination by the U. S. Treasury \nDepartment. \nOn February 3, 1952 the Board of Directors declared a \ncash dividend payable on March 15, 1952 of 15tf a share, \naggregating $82,525. \nNote 3. Mail Revenue. On November 27, 1950 the Civil Aero \nnautics Board issued a tentative decision specifying a rate of \ncompensation for the period prior to January 1, 1949, which \nwould have required a refund of mail pay by the Company \nin amount of $686,565 applicable to the year 1948. Exceptions \nthereto were filed and on June 26, 1951 the Board adopted \na final decision and it reduced the amount of mail pay re \nfundable to $342,973. On July 25, 1951 the Company filed a \nPetition for Reconsideration to which the Board responded \nin an Opinion and Order under date of October 12, 1951 \nwhich claims mail pay refundable in amount of $334,639. \nThe Post Office Department implemented the Order of \nOctober 12, 1951 by offsetting the claimed overpayment to \nthe extent of one-eighth thereof per month, approximately \n$42,000, against mail pay earned subsequent to October \n1, 1951. \nManagement is of the opinion that the position of the \nCivil Aeronautics Board is legally wrong and should not be \nsustained in an appeal for review now pending before the \nUnited States Circuit Court of Appeals; the Post Office \nDepartment has also filed an appeal from the Board's order \nin which they assert that the Company should refund an \nadditional amount of $447,000; pending the final outcome \nof this matter the Company has established a provision for \ncontingencies of $200,000 measured by the amount of the \nclaimed overpayment as determined by the Board net of a \nrelated Federal tax credit, which based on the tax position \nof the Company as of December 31, 1951 would be at least \n38% thereof. \nNote 4. Options to Purchase Capital Stock. 35,000 shares were re \nserved as of December 31, 1951 under a Restricted Stock \nOption Plan adopted by the Board of Directors on April 10, \n1951 under authorization of the shareholders. Such plan per \nmits the allocation of not in excess of 5,250 shares to an \nofficer and 1,750 shares to a key employee. As of February \n15, 1952, 31,000 shares have been allocated to twelve officers \nand key employees; options had been issued in accordance \nwith the plan for 22,300 of the allocated shares with option \nprices ranging from $11.88 to $14.14 a share. The option \nprices are established by determining the average of the high \nand low sales prices for the Company's stock on the New York \nStock Exchange on the day the officer or key employee asks \nfor an option under the allocation previously made. The term \nof each option granted shall be five years from the date \ngranted and the right to grant options under this plan shall \nterminate April 9, 1956. \nNote 5. Revenues Subject to Renegotiation. Under applicable Federal \nstatutes, incidental revenues of the Company for 1951 in gross \namount of approximately $1,100,000 are subject to renegotia \ntion. In the opinion of management the ultimate refund, if \nany, will not have a materially adverse effect on the financial \nposition of the Company. \n  \nACCOUNTANTS' REPORT \nTo the Board of Directors, \nWESTERN AIR LINES, INC.: \nWe have examined the Consolidated Balance Sheet of Western \nAir Lines, Inc. and Subsidiary as of December 31, 1951 and \nthe related statements of Consolidated Income and Surplus for \nthe year then ended. Our examination was made in accordance \nwith generally accepted auditing standards, and accordingly \nincluded such tests of the accounting records and such other \nauditing procedures as we considered necessary in the cir \ncumstances; it was not practicable to confirm receivables from \nUnited States and State Government departments but we \nsatisfied ourselves by other means as to these items. \nIn our opinion, the accompanying Consolidated Balance \nSheet and statements of Consolidated Income and Surplus \npresent fairly the financial position of Western Air Lines, Inc. \nand Subsidiary at December 31, 1951 and the results of their \noperations for the year then ended, in conformity with gen \nerally accepted accounting principles applied on a basis \nconsistent with that of the preceding year. \nPEAT, MARWICK, MITCHELL \u0026 CO. \nLos Angeles, California \nFebruary 27,1952 \n SILVER ANNIVERSARY YEAR \nWhen Western Air Lines in April of 1951 commemorated \nits silver anniversary, it became the nation's first airline \nto complete 25 years of continuous operation. But many another \n\"first\" was added to Western's history in 1951. Pictured here \nare a few of the highlights in a record-breaking year. \nYESTERDAY--Celebration of the 25th birthday of \nAmerica's oldest airline caused people throughout the \nnation to reflect upon the breathtaking progress made in \na quarter-century by air transportation. In newspapers and \nmagazines,the public saw this rare photograph of Western's \nfirst planes, the little silver-and-red M-2s, preparing to take \noff for their initial flights in 1926. \nTODAY--This scene of passengers boarding a huge \nWestern Coachmaster for the historic inaugural of day \nlight, border-to-border economy flights on the Pacific \nCoast points up the tremendous contrast between 1926 \nairline pioneering and the efficient, dependable service of \nthe present. Today, Western carries 10 times more pas \nsengers in a single day than flew with the company during \nits entire first year of its operation. \n LOOKING AHEAD--Men of vision plan for the future. \nHere, Donald W. Douglas, left, president of Douglas Air \ncraft Company, and Terrell C. Drinkwater, Western's \npresident, compare models of the historic Douglas M-2, \nWestern's first plane, and the modern DC-6B, luxurious \nsky giant which will join the company's fleet late in 1952. \nWhen Western purchased the M-2s from Douglas in 1926, \nthe cost was $11,000 for each plane. The five DC-6Bs \nordered in 1951 will cost more than $1,000,000 each. \nNATIONAL DEFENSE--Symbolic of Western's par \nticipation in the national defense program during 1951 is \nthis view of ramp crewmen and American Red Cross \nofficials loading whole blood for swift transfer to Far \nEastern battlefields. Many times the mercy shipments went \nall the way on Western aircraft engaged in the Korean Air \nlift. Serving every major military installation in the West, \nthe company transported thousands of uniformed pas \nsengers, tons of vital materials and mail. \nDIRECTORS--Here are the men who direct Western's \ndestinies--the board of directors and executive staff. \nRepresenting every major section of the territory served by \nthe company, the board includes leaders of long and suc \ncessful experience in air transportation, insurance, busi \nness, finance and the law. The year 1951 was marked by \nthe board's declaration of two dividend payments, first \nmade to shareholders in 15 years. \nTRAVEL PROMOTION--Throughout the year, Western \nAir Lines joined civic organizations and Chambers of Com \nmerce in activities developing increased air travel to the \n\"Sun Country,\" famed national parks, winter sports resorts, \ndude ranches, and world-known western playgrounds for \nall seasons. Shown here are \"Miss Sunshine\" and repre \nsentatives of Palm Springs, Las Vegas, San Diego, \nPhoenix and Los Angeles, departing on an air tour of the \nNorthwest to invite residents to enjoy a \"Second Summer.\" \n SUMMARY OF EARNINGS \nRevenues:* 1944 1945 1946 1947 1948 1949 1950 1951 \nPassenger .$ 3,169 $ 5,654 $10,474 $10,114 $ 7,813 $ 8,471 $11,395 $13,688 \nMail 837 1,239 1,326 1,570 1,740 2,504 2,090 1,212 \nExpress, Freight and Excess Baggage 155 206 318 410 483 313 497 507 \nOther 130 132 118 282 31 246 264 875 \nTotal Revenues .$ 4,291 $ 7,231 $12,236 $12,376 $10,067 $11,534 $14,246 $16,282 \nOperating Expenses: * \nDepreciation .$ 321 $ 555 $ 1,369 $ 1,845 $ 1,164 $ 1,335 $ 1,124 $ 998 \nOther \n. \n3,677 6,297 11,744 11,196 9,198 9,229 11,486 12,750 \nTotal Operating Expenses .$ 3,998 $ 6,852 $13,113 $13,041 $10,362 $10,564 $12,610 $13,748 \nOperating Profit (Loss) * .$ 293 $ 379 ($ 877) ($ 665) ($ 295) $ 970 $ 1,636 $ 2,534 \nOther Income or (Charges) * .$ 6 ($ 20) -- \n($ 192) ($ 186) ($ 258) ($ 196) $ 280 \n$ 299 $ 359 ($ 877) ($ 857) ($ 481) $ 712 $ 1,440 $ 2,814 \nProvision for Federal Taxes on Income* .$ 147 .$ 169 ($ 277) $ 88 ($ 333) $ 391 $ 690 $ 1,425 \nNet Income (Loss) * .$ 152 .$ 190 ($ 600) ($ 945) ($ 148) $ 321 $ 750 $ 1,389 \nOPERATING STATISTICS \nRoute Miles 2,962 3,117 4,808 4,725 4,727 4,727 5,016 5,016 \nAvailable Ton Miles* n/a n/a 35,831 35,757 29,534 32,034 44,515 43,036 \nRevenue Ton Miles* n/a n/a 22,877 20,887 14,660 16,383 24,697 27,549 \nPassenger and Tonnage Carried \nRevenue Passengers . \n147,854 303,931 602,302 491,680 353,569 422,193 619,624 691,322 \nMail Tons \n. \n2,267 3,347 1,852 1,722 1,543 1,359 2,150 3,419 \nExpress and Freight Tons 472 754 1,640 2,252 2,702 2,435 3,396 3,191 \nRevenue Miles Flown: \nAirplane Miles * . \n4,057 7,279 10,594 9,607 8,707 9,496 11,783 11,487 \nPassenger Seat Miles \" . \n73,101 138,852 301,856 312,615 243,771 299,503 414,169 401,720 \nPassenger Miles * . \n63,073 117,106 214,023 194,923 135,724 155,747 233,118 259,693 \nMail Ton Miles* 905 1,120 706 733 574 567 978 1,449 \nExpress and Freight Ton Miles* 222 307 635 912 1,089 926 1,442 1,282 \nOther Statistics: \nPassenger Load Factor 86.3 84,3 70.9 62.4 55.7 52.0 56.3 64.7 \nAverage Length in Miles per Passenger Trip. 427 385 355 396 384 369 376 376 \nAverage Revenue per Passenger Mile .$ .0502 $ .0483 $ .0489 $ .0519 $ .0576 $ .0544 $ .0489 $ .0527 \nNumber of Employees End of Year . \n1,120 1,674 2,396 1,529 1,285 1,226 1,279 1,459 \n000 omitted n/a not available \n Where in the West do you want to go? \nTo Canada's Jasper, Banff, and Lake Louise... \nGlacier National Park .. \n.Yellowstone and the Grand \nTetons ... \nZion and Bryce Canyon National Parks... \nthe famous all-year recreation areas of Southern \nCalifornia ... \nthe Redwood Empire ... the Evergreen \nPlayground of the Pacific Northwest? \nWestern serves them all! No matter which is the \nvacationland of your choice, it's only a short, pleas \nant flight on a fast, dependable Western Airliner. \nThis year, See Western America First! \nWESTERNAIRLINES \nAMERICA'S OLDEST AIRLINE \n  "},{"id":"delta_wal-ar_wal-ar-1950","title":"Western Air Lines Annual Report 1950","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1951-03-10"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1950"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1950"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1950"],"dcterms_temporal":["1950-01-01/1950-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" OFFICERS ANO DIRECTORS \nGENERAL OFFICES \nREGISTRAR \n \nSTOCK TRANSFER AGENT \nGENERAL COUNSEL \nAUDITORS \nTerrell C. Drinkwater, President and Director \nStanley R. Shatto, Vice President- Operations \nand Director \nMarvin W. Landes, Vice President- Service \nand Director' \nPaul E. Sullivan, Vice President- Administration \nand Secretary \nArthur F. Kelly, Vice President- Sales \nJ. J. Taylor, Treasurer \nD. P. Renda, Assistant Secretary and Attorney \nRobert H. Purcell, Controller and Assistant Treasurer \nI. W. Burnham II, Director \nNew York City \nHugh W. Darling, Director \nLos Angeles \nHector C. Haight, Director \nLos Angeles \nL. Welch Pogue, Director \nWashington, D. C. \nJohn M. Wallace, Director \nSalt Lake City \nAlexander Warden, Director \nGreat ~alls, Montana \nSidney F. Woodbury, Director \nPortland, Oregon \nWestern Air Lines Building \n6060 A vion Drive \nLos Angeles International Airport \nLos Angeles 45, California \nCitizens National Trust \u0026 Savings Bank, \nLos Angeles \nChase National Bank, New York \nSecurity-First National Bank of Los Angeles \nNew York Trust Company, New York \nGuthrie, Darling and Shattuck \nLos Angeles \nPeat, Marwick, Mitchell \u0026 Co. \nLos Angeles \n to the stockholders of WESTERN AIR LINES, its customers and personnel \nDuring the year 1950, Western Air Lines, Inc. 0 car- \nried 618,624 passengers a distance of 233,118,000 \nrevenue passenger miles over its system. This traffic \nrepresents an increase of 49.68% over 1949. \nOperations of the Company for 1950 resulted in \na net income of $787,904, or $1.50 per share after \ntaxes and all other charges. This compared with a net \nincome for 1949 of $432,053, which amounted to 82 \nper share of capital stock outstanding. In 1948, the \nnet income was 26 per share. \nIn 1950, total operating revenues of the Company \nwere $14,246,494, representing an increase of 23.5% \nover the 1949 operating revenues of $11,534,131. \nReflecting increased mileage flown and the sharp \neffect of inflation on payrolls, materials and \nsupplies, the 1950 total operating expenses were \n$12,610,733, an increase of 19.4% over the 1949 oper- \nating expenses of $10,564,296. Revenue miles flown \nin 1950 totalled 11,782,635 miles, an increase of 24.8% \nover the 9,495,978 miles flown in 1949. \n0 Throughout this report, the operations of the Company's \nsubsidiary, Inland Air Lines, Inc., are consolidated with those \nof the parent Company, except where otherwise indicated. \nThe Company's total Federal, state, and county \ndirect tax bill for 1950 was $1,162,423, which \namounted to $2.21 per share of outstanding stock, \nas compared with the 1949 direct tax bill of $685,316, \nan increase of 70%. \nDuring the past year there was no general increase \nin the Company's rates for the carriage of passengers, \nmail, express or freight. The 1950 cost of air trans- \nportation per available ton mile was reduced to 28 \ncents as compared with the cost of such unit for \n1949 of 33 cents. In spite of the inflation of costs, this \nreduction was made possible by greater efficiency, \nimproved operating techniques, and better utiliza- \ntion of personnel and equipment. The Company's \noperating costs are among the lowest in the industry. \nImprovements in operating equipment, both flight \nand ground, and in .operating procedures, have been \nmade in 1950. \nIn 1950, the Company completed 97.48% of all \nairplane miles scheduled and carried an average of \n1,695 passengers each day. The average passenger \ntraveled 377 miles on Western Air Lines' system \nand paid $18.55 for his trip, exclusive of the 15% \nFederal transportation tax. \n Regularly scheduled services were inaugurated in \n1950 to Edmonton, the Capital of the Province of \nAlberta, Canada; to Brookings, South Dakota, and \nto Mankato, Minnesota. Western Air Lines' system \npresently consists of 5,014 miles of routes certifi- \ncated by the Civil Aeronautics Board over which \nan average of 32,432 airplane miles, amounting to \n1,116,592 airplane seat miles, are scheduled each \nday to serve, with Convair, Douglas DC-4 and DC-3 \naircraft, the following 45 cities in 13 western states \nand Canada: \nARIZONA NEBRASKA \nYuma Alliance \nCALIFORNIA Scottsbluff \nBurbank NEVADA \nEl Centro Las Vegas \nLong Beach OREGON \nLos Angeles Portland \nOakland \nOntario \nSOUTH DAKOTA \nPalm Springs \nBrookings \nSan Bernardino \nHuron \nSan Diego \nPierre \nSan Francisco \nRapid City \nCOLORADO \nSpearfish \nDenver \nUTAH \nCedar City \nIDAHO Logan \nIdaho Falls Ogden \nPocatello Salt Lake City \nMINNESOTA WASHINGTON \nMankato Tacoma \nMinneapolis Seattle \nRochester \nSt. Paul \nWYOMING \nCasper \nMONTANA Cheyenne \nBillings Jackson \nButte Sheridan \nCut Bank \nGreat Falls CANADA \nHelena Edmonton, Alberta \nLewistown Lethbridge, Alberta \nAdditional certificated points not now served because of \ninadequate airports are: St. George and Richfield, Utah; Hot \nSprings, South Dakota; West Yellowstone, Montana; and \nChadron, Nebraska. \nIn 1946 the Company was granted a certificate by the \nPresident of the United States and the CAB for an inter- \nnational route between Los Angeles, California and Mexico \nCity, Mexico, via La Paz, Baja California. Service over this \nroute cannot begin until the governments of the United States \nand Mexico agre~ on reciprocal air routes between the two \ncountries. The Company is advised that little progress has been \nmade in connection with such an agreement and hence has \nno present plans for the inauguration of service to Mexico. \nCondensed Comparative \nStatement of Profit and Loss \n($000.00 omitted) \nFor the Calendar Year \n1950 1949 1948 \nOperating revenues: \nPassenger ............ $10,865. \nMail . . . . . . . . . . . . . . . . 2,090. \nOther . . . . . . . . . . . . . . . 1,291. \nTotal operating \n$ 8,024. \n2,504. \n1,006. \n$ 7,813. \n2,136. \n514. \nrevenues ......... $14,246. $11,534. $10,463. \nOperating expenses: \nDepreciation ......... $ 1,124. \nOther . . . . . . . . . . . . . . . 11,487. \nTotal operating \nexpenses ........ . \nOperating profit ( or loss) .. \nNon-operating income and \nexpense ( net) ........ . \nFederal income taxes or \ncredits .............. . \nMinority interest in profit \n$12,611. \n1,635. \n( 192.) \n( 652.) \n$ 1,335. \n9,229. \n$10,564. \n970. \n(249.) \n(280.) \n$ 1,164. \n9,198. \n$10,362. \n101. \n( 180.) \n220. \nof subsidiary . . . . . . . . . . ( 3.) ( 9.) ( 6.) \nNet profit ( or loss) . . . $ 788. $ 432. $ 135. \n Condensed Comparative Balance Sheet \nAs of December 31 ($000.00 omitted) \nASSETS LIABILITIES \n( What we own) ( What we owe) \n1950 1949 1948 1950 1949 1948 \nCurrent Assets: Current Liabilities: \nCash ............... $ 1,635. $ 1,401. $ 1,462. Notes payable ........ $ 440. $ 773. $ 2,394. \nAccounts receivable .... 1,363. 1,021. 2,307. Accounts payable ...... 786. 522. 1,087. \nInventories ........... 245. 210. 246. Air Travel Plan deposits . 203. 206. 229. \nPrepaid expenses ....... 482. 461. 522. Accrued salaries, wages., \ntaxes, insurance, etc,. ... 1,052. 887. 620. \nTotal current assets .. 3,725. 3,093. 4,537. \nProperties and equipment: \nUnused portion of \nAirplanes, engines, land, \ntickets sold ........... 264. 174. 321. \nTotal current liabilities 2,745. 2,562. 4,651. \nbuildings, equipment, \nspare parts, etc ......... 12,934. 12,598. 12,311. Notes payable-long term 2,231. 3,113. 3,551. \nLess reserve for Operating reserves ...... 272. \ndepreciation .......... (6,313.) (5,427.) (4,217.) Minority stockholders' \n11. 11. 12. interest in subsidiary .... 12. 23. 24. \nSundry securities ........ \nDeferred Charges ........ 186. 176. 156. Capital stock \n(525,164 shares) ....... 525. 525. 525. \nRoutes, contracts \nand leases ............ ll3. 127. 147. \nCapital surplus .......... 2,768. 2,768. 2,768. \n- -- - - - Earned surplus .......... 2,375. 1,587. 1,155. \n$10,656. $10,578. $12,946. \nTotal Assets ........ \nMOBILIZATION-As Western Air Lines, the coun- \ntry's oldest continuously operated air carrier, enters \nits second quarter-century, the mobilization of its \npersonnel and facilities in the interests of our na- \ntional defense is of paramount importance in the \nCompany's planning. Secretary of the Air Force, \nThomas K. Finletter, recently recognized the neces- \nsity of maintaining the domestic air transport \nindustry at an efficient level to provide required \ntransportation for production and home front pur- \nposes during a period of national emergency. Mr. \nFinletter observed that, \"While the air transport \n- - - - - - \nTotal Liabilities ..... $10,656. $10,578. $12,946. \nStockholders' equity \nper share ............. $10.79 $9.29 $8.47 \nindustry will be called upon to assist in a material \nway in the event of war, a plan must be developed \nso that the airlines -which now are an absolutely \nessential part of our transportation system-can con- \ntinue to operate as commercial airlines during the \nwar, since the country will be very dependent upon \nthem.\" \nDuring World War II, both Western Air Lines \nand its subsidiary, Inland Air Lines, performed \nseveral war-time services under contract with the \nGovernment. Among other tasks, the Company oper- \nated for over three years a total of 6,150 trips over \n a 2,451 mile route between Great Falls, Montana, \nand Nome, Alaska. More than seven million miles \nin all were flown over this route, with a perfect \nsafety record. \nAt the present time the Company has a contract \nwith the United States Air Force under which its \naircraft and flight personnel participate in the Pacific \nairlift to Tokyo. \nThroughout the Company's system, including the \nPacific Coast, the Intermountain Region and the \nnorthern section of the Great Plains, the defense \nindustries and the mobilization program have been \nand are being materially accelerated. Military estab- \nlishments are located at or in the vicinity of many \ncities on Western Air Lines' system. Because of these \nwide-spread and varied enterprises, it is anticipated \nthat the requirements for commercial air transport \nservices offered by the Company will in the imme- \ndiate future be substantially increased. The Company \nis making plans to provide additional service and will \nstand ready to do its part. \nSTOCKHOLDERS-The 525,164 outstanding shares \nof $1.00 par value capital stock of the Company are \nheld by approximately 4500 individual stockholders \nresiding in each of the 48 states. The stock is listed \non the New York Stock Exchange and on the Los \nAngeles Stock Exchange. During 1950, 490,000 \nshares of the stock were traded on the New York \nStock Exchange between a price range of 7}~ low \nand 13 high; on the Los Angeles Stock Exchange \n43,260 shares were traded with a low of 7 and a \nhigh of 13. The year-end closing price of the stock \non both stock exchanges was 12. Book value of the \nstock as of December 31, 1950, was $10.79 per share. \nAll shareholders are urged to be represented in \nperson or by proxy at the annual stockholders meet- \ning to be held at the general headquarters of the \nCompany in Los Angeles on April 10, 1951. \nDEBT - During the reorganization of the Company \nin 1947, loans from the Reconstruction Finance Cor- \nporation were arranged for a total of $6,421,606. \nAt the end of 1950, this debt had been reduced to \n$2,671,598, representing a repayment of 58.4% of the \noriginal loans. All amounts due through June 30, \n1951, were prepaid as of December 31, 1950. Steps \nare being taken to refinance the balance of this obli- \ngation with private banking sources on terms more \nadvantageous to the Company. \nPERSONNEL-The Company is fortunate in being \nstaffed by an outstanding group of loyal and expe- \nrienced personnel in all divisions. The average \nlength of service of Western Air Lines employes is \nthe highest in the industry. The training, knowledge \nand judgment of these veteran airline people is of \nimmeasurable value to the Company and to the \ncities it serves. About 17% of the employes own stock \nin the Company. Good progress has been made in \nthe stabilization of employment during the year \nand in minimizing the extent of the historical sea- \nsonal change in number of employes due to the \noperation of reduced flight schedules in the winter \nmonths. At the close of the year the Company had \n1279 employes, of whom 548 were in the Operations \nDivision, 496 in the Service Division, 97 in the Treas- \nury Division, 93 in the Sales Division, and 45 in the \nGeneral Administrative Division. \nAs a result of the national mobilization the air- \nline industry, like many others, is now faced with \na manpower problem which requires intensified \nemployment training and replacement programs. \nThe Company and the rest of the industry are \nworking closely with the appropriate branches of \nthe Federal Government in order to solve this \nproblem so that the national defense utility of the \nindustry and its component units can be preserved \nand strengthened. \n Participation in the Westemaire Federal Credit \nUnion is open to all Company personnel, of whom \napproximately 65% are now members. This organi- \nzation closed a successful year with a total of 509 \nloans aggregating $162,519, and its 821 members \nreceived a dividend on their savings. No losses have \nbeen experienced in connection with loans made. \nThe Employes' Suggestion System has been con- \ntinued. Many cash prizes have been given for indi- \nvidual suggestions which have been accepted and \nput into effect to improve the efficiency of the \nCompany. \nEarly in 1950, the Employes' club in Los Angeles \nopened a modem cafeteria for the use of Company \nemployes, their guests, passengers, and tenants of \nWestern Air Lines' headquarters building. \nThe employes' group insurance program, cover- \ning both life insurance and accident and sickness \ninsurance, hospitalization and family benefits, to \nwhich most employes subscribe, operated success- \nfully during 1950. \nDue to the increase in living costs, two voluntary, \nCompany-wide increases in salaries and wages were \ngranted to all employes during the fall of 1950. \nGOVERNMENTAL REGULATION-The Company has \nnumerous matters pending before the Civil Aero- \nnautics Board. Of prime importance among these \nis the dispute over the Company's claim for retro- \nactive mail compensation for the period prior to \nJanuary 1, 1949, on which matter the CAB has not \nfinally acted. The Company considers the CAB' s \ntentative decision as legally and equitably wrong \nand has advanced that position in its exceptions and \nbrief filed with the CAB in January 1951. Also, the \nAir Transport Association of America, composed of \nforty scheduled certificated airlines, requested and \nhas been permitted by the CAB to intervene in this \nproceeding as amicus curiae in support of the Com- \npany's position, and in opposition to the tentative \nfindings of the Civil Aeronautics Board. It is hoped \nthat this matter can be finally decided by the CAB \nduring 1951. The Company's current mail rates are \nnot in issue. \nThe Company has pending with the CAB two \nimportant applications for extensions of its routes \nas shown by dotted lines on the system map else- \nwhere in this report. One application involves an \nextension of the Imperial Valley route from Yuma \nto Phoenix, Arizona. It is expected that a decision \nin this case will be reached during the fall of 1951. \nThe other application is for a route between Rapid \nCity, South Dakota, and Salt Lake City, Utah, via \nCasper, Wyoming. This new connecting route, if \ngranted, will _ \nserve to integrate the operations of \nthe Company's system, thereby permitting greater \nutilization of personnel and equipment, in addition \n f=~-1\", \\ \nV ,_ \n{ \n,..,-,-.;\u003c'',f/1#\" \n,.-..... -.. , \nto providing much-needed direct air service be- \ntween Southern California, Nevada and Utah, and \nthe important communities of the Great Plains \nregion in central Wyoming, South Dakota and \nMinnesota. \nThe Company also has pending with the Civil \nAeronautics Board two applications for \"feeder \nroutes\" on the West Coast extending from Los \nAngeles, California, to Bellingham, Washington. \nThe Company is of the opinion that it can provide \nthe existing temporary \"feeder\" service at a very \nsubstantial savings to the taxpayers in comparison \nwith the present cost of this service. It is not known \nwhat action, if any, the Civil Aeronautics Board \ncontemplates taking on these applications. The Com- \npany will continue to impress its views upon the \nCAB with the hope that in due course the Board will \nundertake a review of its \"experimental feeder route\" \nprogram which now threatens the continued sound \ndevelopment of the nation's air transport system. \nAlso awaiting action by the Civil Aeronautics \nBoard is the Company's application to dissolve its \nsubsidiary, Inland Air Lines, Inc., and to consoli- \ndate the properties and routes of that corporation \nwith those of the parent company in order to elimi~ \nnate the necessity for maintaining duplicate sets of \nbooks, duplicate Government reports, etc. The Com- \npany owns 98.8% of the outstanding stock of Inland \nAir Lines, Inc., and the dissolution of the latter will \nreduce the cost of operating the Company's system. \nOther than those mentioned herein, no additional \napplications for new routes or extensions of existing \nroutes are presently contemplated. \nStudies are still in progress by committees of the \nCongress, the CAB and others, looking toward the \nseparation of the elements of so-called \"subsidy,\" \nif any there be, in the amounts of compensation \npaid to all air carriers for the transportation of U. S. \nmail. As stated in the Annual Report for 1949, the \nCompany does not oppose such separation provided \n it is done on a fair and non-political basis by per- \nsons competent to make such separation after thor- \nough and impartial study. As a matter of fact, the \nrates of mail compensation received by the Com- \npany are lower than mail rates paid to many com- \nparable air carriers and very considerably lower \nthan the rates paid to international air carriers and \nrecently certificated \"temporary feeder lines.\" \nThe 1950 mail compensation: received by the Com- \npany was 16.5% less than mail compensation paid to \nit in 1949. In 1949 mail pay represented 21.7% of total \noperating revenues, while in 1950 mail compensation \nrepresented only 14.7% of total operating revenues. \nOn the other hand, ton miles of mail carried by the \nCompany increased 72.5% in 1950 over ton miles \ncarried in 1949. \nOUTLOOK-The Company celebrates its Silver An- \nniversary with good reason for confidence and \noptimism. Along with a rapid increase in the accept- \nance of air transportation as a necessary part of the \npresent day economy has come a great growth in \nthe population, prosperity, and industrial and \nmobilization activity in the thirteen states in which \nWestern Air Lines operates. All indications point to \na continuation of such growth. \nIn concluding this report on the most successful \nyear of operation in the Company's history, it is \nproper that on behalf of the Board of Directors, \nappreciation be expressed to all members of the \norganization for a job well done, together with a \nfirm determination to do in the future an. even better \njob in meeting the demands made on the Company \nin the interests of commerce, the national defense \nand the Postal Service. \nMarch 10, 1951 \nWestern Air Lines Building \nLos Angeles International Airport \nLos Angeles 45, California \nPRESIDENT \n s America's oldest Airline \nenters its second \nquarter-century \nln April, Western Air Lines becomes the first \nairline in the nation to complete 25 years of \ncontinuous operation. Air transport's growth \nduring this quarter-century has speeded the \ndevelopment of the West by setting new stand- \nards of travel and communication. \nWest rn is proud to have pion ered from its \noriginal route between Los Angel and Salt \nLake City, started in 1926 with two-passenger, open cockpit \nbiplanes, to its present 5000-mile system, serving each day \nwith modern, dependable airplanes, 45 cities in 13 western \nstates and Canada. Western is proud to have d veloped new \nquipm nt and techniques that have been adopted by the \nindustry; proud that in addition to meeting the needs of \ncommerce and of the postal service, its record shows many \njobs well done for the military during World War II - \nincluding the operation for over three years of a vital route \nbetween M-0ntana and Alaska. Today some of West m's \npersonnel and aircraft are engaged under Air Force contract \nin the Pacific Airlift from California to Tokyo. \nOn it Silv r Anniv rsary Western pledges its continued \nHort to strengthen the nation's air transport faciliti s - for \np ac , mobilization or war. \n Consolidated Balance Sheet as of December 31, 1950 \nASSETS \nCurrent Assets: \nCash in banks and on hand \nDeposit with Reconstruction Finance Corporation \nfor payment of certain state and local taxes ..... . \nAccounts receivable: \nUnited States Post Office Department .......... . \nOther United States and State Government Depts. \nInterline and agents' traffic balances ......... . \nCustomers' accounts receivable ................ . \nOther ( including $16,395.07 due from officers and \nemployes) ............................... . \nLess allowance for doubtful accounts ........... . \nInventory of parts and supplies at the \nlower of cost or replacement market \n( substantially all pledged) ( Note 1) ........... . \nPrepaid expenses ................................. . \nSundry securities .................................... \nProperties and equipment, at cost ( substantially all \npledged) ( Note 1): \nLand ........................................... . \nBuildings on and improvements to leased property .. . \nAirplanes, engines, propellers and flying equipment .. . \nRadio stations, furniture, fixtures, \nshop and other equipment ................... . \nProperty not used in operations ................... . \nConstruction work in process ..................... . \nLess allowance for depreciation ( Note 2) .......... . \nRoutes, contracts and leases, less amortization $73,392.00 .. . \nDeferred charges: \nUnamortized overhaul and pre-operational expense of \naircraft ..................................... . \nOther .......................................... . \n$ 355,508.96 \n308,254.21 \n440,229.35 \n168,965.63 \n92,167.58 \n1,365,125.73 \n14,661.08 \n1,348.35 \n2,984,093.48 \n8,392,621.85 \n1,186,115.87 \n271,444.69 \n98,534.52 \n12,934,158.76 \n6,313,139.88 \n158,453.90 \n27,746.26 \n$ 1,634,673.45 \n12,761.22 \n1,350,464.65 \n245,315.70 \n482,008.08 \n3,725,223.10 \n11,186.71 \n6,621,018.88 \n112,939.98 \n186,200.16 \n$10,656,568.83 \n tt \nLIABILITIES \nCurrent Liabilities: \nNotes payable-Reconstruction Finance Corporation \n( amount due within 12 months) ( Note 1) ..... . \nAccounts payable-trade .......................... . \nAccounts payable-taxes collected from others ....... . \nInterline and agents' traffic balances ............... . \nAir Travel Plan deposits ......................... . \nAccrued salaries, wages, taxes, insurance and other ... . \nProvision for unused tickets ........................ . \nProvision for Federal taxes on income ( Note 2) ..... . \nLong term debt: \nNotes payable-Reconstruction \nFinance Corporation ( Note 1 ) ................ . \nLess amount due within 12 months ................ . \nMinority stockholders' interest in subsidiary ............. . \nCapital stock-$1.00 par value per share ( Note 1) \nAuthorized 2,000,000 shares (25,000 shares \nreserved for option to officer) \nIssued 525,164 shares ............................ . \nSurplus: \nCapital surplus ( no change during year) ........... . \nEarned surplus from December 31, 1934 (Notes 2 and 3) \nContingent liabilities (Note 4) ......................... . \nLong term lease commitments ( Note 5) ................. . \n$ 2,671,597.65 \n440,499.98 \n525,164.00 \n2,768,247.10 \n2,374,927.31 \n$ 440,499.98 \n540,810.06 \n204,270.54 \n40,601.30 \n202,725.00 \n332,843.70 \n264,141.15 \n718,773.56 \n2,744,665.29 \n2,231,097.67 \n12,467.46 \n5,668,338.41 \n$10,656,568.83 \n Statement of Consolidated Income for the Year Ended December 31, 1950 \nOperating Revenue: \nPassenger .............................................. . \nMail .................................................  \nNon-Scheduled transport services ........................ . \nExpress and freight ..................................... . \nExcess baggage and other ............................... . \nIncidental revenue-net .................................. . \nTohll Operating Revenue ............................ . \nOperating Expenses: \nFlying operations ....................................... . \nGround operations ...................................... . \nDirect maintenance-flight equipment ..................... . \nGround and indirect maintenance ......................... . \nPassenger service ....................................... . \nTraffic and sales ........................................ . \nAdvertising and publicity ................................. . \nGeneral and administrative .............................. . \nDepreciation ................... . ....................... . \nOperating Profit .................................... . \nNon-operating Income: \nDiscounts received ...................................... . \nOther ................................................. . \nNon-operating Charges:  \nInterest ................................................ . \nAmortization of routes, contracts and leases ................ . \nAmortization of pre-operational expense ................... . \nOther . .............................. . ................. . \nIncome before Federal Taxes on Income ............... . \nProvision for Federal Taxes on Income \n( excess profits tax - none ) ............................ . \nLess Minority interest in subsidiary . . . ......................... . \nNet Income ( Note 2) ....... . ........................ . \nStatement of Consolidated Earned Surplus \nAmount at December 31, 1949 .. . ............. . ............... . \nAdd- Net income for the year ............................... . \nAmount at December 31, 1950 ( Notes 2 and 3) .................. . \n$ 3,842,598.57 \n2,066,144.84 \n1,184,305.74 \n801,796.72 \n894,083.03 \n1,177,997.92 \n476,492.26 \n1,043,185.99 \n1,124,127.80 \n8,943.61 \n9,024.60 \n153,532.62 \n18,180.00 \n25,464.02 \n13,172.53 \n$10,865,079.22 \n2,090,031.97 \n730,557.66 \n398,620.65 \n98,405.45 \n14,182,694.95 \n63,798.65 \n14,246,493.60 \n12,610,732.87 \n1,635,760.73 \n17,968.21 \n1,653,728.94 \n210,349.17 \n1,443,379.77 \n652,000.00 \n791,379.77 \n3,475.36 \n$ 787,904.41 \n$ 1,587,022.90 \n787,904.41 \n- - - - \n$ 2,374,927.31 \n Notes to Financial Statements \n1. NOTES PAYABLE-RECONSTRUCTION FINANCE CORPORATION. \nThe amount due to Reconstruction Finance Corporation, \n$2,671,597 ($2,117,766 on 1947 loan and $553,831 on \n1948 loan), is secured by inventories, property and equip- \n:ment, and the capital stock of Inland Air Lines, Inc., a \n99% owned subsidiary. Under the terms of the credit agree- \nments, as amended, the indebtedness as of December 31, \n1950, is payable in specific amounts with interest at 4% per \nannum as follows: \n1947 Loan - Period July 1, 1951, to June 1, 1952, $28,000 \nmonthly May through October, and $8,000 monthly \nNovember through April; Period July 1, 1952, to Decem- \nber 1, 1952, $100,000 monthly July through October, \nand $55,000 monthly during November and December. \nThe unpaid balance, if any, is due on or before December \n31, 1952. \n1948 Loan - $52,083 monthly commencing July 30, 1951. \nThe unpaid balance, if any, is due on or before December \n31, 1952. \nAdditional principal payments are to be made annually \nwithin the first two months after the close of each calendar \nyear in amounts equal to the excess of 50% of the Company's \nannual net income for the preceding year ( before provision \nfor depreciati_ \non) over the total of the specified monthly \npayments on principal made during the preceding year. \nNo additional payment is due under this provision during \nthe year 1951. \nThe credit agreements provide, among other things, that \nno dividends on the capital stock of the Company are to be \npaid without the approval of the Reconstruction Finance \nCorporation. \n2. FEDERAL TAXES ON INCOME. The federal income tax \nreturns of the Company for 1947, 1948 and 1949, have been \nexamined by a field agent of the Bureau of Internal Revenue \nand in connection therewith the Company agreed to a pro- \nposed additional assessment of $171,000 of which $44,000 \nhas been recorded as a liability as of December 31, 1950. \nThe balance of $127,000 has not been recorded pending \nclearance by the Government of the related depreciation \nschedule for Douglas DC-4 aircraft and engines, which as \nof January 1, 1949, redetermines the remaining life to be \n60 months from that date rather than a life of 48 months \nending in 1950. Upon clearance by the Government adjust- \nment will be made reducing the provision for depreciation \nfor 1949 and 1950 in respective amounts of $339,000 and \n$193,000 and increasing the provision for federal taxes on \nincome for such years in the respective amounts of $127,000 \nand $81,000. Net income as reported for 1949 and 1950 \nwould thus be increased $212,000 and $112,000, respec- \ntively, or a total of $324,000. The Federal income tax returns \nof the subsidiary have been examined and settled through \nJune 30, 1947. \n3. MAIL REVENUE. On March 3, 1949, the Civil Aeronautics \nBoard awarded the Company \"Temporary Rates of Mail \nCompensation\" which, as to the period subsequent to Janu- \nary 1, 1949, were made permanent by an order issued on \nMay 6, 1949. For the period prior to January 1, 1949, the \ntemporary rates so established resulted in additional retro- \nactive mail revenue in amount of $975,461, which was \nrecorded as income for the year 1948; a similar award was \nmade to the subsidiary in amount of $75,049. On November \n27, 1950, the Civil Aeronautics Board issued a tentative de- \ncision, to which exception has been filed by the Company \nand its subsidiary, specifying a rate of compensation for the \nperiod prior to January 1, 1949, which, if the appeal is not \nsuccessful, will require a refund of mail pay in amount of \n$747,681. Against such amount there would be applied a \nrelated tax credit which at 1951 tax rates would amount to \napproximately $350,000; the net amount of $397,681 would \nthen be charged against earned surplus. Management is of \nthe opinion that the tentative decision of the Civil Aero- \nnautics Board is in error, both legally and equitably, and \ntherefore no provision has been made in the accounts of the \nCompany pending final settlement of the issue. \n4. CONTINGENT LIABILITIES. As of December 31, 1950, the \nCompany and its subsidiary were contingently liable for \ndamage claims and lawsuits in which they are or may be \ndefendants. The amounts claimed by the plaintiffs in such \ndamage claims and lawsuits are substantial but the manage- \nment and its counsel believe the ultimate liability, if any, \nwill not be material in amount. \n5. LONG TERM LEASE COMMITMENTS. The minimum annual \nrental liability on real property leased to the Company and \nits subsidiary for terms expiring more than three years from \nDecember 31, 1950, is summarized by periods of expiration \nas follows: \nLeases Amount \n1954-1958 \n1959-1968 \n1969-1973 \n24 \n2 \n1 \n$109,000 \n26,000 \n29,000 \n6. CHANGES IN ACCOUNTING PRINCIPLES. For the year 1949 the \nCompany adopted the practice of amortizing over a 30 \nmonth period that part of the cost of new aircraft which \nwas deemed to be \"built-in overhaul.\" Based upon experi- \nence with the new aircraft the Company, as of January 1, \n1950, redetermined the amount of original cost deemed to \nbe \"built-in overhaul\" with the result that net income after \ntaxes for 1950 is approximately $42,000 greater than it \nwould have been if such redetermination had not been \nmade. \nAccountants' Report \nTo the Board of Directors, \nWESTERN AIR LINES, INC.: \nWe have examined the Consolidated Balance Sheet of Western \nAir Lines, Inc., and Subsidiary as of December 31, 1950, and \nthe related statements of Consolidated Income and Surplus for \nthe year then ended. Our examination was-made in accordance \nwith generally accepted auditing standards, and accordingly \nincluded such tests of the accounting records and such other \nauditing procedures as we considered necessary in the cir- \ncumstances; it was not practicable to con.firm receivables \nfrom United States and State Government departments but \nwe satisfied ourselves by other means as to these items. \nProvision has not been made for the possible refund to the \nUnited States Government in respect to the final determina- \ntion of mail pay compensation for the period prior to January \n1, 1949; also, depreciation of Douglas DC-4 aircraft and \nengines for 1949 and 1950 and the related Federal taxes on \nincome have not been revised to reflect the possible change \nin estimated life. These matters are more fully explained in \nNotes 3 and 2 to financial statements. \nIn our opinion, subject to the possible effect of the matters \nreferred to in the preceding paragraph, the accompanying \nConsolidated Balance Sheet and statements of Consolidated \nIncome and Surplus present fairly the financial position of \nWestern Air Lines, Inc., and Subsidiary, at December 31, \n1950, and the results of their operations for the year then \nended, in conformity with generally accepted accounting \nprinciples applied on a basis consistent with that of the pre- \nceding year, except for the change, which we approve, set \nforth in Note 6 to financial statements. \nPEAT, MARWICK, MITCHELL \u0026: CO. \nLos Angeles, California \nMarch 5, 1951 \n A B A N N E R Y E A R \nMany new records were chalked up by the men and women \nof Western Air Lines during 1950 - in traffic gains and \noperating efficiency. Pictured here are highlights of some \nof the activities that helped to make this the \nbest year in the company's history. \n AIR COACH - Leading operator of economy coach service in the West, the \ncompany passed a milestone in air travel history last May when the 100,000th \nCoachmaster passenger boarded at Burbank for Oakland. Receiving orchids are \nMrs. Lawrence Brown and daughter, Cindy, who became \"Air Coach Passenger \nNo. 100,000.\" \nNEW NON-STOP SERVICE - Queens of the Minneapolis Aquatennial and St. Paul \nWinter Carnival added glamour to 1950's inaugural of non-stop service between \nthe Twin Cities and Denver. \nSKYWAY OF THE STARS - For 25 years the favorite airline of Hollywood, Western \nhas carried almost every important personality of screen, radio and television. \nShown are just a few. At left, the hero of young America, Bill \"Hopalong \nCassidy\" Boyd, and his wife, Grace Bradley, depart from Los Angeles for Jackson, \nWyo., during an extensive tour of the West's national parks. Center, lovely Esther \nCHARTER FLIGHTS- Western set new charter-operation records in 1950, special- \nizing in the transport of athletic teams, civic organizations, and military groups. \nMost colorful charter flight of the year was made from Seattle to Los Angeles \nby the famed Vancouver Police Bagpipe Band. \nEDMONTON INAUGURAL- Service was opened during April into Edmonton, Alta., \ngateway to Canada's parks and oil fields. At official banquet Mayor Sidney \nParsons of Edmonton (center) received trophy of friendship from Mayor Earl J. \nGlade of Salt Lake City as James Flaherty, president of the Great Falls Chamber \nof Commerce, smiled approval. \nWilliams and Western team up to promote the annual Christmas Seal campaign. \nAt right, a famous troupe poses before leaving for San Francisco on Convair-liner \ntour of Pacific Coast service installations. Left to right are Bob Hope, singer \nMarilyn Maxwell, comedian Eddie Bracken, actress Gene Tierney, and leading man \nLloyd Nolan, all veteran air travelers. \n OPERATING STATISTICS \nRevenues: 0 1943 1944 1945 1946 1947 1948 1949 1950 \nPassenger0 ............................ $ 1,709 $ 3,169 $ 5,654 $10,474 $10,114 $ 7,813 $ 8,024 $10,865 \nMail0 \n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \n261 837 1,239 1,326( a) 1,570 2,136 2,504 2,090 \nExpress, Freight, Charter, etc. 0 \n \n148 155 206 318 410 483 920 1,227 \nOther0 \n   \n43 97 59 118 282 31 86 64 \nTotal Revenueso . . . . . . . . . . . . . . . . . . . . . . $ 2,161 $ 4,258 $ 7,158 $12,236( a) $12,376 $10,463 $11,534 $14,246 \n- - - \nOperating Expenses: 0 \nDepreciation .......................... $ 204 $ 321 $ 555 $ 1,369 $ 1,845 $ 1,164 $ 1,335 $ 1,124 \nOther0 \n \n1,851 3,702 6,298 11,744 11,196 9,198 9,229 11,487 \nTotal Operating Expenses0 \n \n$ 2,055 $ 4,023 $ 6,853 $13,113 $13,041 $10,362 $10,564 $12,611 \n- - - - - - --- \nRevenue Miles Flown ........ , ........... 2,057 4,057 7,279 10,594 9,607 8,707 9,496 11,783 \nRevenue Passengers .............. , ......... 80,907 147,854 303,931 602,302 491,680 353,569 422,193 618,624 \nAverage Length in Miles per Passenger Trip .. 403 427 385 355 396 384 369 377 \nAverage Revenue per Passenger Mile ........ $ .0525 $ .0502 $ .0483 $ .0489 $ .0519 $ .0576 $ .0515 $ .0497 \nPassenger Seat Miles Flown ............... 38,499 73,101 138,852 301,856 312,615 243,771 299,503 414,169 \nRevenue Passenger Miles0 \n. . . . . . . . . . . . . . . . . . 32,589 63,073 117,106 214,023 194,923 135,724 155,747 233,118 \nPassenger Load Factor ..................... 84.65% 86.28 % 84.34% 70.90% 62.35% 55.68% 52.00% 56.29% \nMail Ton Miles Flown .................... 435 893 1,120 706 733 574 567 978 \nExpress and Freight Ton Miles0 \n \n221 221 312 635 912 1,089 926 1,442 \nTotal Revenue per Revenu; Mile ............ $1.0506 $1.0495 $ .9834 $1.1550 $1.2882 $1.2017 $1.2146 $ 1.2005 \nTotal Operating Expenses per Revenue Mile .... $ .9988 $ .9915 $ .9414 $1.2377 $1.3574 $1.1901 $1.1125 $ 1.0703 \nPercent of Scheduled Service Performed ...... 94.44% 95.43% 98.41% 96.59% 96.77% 98.32% 97.72% 97.48% \nNurnber Employes End of Year ............. 817 1,120 1,674 2,396 1,529 1,285 1,226 1,279 \n0 000. omitted (a) Adjusted for $344,300.89 in mail pay applicable to 1946, but received in 1947. \n See WESTERN America first \nWestern Air Lines provides fast service to many \ngreat vacation areas, including: \nBanff and Lake Louise \nJasper National Park \nGlacier National Park and the Waterton Lakes \nBlack Hills and Mt. Rushmore \nRocky Mountain National Park \nMinnesota Lakes \nYellowstone National Park \nJackson Hole, Wyo., and Grand Teton National Park \nSun Valley \nUtah National Parks \nGrand Canyon \nDude Ranches and Desert Resorts \nDeath Valley \nLas Vegas and Hoover Dam \nPalm Springs \nSouthern California \nSan Francisco and the Redwood Empire \nOregon's Evergreen Empire \nMt. Rainier and Olympic National Parks \nSeattle and the Puget Sound Playground \nWESTERN AIR LINES \n WESTERN AIR LINES SYSTEM \n- PRESENT ROUTES    PROPOSED ROUTES \n "},{"id":"delta_wal-ar_wal-ar-1949","title":"Western Air Lines Annual Report 1949","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1950-03-15"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1949"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1949"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1949"],"dcterms_temporal":["1949-01-01/1949-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" OFFICERS AND DIRECTORS \nREGISTRAR \nSTOCK TRANSFER AGENT \nAUDITORS \nGENERAL OFFICES \nTerrell C. Drinkwater, President and Director \nStanley R. Shatto, Vice President-Engineering \nand Maintenance and Director \nMarvin W. Landes, Vice President-Service \nand Director \nArthur F. Kelly, Vice President-Sales \nPaul E. Sullivan, Vice President and Secretary \nD. P. Renda, Assistant Secretary \nJ. J. Taylor, Treasurer \nRobert H. Purcell, Controller and Assistant Treasurer \nI. W. Burnham II, Director \new York City \nHugh W. Darling, Director \nLos Angeles \nHector C. Haight, Director \nLos Angeles \nL. Welch Pogue, Director \nWashington, D. C. \nJohn M. Wallace, Director \nSalt Lake City \nAlexander Warden, Director \nGreat Falls, fontana \nSidney F. Woodbury, Director \nPortland, Oregon \nCitizens National Trust \u0026 Savings Bank, \nLos Angeles \nChase National Bank, ew York \nSecurity-First National Bank of Los Angeles \nNew York Trust Company, New York \nPeat, Marwick, Mitchell \u0026 Co. \nW stern Air Lines Building \n6060 A vion Driv \nLos Ang les Int rnational Airport \nLos Ang 1 s 45, California \n to the stockholders of WESTERN AIR LINES, its customers and employees \nFor the calendar year 1949, the operations of the \nCompany and its subsidiary, Inland Air Lines, Inc., \nresulted in a net profit of $432,053, or 82 per share \nafter taxes and all other charges. This compares \nwith a net profit for 1948 of $134,704, equivalent \nto 26 per share of capital stock outstanding. \nIn 1949, total operating revenues of the Com- \npany0 amounted to $11,534,131, an increase of 10.2% \nover the total operating revenues of $10,463,232 \nrealized the previous year. Total revenue miles \nflown by the Company increased 9.1% during the \nperiod. This increased mileage was operated with \nan addition of only $202,321, or 1.9%, in total oper- \nating expenses, which totaled $10,564,296 in 1949, \nas compared with $10,361,975 in 1948. Those ex- \npenses directly related to the cost of flying the \naircraft accounted for all of the increase in total \noperating costs, with indirect expenses reflecting \na decrease of $436,335, or 7.3%. \nDuring the past year many new problems arose \nin the operation of the Company, some of these \nrequiring sharp revisions in the planning of the \nmanagement. Substantial progress has been made \nin meeting these problems. The beneficial results \nof the reorganization of the Company during the \npast three years have become manifest and, in \nthe absence of totally unforeseen contingencies, it \nis expected that additional gains will be made \n0 Whenever the term \"the Company\" appears herein, it refers \nto Western Air Lines, Inc. and its subsidiary, Inland Air \nLines, Inc. \nduring 1950. The entire western region served by \nthe Company is growing in population, commerce \nand industry. \nThe Company is presently serving 39 stations \nlocated in 13 states and Canada. Each day 372 \nWestern Air Lines take-offs and landings are sched- \nuled-or one every 4 minutes. A fleet of 26 aircraft \nis operated, including 10 Convairs, 10 Douglas \nDC-3' s and 6 Douglas DC-4' s. The Company has \ncertificated routes of 4,613 miles, over which 29,955 \nairplane miles are scheduled each day. This is equal \nto a daily trip around the world with two round \ntrips between Los Angeles and Seattle added. \nEach day the Company schedules 1,078,280 airplane \nseat miles. \nDuring 1949, the Company completed 97.72% of \nall airplane miles scheduled. An average of 1,157 \npassengers was carried each day. The average pas- \nsenger traveled 369 miles and paid $20.44 for his \nticket, exclusive of the 15% Federal transportation \ntax. \nWorking in concert with the industry and the \ngovernmental agencies concerned, much progress \nhas been made by the Company during 1949 in \nimproving the safety and dependability of its fly- \ning operations. Considerable work was done in \nstudying and installing new techniques, procedures \nand equipment for instrument flying, airway traffic \ncontrol, and airport approach systems. This pro- \ngram is being continued and it is confidently \nexpected that the Company will be able to report \nmore advancement at the close of 1950, during \n which year it is anticipated that still further im- \nproved radio, instrument landing, airport lighting, \nfog dispersal and other aids to navigation will be \nstudied, refined and utilized. \nIn the Company's headquarters at the Los \nAngeles International Airport, additions have been \nmade to the maintenance and shop equipment to \nthe end that these facilities now take care of vir- \ntually all of the overhaul and maintenance work \nrequired for all aircraft. These facilities are among \nthe most complete, efficient and outstanding units \nof their kind. \nStockholders: As of November 7, 1949, there were \nissued and outstanding 525,164 shares of the capi- \ntal stock of the Company, all of one class and held \nby 2,691 shq.reholders of record. Many are nominees \nwho hold stock for the accounts of others, the num- \nber of whom is unknown to the Company. It is \nestimated, however, that Western Air Lines, Inc., \nis owned by over 4,000 individual stockholders: \nresiding in each of the forty-eight states. Since \nthe sale in the spring of 1949 of the large block \nof stock formerly held by Mr. W. A. Coulter, \nmost of which stock has since been redistributed, \nthe number of shareholders of the Company has \nincreased materially, particularly in the western \nstates served by the Company, thus providing a \nbroadened market for the stock. \nApproximately 17% of the employes and all of \nthe officers own stock in the Company. \nEmployes: At the close of the year, the Com- \npany's payroll listed 1,226 employes, 74.7% men \nand 25.3% women. These employes were divided \nbetween divisions of the Company as follows: \nService Division, including station and reserva- \ntions personnel, radio operators and stewardesses, \n473; Maintenance and Engineering Division, 318; \nFlight Division, including pilots, dispatchers and \ninstructors, 198; Treasury Division, including \nbudget, accounting, purchasing and stores person- \nnel, 97; Sales Division, including city ticket office \nstaffs, 92; General Administration Division, includ- \ning corporate, legal, clerical and insurance depart- \nments, 48. \nThe average length of service with the Company \nfor ~.11 employes was 5J~ years. The average length \nof service of pilot captains was 11 years. There \nhas been a marked reduction in the turnover of \nemployes during the year. This, coupled with \nrevised training programs and departmental reor- \nganization, has aided in increasing efficiency and \nreducing costs. \nApproximately 85% of the Company's employes \nare represented by six labor unions. The Com- \npany has contracts with these unions under which \nharmonious relationships have been maintained \nthroughout the year. \nThe employes' Westernaire Federal Credit Union \nhas had a successful year during which 863 loans \ntotaling $130,230 were made to employes. A divi- \ndend of 6% was paid on savings accounts to employe \nmembers. No losses have been experienced in con- \nnection with loans made. Membership is open to \nall Company employes, of whom 54% are now \nmembers. \nThe Employes' Suggestion System has been \ncontinued, with awards of tnany cash prizes for \nindividual suggestions which have been accepted \nand put into effect to improve the efficiency of \nthe organization. \n($000.00 omitted) \nFor the Calendar Year \n1949 1948 1947 \nOperating revenues: \nPassenger ............ $ 8,024. $ 7,813. $10,114. \nMai1 ................ 2,504. 2,136. 1,570. \nOther ............... $ 1,006. 514. 692. \nTotal operating \nrevenues ......... $11,534. $10,463. $12,376. \nOperating expenses: \nDepreciation ......... $ 1,335. $ 1,164. $ 1,845. \n. Other ............... $9,229. 9,198. 11,196. \nTotal operating \nexpenses ......... $10,564. $10,362. $13,041. \nOperating profit ( or loss) .. \nNon-operating income and \n 970. 101. (665.) \nexpense (net) ......... (249.) ( 180.) ( 192.) \nFederal income taxes or \ncredits ............... (280.) 220. (88.) \nMinority inter tin profit \nofsubsidiary .......... (9.) (6.) \nNet proftt ( or loss) . .. $ 432. $ 135. $ (945.) \n Flnanclal Position-The comparative financial status of \nyour Company as of the close of the last three calendar \nyears is shown in the following condensed statement: \nAs of December 31, 1949 ($000.00 omitted) \nASSETS \n( What we own) \n1949 1948 1947 \nCurrent Assets: \nCash ............... . $ 1,401. $ 1,462. $ 2,187. \nAccounts receivable .... 1,021. 2,307. 1,168. \nInventories ........... 210. 246. 229. \nTotal current assets . . 2,632. 4,015. 3,534. \nProperties and equipment: \nAirplanes, engines, land, \nbuildings, equipment, \nspare parts, etc .. .... . .. 12,598. 12,311. 9,823. \nLess reserve for \ndepreciation .......... (5,427.) (4,217.) (3,531.) \nSundry securities ........ 11. 12. 11. \nDeposits on equipment \npurchase contracts ..... 484. \nInsurance, rent, interest, \netc., paid in advance . ... 637. 678. 269. \nRoutes, contracts \nand leases ............ 127. 147. 166. \nTotal Assets ........ $10,578. $12,946. $10,756. \n--- \nThe Employes' club in Los Angeles maintains \nclose working arrangements and sponsorships with \nsuch organizations as the Red Cross, Boy Scouts, \nand the National Polio Foundation. \nFor a number of years the Company has pro- \nvided a voluntary employes' Group Insurance \nProgram under which life, accident and sickness, \nand accidental death and dismemberment insur- \nance is made available for employes, and hospitali- \nzation insurance with medical and surgical benefits \nis made available for employes and for members \nof their families. All employes are eligible to par- \nticipate in this insurance, which cost is borne \njointly by the employes and the Company. Benefits \nunder all coverages have been broadened from \ntime to time, and the program is now one of the \nfinest available. Approximately 75% of the employes \nLIABILITIES \n( What we owe) \n1949 1948 1947 \nCurrent Liabilities: \nNotes payable ........ $ 773. $ 2,394. $ \nAccounts payable ..... . 522. 1,087. 532. \nAir Travel Plan deposits . 206. 229. 244. \nAccrued salaries, wages, \ntaxes, insurance, etc ..... 887. 620. 1,348. \n--- \nTotal current liabilities 2,388. 4,330. 2,124. \nUnused portion of \ntickets sold ........... 174. 321. 239. \nNotes payable-long term 3,113. 3,551. 3,800. \nOperating reserves ...... 272. 260. \nMinority stockholders' \ninter~t in subsidiary . ... 23. 24. 20. \nCapital stock \n(525,164 shares) ... . ... 525. 525. 525. \nCapital surplus . ......... 2,768. 2,768. 2,768. \nEarned surplus ........ . . 1,587. 1,155. 1,020. \nTotal Liabilities ..... $10,578. $12,946. $10,756. \n--- - - - \nStockholders' equity \nper share ............. $9.29' $8.47 $8.21 \ncarry the group life insurance, while about 90% \nhave availed themselves of the accident and sick- \nness and hospitalization coverages. \nThe management and directors wish to thank each \nindividual employe for his or her contribution to \nthe progress made by the Company during 1949. \nDebt: The Company's loan from the Reconstruc- \ntion Finance Corporation, which represents total \nborrowings in 1947. and 1948 of $6,421,606, had \nbeen reduced at the year end to $3,886,098. As \nof March 15, 1950, this balance has been further \nreduced to $3,544,036, which represents a repay- \nment of 45% of the original loans. \nDuring 1949 a'trangements were made with the \nReconstruction Finance Corporation for the re- \nscheduling of-the principal payments of the unpaid \nbalance of these loans. Under the revised terms, \n the Company will be required to pay the unpaid \nbalance over a three-year period ending December \n31, 1952. The annual principal payments required \nwill approximate $840,000 per year, with any un- \npaid balance due on December 31st, 1952. The \ninterest rate of the loans is 4% per annum, but the \nCompany is permitted to make prepayments on \nthe loans whenever working capital will permit \nin order to reduce the interest charges. As of March \n15, 1950, the principal payments were prepaid to \nJuly 1, 1950. \nIn addition to the regular principal payments, \namounts which the Company receives from rentals \nand sales of surplus property from time to time \nare also applied in reduction of the loans. The \nloans are secured by a first lien on practically all \nof the Company's property. The annual principal \npayments required are less than the Company's \ncurrent annual depreciation charges. \nAir Coach Service: It has become quite appar- \nent to the Company's management during the \npast year that there exists a definite market for \ntwo types of air transportation between large cen- \nters of population sufficiently far apart to enable \nthe airplane to produce a real saving in time over \nsurface carriers. On the system of Western Air \nLines, it is believed that these factors presently \nexist on the coastal route between Seattle-Tacoma \nand Portland and San Francisco-Oakland and Los \nAngeles-Burbank and, to a limited degree, between \nLos Angeles-Burbank and Las Vegas, Nevada. \nIn addition to its first-class services operated on \nthe Coastal Division with Convair aircraft, the \nCompany, on October 15, 1949, inaugurated night- \ntime air coach service between Los Angeles-Burbank \nand Seattle-Tacoma via San Francisco-Oakland and \nPortland, using DC-4 aircraft with added seating \ncapacity. The fare for this service is approximately \none-third less than the regular first-class fare charged \non the Convair coastal flights. No meals or other \nrefinements of passenger service are furnished on the \ncoach flights. Due to r strictions imposed by the \nCivil Aeronautics Board, up to the present time \nregular air coach sch dules must be flown only \nat night, with departures being restricted to times \nsubsequent to 10:00 PM from both t rminal points. \nBecause of the unusual nature of the traffic flow \nbetween Los Angeles -Burbank and Las Vegas, \nNevada, the Company, with the same type DC-4 \naircraft, inaugurated, on January 12, 1950, a round- \ntrip excursion coach type service between these \npoints. \nAs set forth in the annual report for 1948, por- \ntions of the Company's system have been subjected \nto improper competition by so-called irregular or \nnon-scheduled air carriers. No action was taken \nby either the Federal or State Government to \nregulate such competition, which began to have \na particularly serious effect on Western Air Lines \nbehveen San Francisco-Oakland and Los Angeles- \nBurbank The Company made application to the \nCivil Aeronautics Board for permission to operate \ncoach service between these cities at any time day \nor night at the four-cent-a-mile coach rate which \nhas been the minimum fare permitted by that \nregulatory body. The application was not approved \nby the CAB. \nDuring the first half of 1949 there were six \nintrastate coach-type operators carrying passengers \nbetween these points, practically without economic \nregulation by either the State or Federal Govern- \nments. The one-way fare most of such carriers \nwere charging was $9.95, which amounts to 3.04 \nper mile. In the fall of 1949, the Company _ \nentered \ninto an arrangement with an independent Califor- \nnia corporation, Western Air Lines of California, \nInc., whereby the Company charters high seat- \ndensity DC-4s to Western Air Lines of California, \nInc. The latter has been furnishing coach service \nat $9,95 between San Francisco-Oakland and Los \nAngeles (Burbank) under intrastate tariffs led \nwith the California Public Utilities Commission. \nBetween September 1 and December 31, 1949, \nWestern Air Lines of California, Inc. carried more \nthan 50,000 passengers in this intrastate coach serv- \nice. The charter revenues received by the Company \nfrom this arrangement continue to represent an \nimportant source of income. \nAlthough General Counsel for the Company has \nadvised that th arrang m nt is 1 gal und r the \nprovisions of th Civil Aeronautics Act of 1938 \nand th regulations of th Civil A ronautics Board \n thereunder, the CAB has instituted an investiga- \ntion of the arrangement, coupled with an investi- \ngation of all intrastate operations within the State \nof California. The duration or the outcome of such \ninvestigation cannot be forecast. However, the man- \nagement of the Company is firmly convinced that \nthe low fare service has been demonstrated to be \nin the public interest and profitable to the Com- \npany, and should be offered between these Cali- \nfornia metropolitan centers, notwithstanding the \nCAB aircoach policy more applicable in other sec- \ntions of the country. Figures recently released by \nthe California Public Utilities Commission show \nthat of the total number of passengers carried by \nrail, bus and air between the San Francisco-Oakland \nand Los Angeles metropolitan areas in 1949, 43.1% \nwent by air, 32.7% by rail, and 24.2% by bus. It is \ndoubtful if this ratie exists between any other pair \nof cities in the United States. \nGovernmental Regulation: By far the greatest \nimponderable in the scheduled air transport busi- \nness today is the regulatory relationship of the \nFederal Government to the industry. Being faced \nwith constant and minute regulation by the Civil \n($000.00 omitted) \n1949 \nWe Received: \nPassenger revenue ............... $ 8,024. \nMail revenue . . . . . . . . . . . . . . . . . . . 3,555. 0 \nExpress, freight, charter, etc. . . . . . . 1,006. \nRFC loan ..................... . \nSale of other assets . . . . . . . . . . . . . . . 494. \n$13,079. \nWe Spent: \nSalaries and wages .............. $ 4,856. \nGasoline and oil . . . . . . . . . . . . . . . . . 1,279. \nInsurance . . . . . . . . . . . . . . . . . . . . . . 542. \nTaxes.......................... 385. \nPassenger food and supplies . . . . . . 116. \nMaterials and outside services . . . . . 1,670. \nOther expenses . . . . . . . . . . . . . . . . . . 394. \nInterest . . . . . . . . . . . . . . . . . . . . . . . . 197. \nPayment of loans. . . . . . . . . . . . . . . . . 2,059. \nPurchase of equipment, spare parts, \netc ....................... . \nReduction of other debts and misc. \n( ) $1,051 arned in 1948. \n910. \n671. \n$13,079. \n1948 \n$ 7,813. \n1,085. \n514. \n2,266. \n176. \n$11,854. \n$ 4,974. \n1,118. \n312. \n368. \n301. \n1,694. \n404. \n184. \n121. \n2,270. \n108. \n$11,854. \nAeronautics Board, the Post Office Department and \nthe Civil Aeronautics Administration as well as \nother Federal agencies, scheduled air transporta- \ntion is probably the most completely regulated \nindustry in the nation. \nA large part of such regulation stems from the \nprovisions of the Civil Aeronautics Act of 1938 as \nadministered by the executive branch of the gov- \nernment. During the twelve years since its passage, \nthis has proven to be a good basic law. There now \nare attempts being made in Congress to change it \nby those who are motivated by a desire to stifle the \nsteady growth of domestic air transportation. The \nCompany's management, in common with most of \nthe other scheduled air carriers, has taken the posi- \ntion that this law should not now be changed in \nany major respect. But the administration of this \nlaw should be considerably simplified, clarified, \nand expedited. \nIn addition to the investigation of the California \nintrastate air coach service, the Company, like all \nother members of the air transport industry, has \nmany proceedings pending before the Civil Aero- \nnautics Board. \nAlthough the matter has been pending for sev- \neral years, no final decision has yet been rendered \non the Company's request for a determination of \nmail compensation for the period prior to January \n1, 1949. Because of disagreements between the \nCivil Aeronautics Board and the Post Office Depart- \nment, additional lengthy hearings on the case have \njust been concluded and it is hoped that a final \ndetermination will be made by the CAB during \n1950. The rate of mail compensation for the period \nsubsequent to January 1, 1949, has been determined \nand is not in issue. \nNo formal action has been taken by the Civil \nAeronautics Board in connection with any of the \nseveral investigations announced by it in a state- \nment of policy issued February 25, 1949. One of \nthese had specific reference to Western Air Lines, \nas set forth in the Company's Annual Report for \n1948. The management of the Company is of the \nopinion that if there ever were any valid reasons \nfor this investigation, they uo longer exist. \nOn Dec mber 19, 1949, the CAB issu d \"show \n cause orders\" directing the Company to demon- \nstrate why it should not stop service presently \nrendered to San Bernardino (Ontario), Palm Springs \nand El Centro, California, and Yuma, Arizona, in \norder that service could be provided to these points \non Western's system by a so-called \"feederline\" \noperator which is now doing everything possible \nto become a permanently certified trunk line car- \nrier competitive with the Company's coastal route. \nNo date has yet been set for the hearings on this \nmatter, but at the time of those hearings the Com- \npany feels it can defend its position with respect \nto service to these four cities, and prove that the \nsubstitution of a feederline for Western Air Lines \nwould be a costly duplication of service and a \nwaste of taxpayers' money. \nThe Company has refiled its CAB application \nto extend its Imperial Valley flights from Yuma \nto Phoenix in order to make a sensible route out \nof this portion of its system, it being impractical \nto carry out its previously announced plan to solve \nthe problem. \nDuring 1949, the U. S. Senate Committee on \nInterstate and Foreign Commerce started an inquiry \ninto the financial condition of the air transport \nindustry. This investigation ~s still going on. \nOne of the main projects being considered by \nthis Committee is the necessity or desirability of \nseparating moneys received by air carriers for \ntransporting United States mail into payments solely \nfor the carriage of that mail and payments in the \nnature of subsidy to permit continued operation of \nessential but uneconomical segments of the air \ntransport system, much the same as subsidy pay- \nments are made to provide free delivery mail \nservice to rural districts of the United States. \nThe rate of mail compensation received by the \nCompany falls neither in the highest nor lowest \ncategories paid to the various classes of airlines. \nUnited States air carriers operating international \nand overseas routes, as well as temporary feeder- \nline operators and some of the smaller domestic \ntrunk line air carriers, receive mail compensation \nat a considerably higher rate than that received \nby the Company. On the other hand, several of \nthe domestic air carriers larger than Western Air \nLines receive mail compensation at a rate lower \nthan that paid to the Company. \nThe management of the Company has taken no \nposition in opposition to the separation of mail \ncompensation into two components, provided such \nseparation is done on a fair and non-political basis \nby persons competent to make such separation, after \nthorough and impartial study and analysis has \nbeen completed. \nMany attacks during the past year have been \nleveled at scheduled interstate air transportation, \ninspired in most instances by surface carriers and \nother interests whose purpose is to retard the devel- \nopment of air transport. Much has been spoken and \nwritten about what has been loosely referred to as \n\"airline subsidy.\" However, many informed persons \nhave suggested that the airlines as such are not \nsubsidized but rather, if there is any element of \nsubsidy involved, it is the users of the airline \nservices who are subsidized. \nThe Postmaster General of the United States has \nrecently expressed an opinion that the subsidy \nrequired for airmail costs the Post Office Depart- \nment about $50,000,000 a year, while Government \nfranked mail costs a little over $75,000,000. The \nPostmaster General has further stated that second- \nclass mail requires a subsidy of about $200,000,000 \nannually, third-class $130,000,000 annually, and \npostal cards $55,000,000. In other words, the air- \nmail subsidy is the smallest subsidy the Post Office \nDepartment pays. \nIn any event, and regardless of the outcome of \nthe current debate, it is clear that the combined \nroute systems of Western Air Lines and its sub- \nsidiary are sound and essential and must continue to \nbe operated in the public interest to provide needed \nservice for the fast growing commercial interests \nin the areas served, to meet the postal needs and \nthe increasing needs of the national defense. \nDuring 1949 the Company has been privileged \nto work closely with the Military Air Transport \nService of the United States Department of the \nAir Force, in sponsoring and providing headquar- \nters for the organization and development of a \n military reserve air transport organization in South- \nern California. Several of the Company's key per- \nsonnel have provided the original stimulus for this \nreserve unit, which is the first and only one of its \nkind in the nation. The unit includes former mem- \nbers of the Naval Air Transport Service, the Air \nTransport Command, the Army Ground Forces, \nMarine Corps flying personnel, and civilians \nengaged in the aviation industry in Southern Cali- \nfornia. The Company will continue to cooperate \nwith the Military Air Transport Service in this \nproject in order to meet its obligation under the \nnational defense aspect of the Civil Aeronautics Act. \nDuring 1949, the Company inaugurated opera- \ntions to the Ontario International Airport, which is \nin the center of a heavily populated area adjacent \nto Los Angeles County. It is expected that new \nsources of business will be developed from this point. \nThe Company expects to receive permission from \nthe Canadian Government to extend its service \nnorth from Lethbridge to Edmonton in the Province \nof Alberta in the late spring or early summer of \n1950. This extension will enable the Company to \ntap additional long-haul traffic to and from this \nfast-growing Province of Canada which may well \nbecome one of the greatest oil-producing areas in \nthe world. \nThe governments of the United States and Mexico \nhave as yet been unable to come to an under- \nstanding with respect to the terms of a bilateral \nagreement for the further exchange of air routes \nbetween the two countries. As a result of this con- \ntinuing disagreement the Company has no present \nplans for service over its route authorized by our \nGovernment between Los Angeles and Mexico City \nvia La Paz, Baja California. \nIn furtherance of the policy of strengthening \nthe Company in the western region it serves, the \nBoard of Directors has been enlarged. The mem- \nbers of the present Board are listed at the beginning \nof this report. \nOn November 1, 1949, Mr. Arthur F. Kelly was. \nelected Vice President-Sales to direct the Com- \npany's advertising, sales, traffic and promotional \nprograms. \nRespectfully submitted, \nPRESIDENT \nMarch 15, 1950 \nWestern Air Lines Building \n6060 A vion Drive \nLos Angeles International Airport \nLos Angeles 45, California \nOn the next two pages is a reproduction \nof Westem's unique new timetable. De- \nsigned for easy reading and immediate \nunderstanding, this timetable has drawn \nnationwide attention as a passenger serv- \nice. It represents another important step \nforward in WestemAir Lines' long history \n~f pioneering. \n 800 \nI \ni \n8 50 \n907 \n12,3 3, ~ I ' / / / \niii if ff \n120 350 705 \n10l 1220 220 520 \n137 407 \ni \n6 \n2 \nl \n415 \n6 \n2 \n7 \nI \nD \n722 1115 1205 \nT \n505 \n7 \n4 \n1 \n205 \nL \nI \n6 \n0 \n6 \n235 \nl l \n- . \n10 ~0 5 ~5 \n1005 445 \nt \ns \nI \n155 \n---- ---- \n830 1205 \n I \n  \n3 \n0 L \n1 \nl \nI 1 \n.s \n1015 150 \n400 500 7058301020 305 9151115145 315 715 800 9451255 \n1 ! 1 i 1 1 1 \nl t t \nt \n~6 \nl t \n6 \n3 \n3 \nl \n~I~ I~ I ~ ! \nl6 I JI 1 ( \n~ \nl 3 1 3 7 \ni . I \n; . \ni . . , : \nr \nI i i \nl 4 55 1105 \n5 05        10,50 \nf 1@ I I I I 1@ I  \n5 45 6 45 8 50 1015 12 05 5 25 7 30 9 30 12 01 130 5 30 615 8 00 10 30 \nI \nI \nI \n/ \nI' \nI \nI \n/ \nI \nI \nI \nI \nI \nI \n!(\"'' t;J1, \nI I 4 \nI 1 I 5 \nI MST \nI \nI \nI \nI \nI \nI . \n/ \n400 715 I 00 508 7 38 9 35 \n-----------------~~ \nv \n7451035215 \n\\ 10, t 2 \n1! \n~ \n3 \n5 \n\\ 1100 240 \n., ., \n8351139319 \n8 50 \n\\ \n135 \n~ \n740 \n450 a \n'ts \n505 \n( \n~ - - \ns \n\\ \n1210 \n1155 \n~ \ns--321 \n303 \n~ ~ \n4 51 7 21 \n3 \n4 \nt6 \n. 716 ~ \nH, \n410 640 845 \n830 \n\\, \n316 \n338-- 745 740 \n11 IO 1105 \n550 \n935  940 - \nI \nI \n/ \n - sos \n - 1130 \n7 30 \n1115 \n/ \n/ \n/ \n356 139 \n'rn too \n5151237 \n~\\ 'II-,, \n}se 1 \n1s2 \n\\ \n810 \n6 01 1149 \n0\\ \\ \n645 1101 \n\\ \n1134 \nMONT. \n1035 \nEQUIPMENT: \ni( ,o 11 \nL \nj \n23 \n:::=:=~CA;NA;;OA~====ir' \n~ \n~~=-~ \n~--=------- \n1 I I \nI 1 6 \ns \n1 CST \n\\ \n\\ \n\\ \n820 \nl \n73~ \nt \n245 \n Indicates CON VAi R De Luxe pressurized aircraft. \n Indicates Douglas DC-4 COACH MASTER aircraft. \nT Indicates Douglas DC-3 aircraft. \nI \nI \nI \nI \nI \nI \nMINN. \nFLIGHT NUMBERS: -301- \nFOOD SERVICE: \nNOTES: \nB-Breakfast L-Lunch D-Dinner S-Snacks, complimentary meals served aloft. \n -Complimentary meals served at airport cafe for through passengers only. \nCD-Twenty miles from San Bernardino. \n-One fuel stop may occasionally be made enroute. \n-Operates daily except Saturday. \n@-Operates Friday and Sunday only. \nAll times are local Standard Time. A.M.- Light Fh:urrs. P.M .~Dark figures. \nOLDEST AIRLINE \nMA IL EXPRESS F R E, I G H T \n Consolidated Balance Sheet as of De~ember 31, 1949 \nASSETS \nCurrent Assets: \nCash in banks and on hand \nDeposit with Reconstruction Finance Corporation \nfor payment of certain state and local taxes ..... . \nAccounts receivable: \nUnited States Post Office Department .......... . \nOther United States and State Government Depts. \nInterline and agents' traffic balances ......... . \nCustomers' accounts receivable ................ . \nOther ( including $15,464.30 due from officers and \nemployes) .............................. . \nLess allowance for doubtful accounts ........... . \nInventory of parts and supplies at the \nlower of cost or replacement market \n( substantially all pledged) ( Note 1) ........... . \nSundry securities .................................... . \nProperties and equipment, at cost ( substantially all \npledged) ( Note 1): \nLand ........................................... . \nBuildings on and improvements to leased property .. . \nAirplanes, engines, propellers and flying equipment .. . \nRadio stations, furniture, fixtures, \nshop and other equipment ................... . \nProperty not used in operat10ns .................... . \nConstruction work in process ..................... . \nLess allowance for depreciation ................... . \nRoutes, contracts and leases, less amortizatior.t $55,212.00 .. \nDeferred charges: \nPrepaid insurance . . . . .......................... . \nUnamortized pre-operational expense \nof new type aircraft ......................... . \nOther .......................................... . \n$ 262,204.62 \n127,575.26 \n273,885.70 \n144,366.49 \n114,861.99 \n922,894.06 \n8,660.73 \n1,348.35 \n2,969,172.26 \n8,159,672.60 \n1,101,377.42 \n339,633.00 \n27,210.91 \n12,598,414.54 \n5,427,024.20 \n397,978.17 \n93,368.02 \n145,941.84 \n$ 1,401,260.11 \n106,281.17 \n914,233.33 \n209,636.14 \n2,631,410.75 \n11,186.71 \n7,171,390.34 \n127,241.60 \n637,288.03 \n$10,578,517.43 \nLIABILITIES \nCurrent Liabilities: \nNotes payable-Reconstruction Finance Corporation \n( amount due within 12 months) ( Note 1) ..... . \nAccounts payable-trade . . ....... . ................ . \nAccounts payable-taxes collected from others ....... . \nInterline and agents' traffic balances ............... . \nAir Travel Plan deposits ................ . ........ . \nAccrued salaries, ~ages, taxes, insurance and other ... . \nProvision for Federal taxes on income \n( subject to review by United States \nTreasury Department) (Note 2) ............... . \nDeferred income ( unused portion of tickets sold) ....... . \nLong term debt: \nNotes payable-Reconstruction \nFinance Corporation (Nate 1 ) ................ . \nLess amount due within 12 months ................ . \nMinority stockholders' interest in subsidiary ............. . \nCapital stock-$1.00 par value per share (Note 1) \nAuthorized 2,000,000 shares (25,000 shares \nreserved for option to officer) \nIssued 525,164 shares ............................ . \nSurplus: \nCapital surplus ( no change during year) ........... . \nEarned surplus from December 31, 1934 ........... . \nContingent liabilities ( Note 3) ........................ . \nLong term lease commitments (Nate 4) ................. . \n$ 3,886,097.80 \n772,916.63 \n2,768,247.10 \n1,587,022.90 \n$ 772,916.63 \n358,436.04 \n135,506.22 \n28,146.47 \n206,125.00 \n325,580.51 \n561,424.22 \n2,388,135.09 \n173,680.80 \n3,113,181.17 \n23,086.37 \n525,164.00 \n4,355,270.00 \n$10,578,517.43 \n Consolidated Profit and Loss Statement for the Year Ended December 31, 1949 \nOperating Revenue: \nPassenger .............................................. . \nMail (Note 2) .......................................... . \nNon-Scheduled transport services ........................ . \nExpress and freight ..................................... . \nExcess baggage and other ............................... . \nIncidental revenue-net .................................. . \nTot:il Operating Revenue ............................ . \nOperating Expenses: \nFlying operations ....................................... . \nGround operations ...................................... . \nDirect maintenance-flight equipment ..................... . \nGround and indirect maintenance ......................... . \nPassenger service ....................................... . \nTraffic and sales ........................................ . \nAdvertising and publicity ................................. . \nGeneral and administrative .............................. . \nDepreciation ........................................... . \nOperating Profit ..................................... . \nNon-operating Income: \nDiscounts received ...................................... . \nOther ................................................. . \nNon-operating Charges: \nInterest ................................................ . \nAmortization of routes, contracts and leases ................ . \nAmortization of pre-operational expense ................... . \nOther ................................................. . \nProfit before Federal Taxes on Income ................ . \nProvision for Federal Taxes on Income ........................ . \nLess Minority interest in subsidiary ............................ . \nNet Profit .......................................... . \nAmount at December 31, 1948 ............................... . \nAdd-Net profit for the year .................................. . \nAmount at December 31, 1949 ................................ . \n$ 3,080,370.59 \n1,746,574.41 \n821,782.38 \n721,815.10 \n561,538.03 \n1,062,326.00 \n299,805.87 \n934,911.64 \n1,335,171.98 \n6,866.05 \n9,182.10 \n196,798.26 \n18,408.00 \n25,464.00 \n24,379.60 \n$ 8,024,175.98 \n2,504,172.33 \n604,026.12 \n252,182.17 \n63,231.73 \n11,447,788.33 \n86,342.25 \n11,534,130.58 \n10,564,296.00 \n969,834.58 \n16,048.15 \n985,882.73 \n265,049.86 \n720,832.87 \n280,000.00 \n440,832.87 \n8,780.21 \n$ 432,052.66 \n--- \n$ 1,154,970.24 \n432,052.66 \n$ 1,587,022.90 \n Notes to Financial Statements \n1. NOTES PAYABLE-RECONSTRUCTION FINANCE CORPORATION. \nThe amount due to Reconstruction Finance Corporation, \n$3,886,097.80 ($2,446,850.33 on 1947 loan and \n$1,439,247.47 on 1948 loan), is secured by inventories, \nproperty and equipment, and the capital stock of Inland \nAir Lines, Inc., a 97% owned subsidiary. Under the terms of \nthe credit agreements, as amended, the indebtedness as of \nDecember 31, 1949, is payable in specific amounts with \ninterest at 4% per annum as follows: \n1947 Loan - Period March 1, 1950, to June 1, 1952, \n$28,000.00 monthly May through October, and $8,000.00 \nmonthly November through April; Period July 1, 1952, \nto December 1, 1952, $100,000.00 monthly July through \nOctober, and $55,000.00 monthly during November and \nDecember. The unpaid balance, if any, is due on or \nbefore December 31, 1952. \n1948 Loan- $52,083.33 monthly commencing February \n1950. The unpaid balance, if any, is due on or before \nDecember 31, 1952. \nAdditional principal payments are to be made annually \nwithin the first two months after the close of each calendar \nyear in amounts equal'to the excess of 50% of the Company's \nannual net profit for the preceding year ( before provision \nfor depreciation) over the total of the specified monthly \npayments on principal made during the preceding year. No \nadditional payment is due under this provision during the \nyear 1950. \nThe credit agreements provide, among other things, that \nno dividends on the capital stock of the Company are to be \npaid without the approval of the Reconstruction Finance \nCorporation. \n2. MAIL REVENUE AND FEDERAL INCOME TAXES. On March 3, \n1949, the Civil Aeronautics Board awarded the Company \n\"Temporary Rates of Mail Compensation\" which as to the \nperiod subsequent to January 1, 1949, were made permanent \nby an order issued on May 6, 1949. For the period prior to \nJanuary 1, 1949, the temporary rates so established resulted \nin additional retroactive mail revenue in amount of \n$975,461.20, which was recorded as income for the year \n1948 and set forth as being includable in the 1949 \nincome tax return of the Company. Accordingly provision \nwas made as of December 31, 1948, in the amount of \n$272,000.00 for the Federal income tax deemed to be pay- \nable for the year ended December 31, 1949, on the increased \nmail revenue of $975,461.20. The amount ($272,000.00) \nso provided together with the provision for Federal income \ntaxes based upon the net profit for the year ended December \n31, 1949, is reflected on the balance sheet as a current \nliability. \nA protest against the additional retroactive mail revenue \nawarded the Company has been filed by the United States \nPost Office Department and appropriate proceedings are \nb fore the Civil Aeronautics Board for final determination. \nIn the opinion of the management such final determination \nwill not materially r due the amount of the award made \nalthough the y ar or y ars in which the additional r v nue \nis taxabl may be altered. \n3. CONTINGENT LIABILITIES. As of D c mber 31, 1949, the \nCompany and its subsidiary w re conting ntly liable for \ndamage claims and lawsuits in which they are or may be \ndefendants. The amounts claimed by the plaintiffs in such \ndamage claims and lawsuits are substantial but the manage- \nment and its counsel believe the ultimate liability, if any, \nthat may result therefrom will not be material in amount. \n4. LONG TERM LEASE COMMITMENTS. The minimum annual \nrental liability on real property leased to the Company and \nits subsidiary for terms expiring more than three years from \nDecember 31, 1949, is approximately $ll7,000.00; the \nnumb ~ of leases is 25. A summary by periods of expiration \nis as follows : \n1953-1957 \n1958-1967 \n1968-1973 \nLeases \n22 \n1 \n2 \nAmount \n$81,000.00 \n1,000:00 \n29,000.00 \n5. CHANGES IN ACCOUNTING PRINCIPLES. For the year 1948 \nthe Company and its subsidiary discontinued the practice \nof making monthly reserve provisions for aircraft and \nengine overhaul costs in order to conform its accounting \npractices with a majority of the Air Transport Industry and \nto reflect agreements reached after extensive conferences \nwith the Rates and Analyses Division of the Civil Aero- \nnautics Board. In 1949, as a furtherance of this fundamental \nchange, aircraft overhaul costs are being amortized over a \nSO-month period. Likewise that part of the cost of new \naircraft which is deemed to be \"built-in overhaul\" is being \namortized over a 30-month period rather than over the \neximcted life of the aircraft. As a result of the change in \n1949, the net profit for the year 1949 is approximately \n$45,000.00 less than it would have been if such changes had \nnot been made. \nTo the Board of Directors, \nWESTERN AIR LI ES, I C.: \nWe have examined the Consolidated Balance Sheet of Western \nAir Lines, Inc., and Subsidiary as of December 31, 1949, and \nthe related statements of Consolidated Profit and Loss and \nSurplus for the year then ended. Our examination was made \nin accordance with generally accepted auditing standards, \nand accordingly included such tests of the accounting records \nand such other auditing procedures as we considered neces- \nsary in the circumstances; it was not practicable to confirm \nreceivables from United States and State Government depart- \nments but we satisfied ourselves by other means as to these \nitems. \nIn our opinion, the accompanying Consolidated Balance Sheet \nand statements of Consolidated Profit and Loss and Surplus \npresent fairly the financial position of Western Air Lines, \nInc., and Subsidiary, at Dec mber 31, 1949, and the results \nof their operations for the year then ended, in conformity with \ngen rally accepted accounting principles applied on a basis \nconsistent with that. of the preceding year, except for the \nchanges, which w approve, set forth in ote 5. \nPEAT, MARWICK, MITCHELL \u0026 CO, \nLos Angeles, California \nMarch 10, 1950 \n A museum pi e today, this M-2 biplane was \nthe last word n  aviation back in 1926 when it \nmade the nat n's first scheduled commercial \nairline flights for Western Air between Los \nAngeles and S It Lake City. \nthis is p ogress \nWestern Air Lines' 300-mph Convair-Liner represents commercial \naviation's latest and finest in speed, comfort and safety. The \nsleek plane carries 40 passengers and crew of three in an air- \nconditioned, pressurized cabin which gives ground-level comfort \nwhile cruising at above-the-weather altitudes. \n passengers \nmail \nmaintenance \nfacilities \nIn 1926 Western Air Lines, America's oldest \nairline, carried the nation's first commercial \nairline feminine passenger between Salt Lake \nCity and Los Angeles-in 6 hours, 30 minutes. \nMaude Campbell paid $90 for her ticket and \nrode in the windblown front open cockpit. \nTotaling less than 200 pounds, this airmail load \nwas a capacity haul for Western Air's M-2 \nbiplane in 1926 when the company flew the \nnation's first commercial airmail between Los \nAngeles and Salt Lake City. \nIn 1926 when Western Air mechanics did repair \nwork on the 425-hp Liberty engine of the M \n-2 \nbiplane they placed stepladders alongside the \nship, climbed up, lifted the engine hood fnd \nbegan tinkering. \nIn 1949 nearly one-half million passengers flew \nWestern Air Lines. Many thousands, new to \nair travel, used and liked Western's reduced \nfare DC-4 Coachmasters between major cities \non the Pacific Coast. \nJust in from Seattle-Tacoma on a Western Air \nLines Convair-Liner, this ton of airmail being \nprocessed at the Los Angeles International \nAirport field postoffice represents a typical mail \nload carried in WAL aircraft. \nA typical scene in Western Air Lines' modern \nengine overhaul shop at Los Angeles Inter- \nnational Airport, with mechanics in left back- \nground working on a 2400-hp Pratt \u0026 Whitney \nConvair-Liner engine, while mechanic in fore- \nground gives finishing tune-up touches to \n~~~~-------~ ____ \n1200-hp Pratt \u0026 Whitney DC-3 en~ \ngi_ \nne \n_ \n. ___ __, \nTaken 24 years a10, this picture shows one of \nWestern Air's ori1inal fleet of six M-2 biplanes \nsoarin1 over the company's ori\u0026inal han1ar at \nold Vall Field near Montebello, California. \nThe old 1926 Western Air hangar could be \ntucked away in one corner of the company's \nmodern headquarters buildin1 at Los Angeles \nInternational Airport, which houses WAL's \nadministrative offices and complete mainte- \nnance, overhaul and enalneering facilities. \n  "},{"id":"delta_wal-ar_wal-ar-1948","title":"Western Air Lines Annual Report 1948","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1949-03-17"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1948"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1948"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1948"],"dcterms_temporal":["1948-01-01/1948-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" OFFICERS AND DIRECTORS \nWESTERN AIR LINES,INC. \nREGISTRAR \nSTOCK TRANSFER AGENT \nEhiihii \nGENERAL OFFICES \nTerrell C. Drinkwater, President and Director \nStanley R. Shatto, Vice President- \nEngineering and Maintenance and Director \nMarvin W. Landes, Vice President-Service \nRic.hard A. Dick, Vice President- Sales \nPaul E. Sullivan, Vice President and Secretary \nD. P. Renda, Assistant Secretary \nJ. J. Taylor, Treasurer \nRobert H. Purcell, Controller and Assistant Treasurer \nWilliam A. CQulter, Director \nHugh W. Darling, Director \nGeorge Albert Smith, Director \nChase National Bank, New York, New York \nCitizens National Trust \u0026 Savings Bank, Los Angeles, California \nNew York Trust Company, New York, New York \nSecurity-First National Bank of Los Angeles, California \nPeat, Marwick, Mitchell \u0026 Co. \nWestern Air Lines Building \n6060 A vion Drive \nLos Angeles Airport \nLos Angeles 45, California \n To the Stockholders of \nw \nEs TE n H \nAUL LIKES, IMC. \nOPERATIONS OF THE COMPANY and its subsidi- \nary, Inland Air Lines, Inc., for the year 1948 resulted \nin a net profit of $134,704, or 26 cents per share, as \ncompared with a loss of $945,333 for the calendar \nyear 1947, exclusive of the gain resulting from the \nsale of the Denver-Los Angeles route and related \nequipment. Total operating revenues decreased from \n$12,376,176 in 1947 to $10,463,232 in 1948, a de- \ncrease of 15 % . Total operating expenses were reduced \nfrom $13,040,685 in 1947 to $10,361,975 in 1948, \na decrease of 21 % . \nThe end of 1948 marks the close of the second \nyear of your Company's* reorganization period. As \nhas been previously reported, the end of 1946 found \nyour Company in serious financial difficulties. At- \ntempts at public financing had failed, the Company's \ncash position was critical, and outstanding purchase \ncommitments and other obligations were substantial. \nAccordingly, the management of your Company at \nthat time was faced with the problems of, first, obtain- \ning some means of financing at least for the interim \nperiod and, second, lowering costs and construc- \ntively contracting the Company as promptly as could \nbe done on a sound basis. This has been the program \nof the management of your Company for the past \nt \ntwo years. Adding to the complexity of the problem \nhas been the serious effect of inflation on the costs \nof operating your Company since January 1, 194 7, \nand the general leveling off in passenger volume exper- \nienced by all domestic air transportation companies. \nIn spite of these obstacles, however, the manage- \n,:,Note: Whenever the terms \"your Company\" or \"the Com- \npany\" appear herein they refer to Western Air Lines, Inc., \nand its subsidiary, Inland Air Lines, Inc. \nment of your Company has made good progress. At \nthe present time payrolls account for about 48 % of \nyour Company's total operating expenses. The num- \nber of employes of your Company has been reduced \nfrom 2,396 on January 1, 1947, to 1,203 on March 1, \n1949, a reduction of approximately 50%. Although, \ndue to inflation, the average salary has risen during \nthat period approximately 32 % , the total payroll \nexpense has been reduced 34%. \nToday, the wages, rules and working conditions of \nover 85 % of the employes of your Company are \ngoverned by union contracts with six different unions. \nThese organizations include: Air Line Pilots Associ- \nation International; International Union, United Auto- \nmobile, Aircraft and Agricultural Implement Workers \nof America, CIO; Air Line Stewardesses Association; \nAmerican Communications Association, CIO; Air \nLine Dispatchers Association; and the Brotherhood \nof Railway and Steamship Clerks, Freight Handlers, \nExpress and Station Employes. I~ each of the general \ncategories governed by the six union contracts, indi- \nvidual pay is higher than was the c.ase on January \n1, 1947. \nSimilarly, the cost to your Company of materials, \nsupplies, equipment and parts has increased substan- \ntially during the past two years. For illustration, dur- \ning that period there has been an increase of 41 % \nin the cost of aviation gasoline. Aircraft parts have \nbeen increased generally an average of 40% in price. \nPractically everything used today in the operation of \nyour Company is more expensive than it was two \nyears ago. In spite of such a condition, your Company \nhas been able to reduce its expenses materially as \nshown in the adjoining Comparative Statement of \nProfit and Loss. \n1 \n Stockholders. As of January 7, 1949, there were \nissued and outstaJ?.ding 525,164 shares of the Capital \nStock of your Company, all _of one class, and owned \nby 2,664 shareholders of record, including a large \nnumber of Company employes. \nIn September, 1948, on behalf of William A. \nCoulter, the principal stockholder and former presi- \ndent of the Company, there was filed with the Securi- \nties and Exchange Commission a registration state- \nment permitting the public or private sale of the \n215,597 shares of the Company stock owned by him. \nAs of .March 17, 1949, according to the Company's \nrecords, Mr. Coulter had sold all but a small amount \nof his stock in the Company. It is believed that the \nsale of this stock is in the best interests of your Com- \npany inasmuch as it enlarges the group of stock- \nholders, makes a better market for the stock, and \nshould make any future permanent financing program \nmore easily attainable. \nMail Compensation. On December 30, 1948, the \nCivil Aeronautics Board issued show cause orders \ntentatively fixing the rates of mail compensation for \npast and future periods for your Company. \nWith respect to the retroactive adjustment for the \nperiod prior to January 1, J 949, your Company has \nreceived $1,051,000. Your management feels, how- \never, that the Company is also entitled to receive an \nadditional sum of $925,000 in retroactive mail pay- \nments representing profits earned in past periods .from \nnon-airline operations and the profit realized on the \nsale of the Denver-Los Angeles route and related \nequipment in September, 1947. Although the CAB \nhas tentatively deducted the sum of $925,000 from \nthe retroactive mail pay settlement, your Company \nintends to pursue in all appropriate ways the collec- \ntion of this additional claim and will urge the CAB \nto revise its tentative findings in this regard. In the \nevent your Company is successful in this matter, the \nretroactive settlement will be increased from $1,051,- \n000 to $1,976,000. In view of the fact that the claim \nis still pending, no part of the additional amount of \n$925,000 has been recorded on the books of your \nCompany. \nWith reference to the future period subsequent to \nJanuary 1, 1949, the tentative orders of the CAB \npropose establishment of new rates of mail compen- \nsation for your Company on a more realistic basis. \n2 \nCondensed Co1nparative Statement \nof Profit and Loss \n($000.00 omitted) \nFor the Calendar Year \n1948 1947 1946 \nOperating revenues: \nP!ssenger ............ $ 7,813. $10,114. $10,474. \nMail . . . . . . . . . . . . . . . . 2. t 36. \nOther . . . . . . . . . . . ... . . 514. \nTotal operating \n1,570. 982.:: \n692. 436. \nrevenues ......... $10,463. $12,376. $11,892. \nOperating expenses: \nDepreciation ......... $ 1, t 64. $ l,845. $ 1,369. \nOther . . . .. .. .. .. .. .. 9,198. J 1,196. 11,744. \nTotal operating \nexpenses ......... $10,362. $)3,041. $13,1 J 3. \nOperating profit or (loss) . . 10 I. ( 665.) (1,221.) \nNon-operating income and \nexpense ( net) . . . . . . . . . ( 180.) ( 192.) \nFederal income taxes or \ncredits . . . . . . . . . . . . . . . 220. (88.) 278. \nMinority interest in profit \nof subsidiary ... ..... (6.) \nNetptofitorloss ..... $ 135. $ (945.) $ (943.) \n~Exclusive of 1946 mail pay in the amount of $344,300.89 \nreceived in 1947 and credited direct to earned surplus. \nOn the basis of a forecast of a revenue passenger load \nfactor of 57 % , the estimated_ effective mail rate per \nairplane mile is established at 25.76 cents per mile \nfor Western Air Lines, Inc. At an anticipated revenue \npassenger load factor of 59.4% for the subsidiary, \nInland Air Lines, Inc., an effective rate of 27 cents \nper airplane mile is established. It is estimated that \nthese rates will produce total mail compensation of \n$2,200,000 to your Company for the year 1949. \nYour Company has indicated its acceptance of \nthese new rates to the CAB. However, because of \ncertain technical disagreements as to procedures be- \ntween the CAB and the Post Office Department, the \nrates have not yet been made permanent by order of \nthe CAB, but are effective under a temporary order \n Financial Position-The comparative financial status of \nyour Company as of the close of the last three calendar \nyears is shown in the following condensed statement: \nASSETS \n(What we own) \n1948 1947 1946 \nCurrent Assets: \nCash ................ $ 1.462. $ 2,137. $ 1,137. \nAccounts receivable .... 2.307. 1.168. 1,591. \nInventories ........... 246. 229. 1,043. \n-- \nTotal current assets .. 4,015. 3,534. 3,771. \nProperties and equipment: \nAirplanes, engines, land, \nbuildings, equipment, \nspare parts, etc. . ...... 12,311. 9,823. 10,207. \nLess reserve for \ndepreciation .......... (4,217.) (3,531.) (2,625.) \nSundry securities ........ 12. 11. 10. \nDeposits on equipment \npurchase contracts ..... 484. 653. \nInsurance. rent, interest, \netc., paid in advance ... 678. 269. 404. \nRoutes, contracts \nand leases ............ 147. 166. 184. \nTotal Assets ........ $12,946. $10,756. $12,604. \n- - - --- --- \nand your Company is currently receiving mail com- \npensation on the new basis. \nReconstruction Finance Corporation Loan. During \nthe past two years, your Company has borrowed from \nthe Reconstruction Finance Corporation a total of \n$6,421,606, which sums were used, first, for the pay- \nment of substantial obligations outstanding on Jan- \nuary 1, 194 7, and, second, to purchase a fleet of \nConvair aircraft, together with spare engines and \nparts. As security for the loans, the Reconstruction \nFinance Corporation holds a first mortgage lien on \npractically all of the assets of your Company. The \nagreement between your Company and the Recon- \nstruction Finance Corporation likewise contains cer- \nCondensed Comparative \nBalance Sheet \nAs of December 31 ($000.00 omitted) \nLIABILITIES \n( What we owe) \n1948 1947 1946 \nCurrent Liabilities: \nNotes payable ........ $ 2,394. $ $ 3,831. \nAccounts payable ..... 1,087. 532. 3,470. \nAir Travel Plan \ndeposits \n............. 229. 244. 240. \nAccrued salaries, wages, \ntaxes, insurance, etc. . .. 620. 1,348. 787. \nTotal current \nliabilities .. . . \" \n..... 4,330. 2,124. 8,328 . \nUnused portion of \ntickets sold ........... 321. 239. 308. \nNotes payable-long term. 3,551. 3,800. 287. \nOperating reserves ...... 272. 260. 340. \nMinority stockholders' \ninterest in subsidiary ... 24. 20. 21. \nCapital stock \n(525,164 shares) ...... 525. 525. 525. \nCapital surplus .......... 2,768. 2,768. 2,768. \nEarned surplus .......... 1,155. 1.020. 27. \nTotal Liabilities ..... $12,946. $10,756. $12,604. \n--- = - - - \nStockholders' equity \nper share ................... $8.47 $8.21 $6.32 \ntain provisions with respect to your management and \nother matters relating to the Company's finances to \nbe effective until the loans are paid. \nAs of March 17, 1949, the balance due the RFC \nhad been reduced to $5,367,205. The terms of these \nloans will require principal payments by your Com- \npany during the remainder of 1949 of $1,495,833. \nDiscussions are being had with the RFC for the pur- \npose of rescheduling the principal payments which \nwill become due to the RFC in 1949 and subsequent \nyears. \nRoute Structure. During the past two-year period, \nthe concept of your Company's place in the domestic \nair route pattern has materially changed. Attempts \n3 \n to compete in the transcontinental market with its \nhigh cost, and intense competition by four very large \ncompanies, were of necessity abandoned. The West- \nern Air Lines' route from Los Angeles to Denver, \nbasically part of a transcontinental operation, was \nsold and transferred to United Air Lines, the proceeds \nof such sale helping to alleviate the Company's finan- \ncial problems. \nIn accord with the regionalization philosophy of \nthe Company's system, on August 1, 1947, the Com- \npany's coastal route was extended from San Francisco \nand Oakland to Seattle-Tacoma via Portland. On \nApril 1, 1947, the operations of the Company's In- \nland Division were extended from Huron to Minne- \napolis-St. Paul and Rochester, thus permitting a \nthrough service from Denver as well as from Great \nFalls to these Minnesota cities. On May 2, 194 7, \nservice was inaugurated between San Diego, Califor- \nnia and Yuma, Arizona, via El Centro, California, a \nfranchise awarded to the Company in 1946 by the \nCivil Aeronautics Board. \nSince the inauguration of the San Diego-El Centro- \nYuma operations, negotiations have been entered \ninto looking toward the transfer of this segment of \nyour Company's route to Arizona Airways, a tem- \nporarily certificated feeder operator which has been \nauthorized to fly between Phoenix and Yuma. The \nmanagement of your Company is of the belief that \nthe San Diego-Yuma operation is not a sensible seg- \nment of your Companfs route structure. Its opera- \ntion thus far has proved to be uneconomical and this, \ncoupled with low traffic potential, has constituted a \nserious drain on your Company's finances. It can \nbetter be operated as a part of the Arizona Airways \nfeeder line system. This proposed transfer is now \npending before the CAB for approval. \nIn September, 1947, your Company withdrew all \nof its other applications for extensions and new routes \nwhich had previously been filed with the Civil Aero- \nnautics Board. It thus became, for the first time in \nthe history of the industry, the only carrier to abandon \nplans for wide-spread route extensions, electing in- \nstead to confine itself to a regional operation. \nThe route structure of your Company today con- \nsists of three divisions: The Inland Division ( which \ncomprises Inland Air Lines, Inc., a subsidiary) ex- \ntending from Denver to Minneapolis-St. Paul and \nRochester via Rapid City and various intermediate \n4 \npoints, and from Denver to Great Falls, Montana, via \nCheyenne, Casper, and other intermediate points; the \nWestern Division, extending from Los Angeles to \nLethbridge, Alberta, Canada, via Las Vegas, Nevada, \nSalt Lake City, Great Falls, and other intermediate \npoints; and the Coastal Division extending from Seat- \ntle-Tacoma to San Diego via all of the major cities \non the Pacific Coast. Service is also provided between \nSan Diego and Yuma via El Centro. \nThe system serves 3 7 cities and a total metropolitan \npopulation of 7,620,133. An average of 23,855 air- \nplane miles is scheduled each 24 hours, making 316 \nlandings and take-offs. During 1948, the Company \ncarried an average of 969 passengers each day and \nthe average passenger riding over the system traveled \n384 miles and paid $22.10 for his ticket. The Com- \npany is, therefore, essentially a \"short-haul carrier\" \nas distinguished from the predominently long-haul \ncarriers such as the transcontinental airlines. This \nfactor imposes problems with respect to the costs of \nthe Company's operation due to the fact that certain \ncosts obtain with respect to each passenger regardless \nof the length of his ride or the price of his ticket. \nYour Company has been authorized by the Civil \nAeronautics Board and the President of the United \nStates to operate between Los Angeles and Mexico \nCity, D. F., via La Paz, Baja California, and from \nLethbridge, Alberta, Canada, to Edmonton, Alberta, \nvia Calgary. The Government of the United States, \nhowever, has not as yet been able to obtain permission \nof the Mexican and Canadian governments respec- \ntively for the operation of these routes by your Com- \npany. Because of the policy of those governments \nwith respect to American Flag Air Carriers at the \npresent time, your Company has not been advised by \nour own Government as to when permission will be \nforthcoming which will allow the operation of these \nservices. The management of your Company .does not \nnegotiate directly with the governments of Canada \nand Mexico on these matters. \nFlight Equipment. Since the date of the last annual \nreport, your Company has acquired its new fleet of \nConsolidated-Vultee Convair Liner aircraft consisting \nof l O airplanes, the last three of which were delivered \nin December, 1948. This fine, modern, fast, pressur- \nized equipment is now in operation on the Coastal \nDivision and between Los Angeles and Las Vegas. \n It will soon be possible to introduce Convair opera- \ntions on other segments of the system. Your Company \nis also operating a fleet of 10 Douglas DC-3 aircraft \non the Western and Inland Divisions. The introduc- \ntory period of the Convair operation is now drawing \nto a close and the manageme.nt of your Company pro- \nposes to sell, as promptly as possible and at the best \nprices obtainable, the fleet of six Douglas DC-4 type \nairplanes. The proceeds resulting from such sale will \nbe applied toward the reduction of the RFC loan. The \nsale of the DC-4's will eliminate substantial deprecia- \ntion costs, taxes and insurance charges and will make \npossible further economies in operating expenses. \nAttempts also are being made to sell inventories of \nDC-4 spare parts and equipment. \nMaintenance Facilities. Practically all of the Com- \npany's operatfons, maintenance and administrative \npersonnel and facilities have now been housed in the \ngeneral headquarters office and hangar building at the \nLos Angeles Airport. Overhaul and shop facilities \nWhere it came from \nand where it went \n($000.00 omitted) \nWe Received: \n1948 \nPassenger revenue ............... $ 7,813. \nMail revenue . . . . . . . . . . . . . . . . . . . 1,085. \nExpress, freight, etc. . . . .  . . . . . . . . 514. \nSale Route 68, etc. . ............. . \nRFC loan . . . . . . . . . . . . . . . . . . . . . . 2,266. \nSale of other assets ....... : . . . . . . 176. \n$11,854. \nWe Spent: \nSalaries and wages .............. $ 4,974. \nGasoline and oil . . . . . . . . . . . . . . . . 1,118. \nInsurance . . . . . . . . . . . . . . . . . . . . . . 312. \nTaxes . . . . . . . . . . . . . . . . . . . . . . . . . 368. \nPassenger food and supplies . . . . . . 30 t. \nMaterials and outside services. . . . . . 1,694. \nOther expenses . . . . . . . . . . . . . . . . . 404. \nInterest . . . . . . . . . . . . . . . .  . . . . . . . 184. \nPayment of Joans . . . . . . . . . . . . . . . 121. \nPurchase of equipment, spare parts, \netc. . ...................... , 2,270. \nReduction of other debts and misc.. . 108. \n$11,854. \n1947 \n$10,114. \n1,914. \n702. \n3,750. \n3,800. \n1,000. \n$21,280. \n$ '5,777. \n984. \n397. \n455. \n371. \n2,267. \n944. \n109. \n4,118. \n2,997. \n2,861. \n$21,280. \nhave been installed and, for the first time in its his- \ntory, the Company now does almost' all of its own \noverhaul and maintenance work, including airframes, \naircraft engines, propellers, radio, instruments and \naccessories. This program has very materially reduced \nthe maintenance costs of your Company's operation \nand it is felt that even further economies can be \nachieved in this department with the standardization \nof the fleet of aircraft to consist of Convairs and \nDC-3's. The DC-4's will be eliminated. \nThe headquarters building could not be utilized \nefficiently in its entirety by your Company a~d, there- \nfore, on March 1, 1949, a sizeable portion of the build- \ning, including office, hangar and storage space, has \nbeen sub-let to another airline, the proceeds of which \ntenancy will help defray the cost of maintenance of \nthe building. The Company has leased and is under- \ntaking to sell as promptly as possible its former office \nbuilding in Beverly Hills and its former warehouse \nfacilities at Burbank, California, neither of which \nproperties is any longer useful to your Company. \nConsolidations. The management of your Company \nis of the firm belief that the Federally certificated \ntrunk airlines in the United States should consolidate \ntheir respective facilities on the ground at both ticket \noffices and at airport stations wherever practicable in \norder to reduce their costs of operation. In accord \nwith this philosophy, your Company has adopted a \npolicy of making such consolidations wherever they \ncan be arranged with the other air carriers. As a result, \nyour Company occupies a conspicuous position in \nthe airline industry for its consolidation programs. At \nthe present time, the Company serves 3 7 stations, of \nwhich 23 are served jointly with another air carrier. \nOf these 23 stations, Western Air Lines has some type \nof consolidation arrangement at 16, and is constantly \nnegotiating to include other consolidations for the \npurpose of achieving a more efficient operation and \nreducing costs. The management of your Company is \nconstantly urging the establishment and operation of \nconsolidated downtown ticket offices serving all air- \nlines in each major city on your Company's system. \nMeal Service. On December 10, 1948, your Com- \npany, acting on the theory that the serving of meals is \nan illogical and uneconomical function for an organi- \nzation engaged solely in air transportation, applied to \n5 \n the Civil Aeronautics Board for permission to discon- \ntinue this practice. Since the cost of serving meals \namounted to approximately 5 % of passenger fares, \napplication was also made for permission to reduce \nthe fares in this amount. Approval of the application \nsubsequently was received, and on February 1, 1949, \nyour Company eliminated the service of meals on its \nairplanes and passed the savings on to the traveling \npublic in the form of a general 5 % fare reduction. \nWes tern Air Lines was the first air carrier to serve \n\"free\" meals aloft to its passengers as a promotional \nstunt back in 1928. It therefore seems appropriate \nthat Western Air Lines should be the first to eliminate \nthis costly practice and to concentrate its energies on \npromoting the utility of the airplane-its speed, com- \nfort and safety. \nEmploye Relations. The Company employes have \norganized the Westernaire Federal Credit Union under \na Federal charter on January 14, 1948, for the pur- \npose of providing a convenient means of systematic \nsavings to the employes of your Company, all of \nwhom are eligible for membership. The funds derived \nfrom these savings are then made available for loans \nto employe members. \nDuring the past year, dividends amounting to 4.8 % \nof their savings have been paid to employe members. \nNo losses nor delinquent payments have been experi- \nenced in connection with loans made. All officers and \ndirectors of the Credit Union are elected by the mem- \nbers at an annual meeting, and a payroll deduction \nplan has been inaugurated by your Company for the \npurpose of facilitating savings and loan repayments. \nOn July 1, 194 7, your Company placed in effect a_ \nn \nEmployes' Suggestion Program based on a system \nof recognition and monetary awards for suggestions \nmade by employes which increased the efficiency and \nsafety of your Company's operation. During the first \n18 months of operation, 2,401 suggestions were made \nby employes in all divisions of your Company and \nover 200 cash awards were made. Annual savings of \napproximately $20,000 have been realized by your \nCompany as a result of these suggestions. \nIn the Los Angeles metropolitan area, the resi- \ndence of 50% of the Company's personnel, an em- \nployes' recreational club is sponsored for various \nemploye activities. This organization also operates the \nlunch-room at the general offices. \n6 \nCivil Aeronautics Board Investigation. On Feb- \nruary 25, 1949, the Civil Aeronautics Board released \na lengthy statement of policy reviewing many current \nproblems of the domestic air transport business, and \nissued a series of some 14 separate orders launching \nbroad investigations of many types. The Board an- \nnounced: \"Our principal objective during the coming \nyear is a complete return of the air transport industry \nto a sound and profitable condition from which it can \nwithstand the ordinary vicissitudes of economic fluc- \ntuations.\" \nYour Company, in common with all other air car- \nriers in varying degrees, is aff ec.ted by this series of \ninvestigations. With specific regard to Western Air \nLines, the CAB issued an order entitled, \"Order \nAmending Order Instituting Investigation,\" thus tying \nin the present order with the investigation the Board \ninstituted on April 29, 194 7. This latter proceeding \nfollowed the application by your Company in the \nearly part of 194 7 for a temporary emergency mail \nrate in order to alleviate the critical financial condition \nof your Company at that time. \nThe present order of investigation indicates that \nthe Board intends to make a complete survey through \npublic hearings of the relationship of your Company's \nroutes to the over-all domestic air transport pattern. \nThe CAB in its order, however, states that \"the \namended inquiry will not contemplate the issuance \nof an order by the Board directing Western to take \nany action, but does contemplate that at the conclu- \nsion of said inquiry the Board will determine what \nfuture steps, if any, may be required to effectuate any \nfindings made during the course of the said investiga- \ntion as to the needs of the public interest.\" \nThe purposes and motives of the CAB's present \ninquiry are obscure. Neither the duration nor the \nscope nor the results of such inquiry can be predicted \nat this time. Under present law, the CAB has no \npower to confiscate the properties of your Company. \nThe route structure of your Company, with minor \nmodifications, is believed to be both economically \nand geographically sound providing, as it does, a much \nneeded regional air transport system for the western \npart of the country in the public interest. It is entirely \nconceivable that the current CAB investigation may \nresult in benefit to your Company. It is by no means a \nforegone conclusion that harm will be done by CAB \naction. The CAB's limited staff is already far behind \n in processing pending proceedings, and in view of the \nfact .that several of the investigations concurrently \nlaunched have to do with matters obviously much \nmore vital to the we~fare of domestic air transporta- \ntion than the continufog investigation of Western Air \nLines, it seems unlikely that any action will be taken \nwith respect to the inquiry relating to your Company \nfor a long time to come. \nOutlook for the Future. Throughout 1947 and \n1948, the management of your Company has of ne- \ncessity concentrated its energies on the job of reducing \ncosts, increasing operating efficiency, and solving its \nacute interim financial difficulties. It is felt that much \nhas been accomplished in this regard. In 1949 your \nmanagement expects to make further progress in the \nreduction of costs and the elimination of frills from \nair transportation without any sacrifice in the safety \nand efficiency of the operation. A new system of bud- \ngetary control has been introduced for this purpose. \nThere are applications on file with the Civil Aero- \nnautics Board by other airlines seeking franchises \nwhich would subject segments of your Company's \nroutes to additional competition. These efforts will \nbe vigorously opposed, inasmuch as it now seems per- \nfectly clear to most informed persons that there is \nlittle need for further competition in the areas served \nby your Company. \nCertain portions of your Company's routes have \nlikewise been subjected to improper competition by \nso-called \"irregular\" or \"non-scheduled\" air carriers \nwhich operate under different safety rules and stand- \nards, wage rates, insurance coverages, and operational \ntechniques than are observed by your Company. It is \nbelieved that in the public interest all such operators \nshould and ultimately will be obliged to observe the \nsame safety standards that are applicable to the op- \neration of your Company. \nMuch has been done during the past two years by \nthe airline industry and the Government to increase \nthe reliability of air transportation. The fog dispersal \nsystem at the Los Angeles Airport will soon go into \noperation and in itself should increase your Com- \npany's revenues. Other navigational aids are being \nand have been installed in both your Company's air- \ncraft and on the ground at considerable expense, all \nof which will increase the efficiency of the scheduled \nperformance. \nThere has been a growing realization on the part \nof the people of the United States of the essential value \nof a sound domestic air 'transportation system with \nrelation to the national defense and security of this \nnation. The validity of the point has been recently \nrecognized on many occasions by persons in both the \nlegislative and executive branches of the Federal Gov- \nernment. Your Company is an integral part of the \nnational defense system, and your management, as in \nthe past, will continue to work closely with the mili- \ntary air forces in appropriate fashion. \nWith the continued progress of cost reduction and \nreasonable adjustment in rates of mail compensation, \nin the absence of unforeseen contingencies, the ma~- \nagement of your Company hopes and expects to \noperate at a profit during the year 1949. The market \nfor air transportation will expand each year as a larger \nsegment of the public becomes acquainted with the \nutility of the airplane, particularly in the western states \nserved by your Company. Greater sales effort will be \nmade to tap this market. \nIt is appropriate to note herein an expression of \nsincere thanks to the loyal employes for their hard \nwork, devotion and energy in doing their part toward \nthe solution of many of the Company's problems \nduring this difficult reorganization period immedi- \nately past. \nRespectfully submitted, \n--- \nPRESIDENT \nMarch 17, 1949 \nWestern Air Lines Building \n6060 A vion Drive \nLos Angeles Airport \nLos Angeles 45, California \n7 \n 8 \nConsolidated \nE \nA \nL AH C \nASSETS \nCurrent Assets: \nCash in banks and on hand ...................... . \nDeposit with Reconstruction Finance Corporation \nfor payment of certain state and local taxes ..... \nAccounts receivable: \nUnited States Post Office Department ......... . \nUnited States and State Government Departments \nInterline and agents' traffic balances ........... . \nCustomers' accounts receivable .. . ........... . \nOther ( including $17,152.16 due from officers and \nemployes) ........................ . .. . \nLess reserve for doubtful accounts ............ . \nFederal taxes on income refundable under loss carry- \nback provisions of Internal Revenue Code \nInventory of parts and supplies at the \nlower of cost or replacement market \n(substantially all pledged) (Note 1) .......... . \nSundry securities ................ . ................. . \nProperties and equipment, at cost (substantially all \npledged) (Note 1): \nLand .................................. . .... . \nBuildings and improvements to leased property ..... . \nAirplanes, engines, propellers and flying equipment .. . \nRadio stations, furniture, fixtures, \nshop and other equipment .. . ........ . . . .. . . . \nProperty not used in operations ................. . . \nConstruction work in process ....... .. . . .. . ...... . \nLess reserve for depreciation ............. . ...... . \nRoutes, contracts and leases, less amortization $36,804.00 .. \nDeferred charges and prepaid insurance, rent, \ntaxes and sundry ( including $118,832.02 of \nunamortized pre-operational expense of \nnew type aircraft- Note 3) .. . ... . .. . ........ . \n$ 1,214,046.74 \n105,746.30 \n303,386.46 \n150,098.18 \n99,956.20 \n1,873,233.88 \n6,947.97 \n1,348.35 \n2,962,767.36 \n7,946,449.39 \n1,103,403.05 \n237,038.10 \n60,375.90 \n1 2,311,382.15 \n4,217,528.39 \n$ 1,461,993.84 \n67,255.56 \n1,866,285.91 \n372,636.36 \n246,417.02 \n4,014,588.69 \n12,481.73 \n8,093,853.76 \n147,288.87 \n678,011.02 \n$12,946,224.07 \nSHEET as of December 31, 1948 \nLIABILITIES \nCurrent Liabilities: \nNotes payable-Reconstruction Finance Corporation \n(amount due within 12 months) (Note 1) ..... . \nAccounts payable-trade ........................ . \nAccounts payable-taxes collected from others ...... . \nInterline and agents' traffic balances ................ . \nAir Travel Plan deposits ........................ . \nAccrued salaries, wages, taxes, insurance and other .. . \nProvision for Federal taxes on income \n(amount due within 12 months) ............. . \nDeferred income ( unused portion of tickets sold) \nLong term debt: \nNotes payable-Reconstruction \nFinance Corporation (Note 1) \nLess amount due within 12 months ............... . \nProvision for Federal taxes on income (Note 2) ......... . \nMinority stockholders' interest in subsidiary .. . ......... . \nCapital stock-$1.00 par value per share (Note 1): \nAuthorized 2,000,000 shares (25,000 shares \nreserved for option to officer) \nIssued 525,164 shares ........... . ...... . ....... . \nSurplus : \nCapital surplus ( no change during year) \nEarned surplus from December 31, 1934 \nContingent liabilities ( Note 4) . . . . .. . . .. . . . . .. . . . .. . . \n$ 5,945,164.12 \n2,394,388.23 \n2,768,247.10 \nI, 154,970.24 \n$ 2,394,388.23 \n1,065,732.43 \n145,630.05 \n20,908.84 \n229,075.00 \n393,629.22 \n80,570.22 \n4,329,933.99 \n320,589.78 \n3,550,775.89 \n272,000.00 \n24,543.07 \n525,164.00 \n. 3,923,217.34 \n12,946,224.07 \n9 \n Consolidated \nPrt 0 F \nlT AH D L \n0 S S S TATE ME H \nT \nfor the year ended December 31, 1948 \nOperating Revenue: \nPassenger .............................................. . \nMail (Note 2) .......................................... . \nExpress and freight ....................................... . \nExcess baggage and other .................................. . \nIncidental revenue-net . , ............... , .................. . \nTotal Operating Revenue .............................. . \nOperating Expenses: \nFlying operations ........................................ . \nGround operations ... , ................................... . \nDirect maintenance-flight equipment . ~ ...................... . \nGround and indirect maintenance ........ ; .................. . \nPassenger service ........................................ . \nTraffic and sales ......................................... . \nAdvertising and publicity .................................. . \nExtension and development ................................ . \nGeneral and administrative ................................. . \nDepreciation ............................................ . \nOperating Profit ..................................... . \nNon-operating Income: \nDiscounts received ....................................... . \nLease bonus ............................................ . \nOther .................................................. . \nNon-operating Charges: \nInterest ................................................ . \nAmortization of routes, contracts and leases ................... . \nOther .................................................. . \nLoss before Federal Taxes on Income ................... . \nProvision for Federal Taxes on Income: \nApplicable to subsidiary company's taxable income ............. . \nApplicable to increased mail revenue taxable in 1949 (Note 2) ... . \nTotal Provision .................................. . \nLess: \nRestoration of excess provision for prior year's taxes resulting \nfrom loss carry-back provisions ............ $179,363.64 \nPrior year's taxes refundable under loss \ncarry-back provisions .................... $372,636.36 \nNet Credit .................................. . \nLess Minority interest in subsidiary .............................. . \nNet Profit .................................. . \nStatement of Consolidated Earned Surplus \nAmount at December 31, 1947 ........................ . ........ . \nAdd- Net profit for the year ............................. . ..... . \nAmount at December 31, 1948 ................................. . \n10 \n$ 2,612,415.13 \n1,732,466.40 \n831,134.56 \n666,554.52 \n812,136.00 \n1,202,341.66 \n328,884.50 \n1,537.81 \n1,010,668.00 \n1,163,836.09 \n5,519 39 \n14,371.77 \n26,700.63 \n183,536.49 \n18,408.00 \n25,361.00 \n60,000.00 \n272,000.00 \n332,000.00 \n552,000.00. \n$ 7,813,194.78 \n2,135,745.66 \n309,730.55 \n173,829.45 \n10,432,500.44 \n30,731.55 \n...._ 10,463,231.99 \n10,361,974.67 \n101,257.32 \n46,591.79 \n147,849.11 \n227,305.49 \n79,456.38 \n220,000.00 \n140,543.62 \n5,839.49 \n$ 134,704.13 \n$ 1,020,266.11 \n134,704.13 \n$ 1,154,970.24 \n Notes to Financial Statements \n1. NOTES PAYABLE - RECONSTRUCTION FINANCE CORPORATION. \nThe amount due to the Reconstruction Finance Corpora- \ntion, $5,945 \n1 \n164.12, includes $4,183,624.36, the amount pay- \nable on a loan obtained in 1947 together with $1,761,539.76, \nthe amount payable under a related loan obtained in 1948, \nand is secured by inventories, property and equipment, and \nthe capital stock of inland Air Lines, lnc., a 95% owned \nsubsidiary. Under the terms of the credit agreements the \namount~ b~rrowed are repayable, commencing in January, \n1949 with interest at 4% per annum, in annual aggregate \namounts of $1,824,999.96, embracing specified installments \nof $177,083.33 ($125,000.00 on the 1947 loan and $52,- \n083.33 on the 1948 loan) payable during the months of \nApril through September and $ I 27,083.33 ($75,000.00 on \nthe 1947 loan and $52,083.33 on the 1948 loan) payable \nduring the months of October through March. \n. Additional principal payments on the 1947 loan during \nits term and subsequently on the 1948 loan are to be made \nannually within the first two months after the close of \neach calendar year, commencing with the year ended \nDecember 31, 1948, in amounts equal to the excess of \n50% of the Company's annual net profit for the preceding \nyear (before provision for depreciation) over the total of \nthe specified monthly payments on principal made during \nthe preceding year. The additional payment due within the \nfirst two months of 1949 amounts to $569,388.27, which \ntogether with the specific payments aggregating $1,824,- \n999.96 to be paid during 1949 are included in the current \nliabilities in the amount of $2,394,388.23. \nThe unpaid balance of the 1947 loan is due on or before \nDecember 24, 1950, and of the 1948 loan on or before \nDecember 31, 1952. \nThe credit agreements provide, among other things, that \nno dividends on the capital stock of the Company are to \nbe paid without the approval of the Reconstruction Finance \nCorporation. \n2. FEDERAL TAXES ON INCOME-INCREASE IN MAIL REVENUE. \nProvision has been made for all known income tax liabili- \nties. The Federal income tax returns of the Company have \nbeen examined and closed through the year ended Decem- \nber 31, 1946, and those of the subsidiary through June 30, \n1946. \nOn February 25, 1949, and March 3, 1949, the Civil \nAeronautics Board awarded the Company and its subsidiary \n\"Temporary Rates of Mail Compensation\" which increased \nthe 1948 mail revenue in the aggregate amount of $1,050,- \n510.90. Except for the increase in mail revenue awarded \nthe Company's subsidiary in the amount of $75,049.70 \n( for which provision for 1948 Federal income taxes has \nbeen made) this increa,se in mail revenue is not includable \nin the 1948 income tax returns of the Company, but is \nincludable in its 1949 return. Provision has been made, \nhowever, in the amount of $272,000.00 for Federal income \ntaxes on the balance ($975,461.20) of the increased mail \nrevenue. Such provision has been based on 1948 tax rates \nand the application of the loss carry-forward provisions \nof the internal Revenue Code. As the amount of income \ntax payable  for the year ended December 31, 1949, is \ndependent upon the results of operations for that full year, \nthe amount provided is reflected on the balance sheet as \na deferred liability. \n3. CHANGES IN ACCOUNTING PRINCIPLES. In order to make its \naccounting practices uniform with those of a majority of \nthe air transport industry and following extensive confer- \nences with the Rates and Analysis Division of the Civil Aero- \nnautics Board in connection with the adjustment in mail \ncom~~nsation_ rates, the ~ompany discontinued for the year- \n1948_ 1!s practice_ of cred1tmg reserve accounts with monthly \nprov1s1ons for aircraft and engine overhaul costs based on \nflying hours and subsequently charging such reserve ac- \ncounts with the costs of overhaul when determined. For the \nyear 1948, therefore, all overhaul costs in excess of the \nreserves provided as of December 31, 194 7, have been \ncharged to operating expenses. In addition, the Company \ndiscontinued its practice of writing off in .the year in- \ncurred all pre-operational expenses and for the year 1948 \ndeferred the pre-operational expenses incurred in connec- \ntion with its new type aircraft and will amortize such ex- \npense over a period of 56 months from December 31, 1948. \nAs a result of these changes, the net profit for the year is \napproximately $378,000.00 greater than it would have been \nhad the previous practices been continued. \n4. CONTINGENT LIABILITIES. The Company and its subsidiary \nwere contingently liable as of December 31, 1948, oncer- \ntain damage claims and lawsuits in which they are or may \nbe defendants, but the management believes that the lia- \nbility resulting therefrom, if any, in excess of insuran.ce \ncoverage will not be material in amount. \nAccountant~' Report \nTo the Board of Directors, \nWESTERN AIR LINES, INC.: \n_We have examined the Consoljdated Balance Sheet of Western \nAir Lines, Inc .. and Subsidiary, as of December 31. 1948, and \nthe related statements of Consolidated Profit and Loss and \nSurplus for the year then ended. Our examination was made \nin accordance with generally accepted auditing standards, \nand accordingly included such tests of the accounting records \nand such other auditing procedures as we considered neces- \nsary in the circumstances; it was not practicable to confirm \nreceivables from United States and State Government depart- \nments and agencies but we satisfied ourselves by other means \nas to these items. \nIn our opinion, the accompanying Consolidated Balance Sheet \nand statements of Consolidated Profit and Loss and Surplus \npresent fairly the financial position of Western Air Lines, \nInc., and Subsidiary, at December 31, 1948, and the results \nof their operations for the year then ended, in conformity with \ngenerally accepted accounting principles applied on a basis \nconsistent with that of the- preceding year, except for the \nchanges, which we approve, as set forth in Note 3. \n'PEAT, MARWICK, MITCHELL \u0026 CO, \nLos Angeles, California \nMarch 16. 1949 \n11 \n OFEl\\ATIHG STATISTICS \nRevenues:* \n1942 1943 1944 1945 1946 1947 1948 \nPassenger* \n    \n            \n e \nI $ 1,243 $ 1,709 $ 3,169 $ 5,654 $10,474 $10,114 $ 7,813 \nMail* ................................. 761 261 837 1,239 l,326(a) 1,570 2,136 \nExpress, Freight and Excess Baggage* ...... 191 148 155 206 318 410 483 \nOther* ................................ 180 43 97 59 118 282 31 \nTotal Revehues* ..................... $ 2,375 $ 2,161 $ 4,258 $ 7,158 $12,236(a) $12,376 $10,463 \n--- \nOperating Expenses: ,:, \nDepreciation,:, .......................... $ 216 $ 204 $ 321 $ 555 $ 1,369 $ 1,845 $ 1,164 \nOther* ................................ 1,582 1,851 3,702 6,298 11,744 11,196 9,198 \nTotal Operating Expenses* ............. $ 1,798 $ 2,055 $ 4,023 $ 6,853 $13,113 $13,041 $10,362 \n- - - \nRevenue Miles Flown* .................... 2,318 2,057 4,057 7,279 10,594 9,607 8,707 \nRevenue Passengers ....................... 77,801 80,907 147,854 303,931 602,302 491,680 353,569 \nAverage Length in Miles per Passenger Trip ... 314 403 427 385 355 396 384 \nAverage Revenue per Passenger Mile ......... $ .0509 $ .0525 $ .0502 $ .0483 $ .0489 $ .0519 $ .0576 \nPassenger Seat Miles Flown':' ... ...... . ..... . 39,349 38,499 73,101 138,852 301,856 312,615 243,771 \nRevenue Passenger Miles* .................. 24,394 32,589 63,073 117,106 214,023 194,923 135,724 \nPassenger Load Factor ..................... 61.99% 84.65% 86.28% 84.34% 70.90% 62.35% 55.68% \nMail Ton Miles Flown':' .................... 316 435 893 1,120 706 733 574 \nExpress and Freight Ton Miles* . ............. 284 221 221 312 635 912 1,089 \nTotal Revenue per Revenue Mile ............. $1.0246 $ 1.0506 $1.0495 $ .9834 $1.1550 $1.2882 $1.2017 \nTotal Operating Expenses per Revenue Mile ... $ .7755 $ .9988 $ .9915 $ .9414 $ 1.2377 $1.3574 $1.1901 \nPercent of Scheduled Service Performed ...... 96.17% 94.44% 95.43% 98.41 % 96.59% 96.77% 98.32% \nNumber Employes End of Year ............. 587 817 1,120 1,674 2,396 1,529 1,285 \n,:, 000. omitted (a) Adjusted for $344,300.89 in mail pay applicable to 1946, but received in 1947. \n12 \n WESTEl\\H All\\ LIKES \nRoute System \nCoastal \u0026 Western Divisions \n\\\\'t\"'t\\\\)6\\ \n\u003c;t.\\~1 \n\\~\\\\ \nInland Division \nServing the entire Pacific Coast, \nArizona, Nevada, Idaho, Montana, \nWyoming, Utah and Canada. \nServing Colorado, Wyoming, Nebraska, \nMontana, South Dakota, Minnesota, and \nCanada with connections to the Pacific Coast. \n "},{"id":"delta_wal-ar_wal-ar-1947","title":"Western Air Lines Annual Report 1947","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1948-03-22"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1947"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1947"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1947"],"dcterms_temporal":["1947-01-01/1947-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"0 0 0 0 \n~ \nto ~ \n.,-======~\"- \n~ ~-~ \nj,F- fj - \nn ~ - L (j \nI ~ \n~ \nI \n~ \n' \n1 -. . - \n= . ~_:~ \n;:==-~==--- \n) \n19-\u003c\\ \n7 \nJ\\. \\Jl\\.L REpOR'f OF \n~ts~tRN AIR LINES \n\\nc. \n Officers and Directors \nRegistrar \nStock Transfer Agent \nAuditors \nGeneral Offices \nTerrell C. Drinkwater, President and Director \nStanley R. Shatto, Vice President \nin charge of Engineering and Maintenance and Director \nMarvin W. Landes, Vice President - Service \nRichard A. Dick, Vice President - Sales \nPaul E. Sullivan, Vice President and Secretary \nD. P. Renda, Assistant Secretary \nJ. J. Taylor, Treasurer \nRobert H. Purcell, Controller and Assistant Treasurer \nWilliam A. Coulter, Director \nStanley W. Guthrie, Director \nGeorge Albert Smith, Director \nChase National Bank, New York, New York \nCitizens National Trust \u0026 Savings Bank, Los Angeles, California \nNew York Trust Company, New York, New York \nSecurity-First National Bank of Los Angeles, California \nPeat, Marwick, Mitchell \u0026 Co. \nLos Angeles Airport \nWestern Air Line Building \n6060 Avion Drive \nLos Angele 45, California \n . TO THE STOCKHOLDERS OF \nMARCH 22, 1948  Submitted herewith is the Con olidated Balance Sheet for your Company and it \nsubsidiary (Inland Air Lines, Inc.) as of December 31, 1947, together with statement of Consolidated Profit \nand Loss and Surplus for the calendar year 1947, to which i appended the report of Me sr . Peat, Marwick, \nMitchell \u0026 Co., accountants and auditors. \nOperations of the company and its ubsidiary for the year 1947 re ulted in a lo of $945,333.4a \n9, exclu ive \nof the gain resulting from the sale of the Denver-Lo Angele route (i.e. Route 68) and exclu ive of certain \nretroactive mail pay. The net gain re ulting from the ale of the Denver-Lo Angele route ( together with cer- \ntain ground facilities, airplanes, parts, and other ground equipment nece ary to operate the route) amounting \nto $1,593,917.25, after provision for Federal Income Taxe , wa credited to earned urplu a was $344,300.89 \nretroactive compensation for the carriage of the United tale Mail received in 1947 but which wa applicable \nLo the calendar year 1946. The net increa e in earned urplu during the year 1947 wa , ther fore, $992,884.65 or \n$1.89 per hare. A condensed Comparativ tatement of Consolidated Profit and Lo immediately follow : \n[ 1 ] \n CONDENSED COMPARATIVE STATEMENT \nOF PROFIT AND LOSS \n( $000.00 Omitted) \nFor the Calendar Year Increase \n1947 1946 (Decrease) \nOperating Revenues : \nPassenger $10,114. $10,474. $ (360.) \nMail 1,570. * 982.* 588.* \nOther 692. 436. 256. \nTotal Operating \nRevenues 12,376. 11,892. 484,, \nOperating Expenses: \nDepreciation 1,845. 1,369. 476. \nOther 11,196. 11,744. (548.) \nTotal Operating \nExpenses 13,041. 13,113. (72.) \nOperating Profit or (Loss) (665.) (1,221.) 556. \nNon-Operating income and \nexpense (net) 192. 192. \nFederal Income Taxes . 88. 278.) 366. \nNet Profit (Loss) $( 945.) $( 943.) $ 2. \n*Exclusive of 1946 mail pay in the amount of $344,300.89 re- \nceived in 1947, and credited direct to earned surplus. \nThe following tabulation presents the change in the \nstockholder's equity per share during the year: \nBook Value \nper Share \nAmount December 31, 1946 . . . . . . . . , 6.32 \nAdd: \nGain from sale of Denver-Los Angeles route \nand related equipment less Federal Income \nTaxes applicable thereto . . . . . . . . \nRetroactive mail compensation received in \n3.04 \n1947 but applicable to 1946 . . . . . . .65 \n$10.01 \nDeduct: \nLoss for year ] 94 7 . . . . 1.80 \nAmount at December 31, 194 7 . $ 8.21 \nThe year 1947 has been one of abrupt transition \nfor your company*. At the beginning of the year, the \ncompany found itself in a very difficult financial \nposition because of it inability to complete a finan- \ncing program which was of vital necessity. The \nfinancial situation wa further comp Heated by the \nexistance of outstanding commitments for new equip- \nment and a contemplated program of expansion. \nAs you have been advi ed previously, the direclors \nand management of your company determined that \nthe most effective course to pursue during 194 7 was \none of constructive contraction. As a result, plans for \nexpanded transcontinental operations were abandoned \nin favor of a policy looking toward the development \nof a concentrated western regional air transport \nsystem. In furtherance of this new policy, several \nsteps were taken: \n1. Orders for new equipment, parts and supplies \nwere cancelled wherever possible. \n2. The Denver-Los Angeles Route (Route 68) , \nwhich was increasingly dependent upon transcontin- \nental traffic for a substantial portion of its payload, \nwas transferred to United Air Lines, Inc. \n3. Bank loans and other obligations were either \npaid or refinanced through :financial arrangements \nwhich are explained in detail elsewhere in this report. \nPURCHASE COMMITMENTS  As of December 31, \n1946, the outstanding purchase commitments of the \ncompany totalled $9,088,035. At the end of 194 7, \nthese have been reduced to $2,280,171. consisting of \nthe following items: \nOUTSTANDING PURCHASE COMMITMENTS \nAs of December 3 I ( 000.00 Omitted) \nIncrease \n1947 1946 (Decrease) \n5 DC-6 airplane $ - \n' 3,000. (3,000.) \n10 Convair Liner airplanes 2,414. 2,300. 114 \nAircraft engines 186. 698. ( 512.) \nHangar \u0026 office building 2,500. (2,500.) \nSpare parts and undry \nground equipment 164. 1,840. (1,676.) \nTotal 2,764. 10,338. (7,574.) \nLe s deposits 484. 1,250. ( 766.) \nBalance of commitmen ts 2,280. 9,088. (6,808.) \n* NOTE: Whenever the terms \"your company\" or \"the com pany\" appear in this report, they refer to Western Air Lines, lnc., \nand its subsidiary, Inland Air Lines, Inc. \nL 2 J \n FINANCIAL POSITION  The comparative financial status of your company at December 31, 1947 and at the \nc1o e of 1946 is shown in the following condensed comparative statement: \nCONDENSED COMPARATIVE BALANCE SHEET \nAs of Dece-m ber 31 (000.00 O mitted} \nASSETS \n( What we own) \nIncrease \n1947 1946 (Decrease) \nCurrent Assets: \nCash . $ 2,137. $ 1,137. $ 1,000. \nAccounts receivable 1,168. 1,591. ( 423.) \nInventories 229. 1,043. ( 814.) \n- - - \nTotal current asset 3,534. 3,771. ( 237.) \nProperties and equipment : \nAirplanes, engines, \nparts, land, buildings, \nequipment, etc . . 9,823. 10,207. ( 384.) \nLess reserve for de- \npreciation (3,531.) (2,625.) 906. \nSundry securitie 11. 10. 1. \nDeposits on equipment \npurcha e contracts 434. 653. ( 169.) \nInsurance, rent, in- \nterest etc., paid in \nadvance 269. 404. ( 135.) \nRoutes, contracts and \nleases 166. 184. ( 18.) \nTotal Assets $10,756. $12,604. (1,848.) \n- - - \nThe receipt of $3,750,000 from Uuited Air Lines, \nInc. for the Denver-Los Angeles route and certain \nfacilities, airplanes, parts and other equipment neces- \nsary to operate that route, plus the reduction of out- \nstanding purchase commitments made it possible for \nyour company to obtain a loan commitment in the \na m o u n t of $4,500,000 from the Reconstruction \nFinance Corporation following the company's inabil- \nity to complete the financing program undertaken \nduring the later part of 1946. \nOf the $4,500,000 loan commitment from the Re- \nconstruction Finance Corporation, $3,800:000 has \nbeen received by your company. The e funds, together \nwith the $3,750,000 received from United Air Lines, \nInc., from the sale of Route 68, have been disbur ed \nin payment of pa t due bank loans and other obliga- \ntion and to increase working capital. A of December \n31, 1947, your company had total current as ets of \n$3,533,513 and current liabilitie of $2,123,559, a \ncurrent ratio of 1. 7 to 1. In compari on, at the close \nof 1946, the company had a working capital deficit of \n$4,,557,349. Therefore, during 1947 there has been an \ni m p r o v e m e n t in working capital po ition of \n$5,967,303. \n[ J ] \nLTABILITIE \n(What we owe) \nIncrease \n1947 1946 (Decrease) \nCurrent Liabilities: \nNotes payable $ $ 3,831. $(3,831.) \nAccounts payable 532. 3,470. (2,938.) \nAir Travel: \nPlan deposit 244. 240. 4. \nAccrued salaries \nwages, taxes, \ninsurance, etc. 1,348. 787. 561. \nTotal current lia- \nbilities: 2,124. 8,328. (6,204.) \nUnused portion of \ntickets old 239. 308. 69.) \nNotes payable - \nlong term 3,800. 287. 3,513. \nReserves for over- \nhaul 260. 340. 80.) \nMinority tockholder ' \ninterest in \nInland Air Lines 20. 21. 1.) \nCapital Stock \n(525,164 shares) 525. 525. \nCapital urplu 2,768. 2,768. \nEarned urplu 1,020. 27. 993. \nTotal Liabilities . 10,756. 12,604 . (1,848.) \nREVENUES  Your company's total operating reve- \nnue for 194 7 were $140,000 greater than in 1946 \n(after adjustment of retroactive mail pay), although \npa senger revenues decrea ed $359,467 during 194 7 \nde pite an increase in passenger fares, which were \ngranted to offset increa ing co t . Thi decrea e was \ndue to the fact that fewer airplane mile were \ncheduled and to a lower pa senger load factor. In \n1947, a total of 9,607,000 revenue airplane miles were \nflown by your company as compared to 10,594,000 in \n1946. During 194,7, your company had a pa senger \nload factor (i.e. percentage of eat occupied) of \n62.35% a compared to 70.90% in 1946. During \n1947, the average pa enger load factor for dome tic \nairline comparable to your company wa 60%. \nIn 194 7, the Civil Aeronautics Board granted your \ncompany an emergency mail rate of a temporary \nnature. This temporary rate is expected to be up- \nplanted by a permanent mail rate not yet determined \nfor which your company has applied, to be ffective \nfor the period from May, 1944, forward. This \napplication call for a ubstantial incr a e in the \nompany's mail rat , both future and retroactiv . It \n1s fell that such application is justifi d hecau e of \n the greatly increased costs of operation. It is ex- \npected that this pending proceeding for the deter- \nmination of a permanent mail rate will be completed \nwithin the next few months. \nDuring 194 7, mail compensation comprised 12.69% \nof your company's total operating revenues. In 1940, \nmail compensation comprised 49% of the company's \ntotal operating revenues. The following table shows \nthe trend of the percentage of Western Air Lines' mail \nrevenue to its total operating revenue from 1938 \nthrough 1947: \nYear \n1938 \n1939 \n1940 \n1941 \n1942 \n1943 \n1944 \n1945 \n1946 \n1947 \nThe Trend of the Percentage of \nWestern Air Lines', Inc., Mail Revenue to Its \nTotal Operating Revenue from 1938 through 1947 \nPercent of \nMail \nTotal Total Revenue to \nNon-Mail Mail Total Total \nRevenue Revenue Revenue Revenue \n$ 517,094.09 $ 752,560.57 $ 1,269,654.66 59.27% \n577,267.54 809,340.00 1,386,607.54 58.37% \n840,269.04 806,272.44 1,646,541.48 48.97% \n1,168,991.82 826,813.65 1,995,805.47 41.43% \n1,614,691.91 760,103.03 2,374,794.94 32.01% \n1,900,546.91 260,906,27 2,161,453.18 12.07% \n3,143,348.79 518,258.54 3,661,607.33 14.15% \n5,213,384.00 636,074.00 5,849,458.00 10.87% \n9,791,839.00 388,147.00 10,179,986.00 3.81% \n9,294,500.37 976,883.72 10,271,384.09 9.51% \n(Above figures do not include subsidiary Inland Air Lines, \nInc. acquired in 1944.) \nROUTE STRUCTURE  As has been previou ly tated, \nthe directors and management of your company de- \ntermined in 194 7 to pursue a plan of developing an \noutstanding western regional operation. This decision \nwas based in good measure upon the soundness of the \ncompany's present route structure, which for adminis- \ntrative purposes is divided into three units: The \nCoastal Division, the Western Division and the Inland \nDivision. \nOn May 19, 194 7, the Civil Aeronautics Board ex- \ntended your company's Coastal Division route north- \nward from San Francisco and Oakland to Seattle- \nTacoma, via Portland. This division now, therefore, \nserves the entire Pacific Coast from Southern Califor- \nnia to the Pacific Northwest. In the opinion of your \nmanagement this division has one of the highest poten- \ntials of any airline route in the world. Enhancing it \nare these factors: It serves the fastest growing section \nof the United States; the cities on the route - all of \nwhich have shown phenominal economic progress in \nthe last decade - are a considerable di tance apart: \nthe urface tran portation is not o highly developed \nas that on the eastern eaboard, and the weather con- \nditions, generally speaking, are conducive to a reli- \nable performance record. Service over the San Fran- \ncisco-Oakland to Seattle-Tacoma extension of the \nCoastal Division was inaugurated on August 1, 1947. \nWhen it is considered that your company was faced \nwith the difficu1t task of establishing identity in an \nentirely new territory, traffic results from the new \nPacific Northwest extension register very favorably. \nThe Western Division, which operates from Los \nAngeles to Lethbridge, Alberta, Canada, via Las \nVegas, Salt Lake City, Great Falls and other inter- \nmediate cities, serves the important inter-mountain \nregion. While not enjoying the concentrated popula- \ntion centers of the Coastal Division, the Western \nDivision nevertheless fulfills a vital transportation \nneed for a region which lacks surface transportation, \nprimarily because of the mountainous terrain in which \nit is situated. This division will continue to develop \nadditional traffic. \nThe Inland Division, which serves the area between \nGreat Falls and Denver and Denver and Minneapolis- \nSt. Paul, is comprised of two route segments- Routes \n28 and 35. The former serves the growing territory \nembraced in the states of Montana, Wyoming and \nColorado, while the latter c o v e r s the states of \nColorado, Wyoming, ebraska, South Dakota and \nMinnesota. Situated as it is between the three gateways \nof Great Falls, Minneapolis-St. Paul and Denver, the \nInland Division has demonstrated a progressive traffic \ngrowth. The traffic potential of the Inland Division \nwas enhanced considerably by the extension of service \nfrom Huron, South Dakota, to Minneapolis-St. Paul \nand Rochester, Minnesota, inaugurated April 1, 194 7. \nOn this same date, service was inaugurated between \nRapid City, South Dakota, and Sheridan, Wyoming. \nService by your company from Los Angeles to \nMexico via La Paz, Baja, California, and the exten- \nion of the W e s t e r n Division from Lethbridge, \nAlberta, Canada to Edmonton, via Calgary is still in \nabeyance pending permission of the Governments of \nMexico and Canada, respectively. Franchises for the e \noperations have been granted to your company by the \nUnited States Government which is now in process of \nnegotiating the necessary permits with the foreign \ngovernments involved. Your company has not been \nadvised as to when it may expect to inaugurate service \nover the e route extensions. \nOn ovember 12, 194 7, your company's application \nfor a route between Great Falls, Montana and Seattle \nwa denied by the Civil Aeronautic Board for the \nreason that it wa thought that ufficient traffic wa \nnot available between those two termini and appro- \npriate itermediate point to justify introduction of an \n additional carrier to compete with orthwest Air- \n1 ine , the air]ine pre ently serving that route. On \nFebruary 13, 1948, your ompany' application for \nan extcn ion of it route from Yuma, Arjzona to \nPhoenix wa denied by the Civil Aeronautics Board. \nThe Board, in tead, eiected to grant a franchi e be- \ntween Yuma and Phoenix to a newly e tabli hed air \nfeeder line. \nOn eptember 16, 1947, your company withdrew its \nother pending application for new routes and exten- \nion of its pre ent route and pre ently for the fir t \nLime since the Civil Aeronautics Board wa created in \n1938, there are no uch applications pending by your \ncompany. \nCOSTS OF OPERATION  During 1947, the co t of \noperation in the airline indu try ha materially in- \ncrea ed a a re ult of the inflationary trend. otwith- \ntanding thi trend, the management of your company \nha made every effort during the year to reduce it \nexpense con i tent with afety and efficiency. At the \nclo e of 1946, your Company had 2396 employee . At \nthe pre ent time, thi number had been reduced to \n1445. \nTotal operating expen e for 1947 were $71,986 less \nthan the prior year. Exclu ive of depreciation, which \nincrea ed from $1,368,596 in 1946 to 1,845,497 \nin 194 7, other operating expen e were reduced by \n$548,887. Wage and alarie are the ingle large t \nitem (52% in 1947) of the total cot of operation \nexclu ive of depreciation. It i intere ting to note that \non the ame ba i in 1941, alarie and wage com- \npri ed only 41 % of We tern Air Line ' expen e . In \n1947 your company's pa roll wa $5,776,911 a com- \npared to $6,156,362 for 1946. D u r in g 194 7 the \ncompany wa faced with everal non-recurring ex- \npenditure including co t of withdrawal from the \nDenver-Lo Angele ervice, inauguration of the an \nFranci co - eattl , Lh El Centro - uma the Huron- \nMinneapoli -Roche ter and the Rapid City- heridan \ner i e and the move of it h adquarter to the n w \nLo Angele irport. \nThe major r ceipt and di bur emenl of our fund \ndurin Lhe y ar were a follow : \nWE RE EIVED: \nPa en er nu \nMail rev n . \nExpr , fr t, t . \nof Ro 8, t .. \nloan . . . \nof other asset . \n10,114,000. \n1 914,000. \n702,000. \n3,750.000. \n;3,800,000. \n1 000,000. \n21,280,000. \nWE PENT: \nalarie and wage \nGa oline and oil \nIn uran e . . . . \nTaxc . . . . . \nPa enger food and upplie \nMaterial and out ide s rvice \nOther expen es . \nlntere t . . . . . . . . \n Payment of loan . . . . \nPurchase of equipment, spare part , et .. \nHangar and off ice building . . . . . \nReduction of other d ht and mi cellaneou \n$ 5,777,000. \n984,000. \n397,000. \n455,000. \n371,000. \n2,267,000. \n944,000. \n109,000. \n4,118,000. \n1,094,000. \n1,903,000. \n2,861,000. \n$21,280,000. \nAs a part of the effort for cost reduction, every \ndepartment of your company, has, during 194 7 in \nvarying degrees, been reorganized with a view toward \nimplification and added concentration on Safety, \nervice and Sales. \nThe management of your company has undertaken \nto work out arrangement for the consolidation of \nground facilitie of all types with other air carriers \nat e ery point on the y tern wherever practicable. \numerou uch consolidations with everal air car- \nrier , involving both ticket office and airport ground \noperation have been effected. Several more are in \nthe proce of negotiation. It is felt that this program \nwill ultimately re ult in lower co t , better utilization \nof per onnel and equipment, and improved service to \nthe public. \nEQUIPMENT AND FACILITIES  A of December \n31, 194,7, your company and it ub idiary operated \n5 Dougla DC-4, 44-pa enger airplane ; 12 Dougla \nD -3, 21 pa enger airplane ; 1 Dougla C-54 cargo \nairplane and 1 Dougla C-4 7 cargo airplane. There \nare on order with deliverie e pected beginning in \npril of 19 8, 10 Con olidated- ultee Convair-Liner \n40-pa enger, 300-mile-an-hour, pr urized-cabin air- \nplan , which it i believed will prove to be the mo t \nmodern and efficient tran port aircraft yet produced. \nIt i e p cted that a oon a i fea ible, the n w \non air-Liner will b plac d in rvice and ome of \nth pr nt fl et f Dougla aircraft old. pplica- \nLi n are pr ntly in proc with th R on truction \n} \n, inan orporation to provide f r th financin of \nLh n w air raft, a portion of th pur ha pric of \nwhi h ha alr ady b n paid. \nJn l of 1947 your ompany' n ombination \nhanrr p and offi buildinrr al l o \nirporl wa ompl l d and o cupi d. 1 - \n ing, which is one of the most modern and complete in \nexistence today, will permit a more efficient and less \ncostly operation through the consolidation of person- \nnel and facilities. \nOUTLOOK  President Truman's Air Policy Com- \nmission in its recent report made the following obser- \nvation : (January 1, 194B) \n\"The air line , the most important element of civil \naYiation, are passing through one of the most erious \ncrises of their history. The dome tic trunk lines of the \ncountry suffered an operating loss of approximately \n$22,000,000 in the fiscal year ending June 30, 1947. \n\"This situation is significant for two reasons. If not re- \nlieved it will contribute to the rapid deterioration of air- \nline service to the public. A second reason is now of even \ngreater importance. The air lines have a fleet of aircraft \nof great value to the military services as a reserve in time \nof war. As a potential military auxiliary, the air lines must \nbe kept strong and healthy. They are not in such a con- \ndition at the present time. \n\"Most of the air lines are in financial difficulties for a \nnumber of reasons. Both their management and Govern- \nment aviation officials were over-optimistic as to the volume \nof postwar passenger traffic. Starved for both airplanes \nand personnel during the war, the lines hired large num- \nbers of new people when the war ended, ordered many \nnew airplanes and in several instances mad~ what may \nprove to have been unwise route extensions. \n\"Losses for a number of lines began in the latter half of \n1946. There were high expenditures due to the changeover \nfrom war to peace-time conditions. These included cost \nfrom the expansion of routes, services, and organizations; \nthe introduction of new types of airplanes; rapid and un- \nforeseeable cost increases; a reduction in pas enger fares \nand mail rate coupled with a decline in mail volume; the \nreappearance of seasonal declines in passenger traffic; a \nseries of dramatic accidents; and public dissatisfaction \nresulting from lack of dependability. Strikes and the \ngrounding of airplanes have added additional heavy finan- \ncial burdens on some lines. To a large extent the causes of \nthese lo ses are temporary, but only if the air lines and \nthe Government profit by the recent experience.\" \nEven more recently the Congressional Aviation \nPolicy Board reported as follows: (March 1, 1948) \n\"Civil and military aviation are indivisible in assessing \ntotal American air strength. The air-tran port industry \nof the United States and the military air arms mu t fit \ninto a single pattern. \n\"National security requires a financially ound, operation- \nally efficient, and technically modern air-tran port indu try. \nIt envi ions a large, civil air fleet operated in foreign and \ndomestic air commer e with afety and certainty. uch an \noperating air fleet erve peace-time commerce and indu try \nwhile remaining available for immediate conver ion to \nmilitary use in an emergency. \n\"Since is is economically impracticable to maintain an \nair force which will provide ab olute security, as many \ntransport aircraft as possible hould be operated in com- \nmercial service and available to provide a reasonable \nreserve. \n\"Dependability oI flight schedules is the cornerston of a \nh althy civilian air arm. Y t, regular all-weather commer- \ncial service ha not yet been accompli h d. With present \n[ 6 J \nnavigational and landing aids, air traffic control, and air- \nports, the airways system of the country is near the satura- \ntion point, even for the present fleet of 1,000 aircraft. \n\"Lack of regularity is a major factor in the air transport \nindustry's poor financial condition, hown by heavy losse \nin 1946 and 1947. Airport and airways aids have not \nkept pace with the demands of increa ed op ration and \nlarger, faster aircraft. Already crowded, the system could \nnot handle a wartime flow of air traffic. A modern system \nof airway and traffic aids is of first importance for both \nsecurity and financial rea ons. \n\"The problem is how to provide a pool of modern trans- \nport aircraft facilities, equipment and personnel to ap- \nproach most closely the requirements for a national emer- \ngency within budgetary limit that can be supported by \nAmerican economy. Stimulation of pas enger, cargo, and \nother airtraffic is the obvious solution.\" \nBoth of these important reports on national air \npolicy, after referring to past and present difficulties \nof the domestic air transport industry and after re- \naffirming the doctrine announced in the Civil Aero- \nnautics Act of 1938 point up that the development of \na healthy air transport system is essential to the \npresent and future needs of domestic commerce, the \npostal service, and of the national defense, and make \nvarious recommendations designed to improve do- \nmestic air transportation. \nIn accordance with recommendations made by these \ntwo air policy reports, your company, which opera~es \non intregal part of the domestic air pattern, intends \nvigorously to promote a program of cost reduction \nand improved passenger, cargo and air mail service \nto the areas in which it operates. It is felt that a \nregional operation over your company's present route \nstructure is sound and in the public interest; and that \nfurther large expansion in terms of additional nn1te \nmiles at this time is not economically justifiable. Y 0ur \nmanagement believes, on the contrary, that your com- \npany's expansion should be in terms of improved \nservice and more reliable on-time performance which \nis bound to attract more passengers and shippers. It \nwould appear that the domestic air pattern in the \ngeneral regions served by your company has become \nfairly well stabilized. Sufficient lines have been es- \ntabli hed by the Civil Aeronautics Board on those \nroutes in the West where the traffic density justifie \ncompetition. Substantial portions of your c0mpany' \nystem are non-competitive and hould remain o due \nLo the spar e population served. It is believed that \nthe Civil Aeronautics Board will and should refrain \nfrom further burdening the Western Air Lines' sys- \ntem with additional competition with the resulting \ndilution of the limited available traffic on many route \ngmenl. \nWe tern Air Lines, in conjunction with the other \ndom tic air carriers and manufacturer and the var- \n ious governmental a g e n c i e s , is working on the \nimprovement of aids to flight and air navigation. Con- \nsiderable progress has been made in this regard. More \nprogress must be made before reliable all-weather \nflying can be achieved by commercial air transporta- \ntion, which will do a great deal toward solving the \nerious seasonal fluctuation in airline traffic experien- \nced by your company as well as by the entire industry. \nA debt of gratitude is owed to the loyal employ- \nees of your company for their faithful work during \nthis difficult period of readjustment and reorganiza- \ntion. Without the tireless effort of many of the person- \nnel of Western Air Lines, it would have been imposs- \nWestern Air Lines Building \nLos Angeles Airport \n6060 Avion Drive \nLos Angeles 45, California \nMarch 22, 1948 \nible to achieve whatever progress has been made by \nyour company during 1947. \nAnnouncement is made of the resignation of Mr. \nLeo H. Dwerlkotte as executive Vice President and \nDirector and the resignation of Mr. Ronald C. Kinsey \nas Vice President, and of Mr. Robert K. Light as \nAssistant Secretary of the company, and of the elec- \ntion of Mr. Stanley R. Shatto as Director and Vice \nPres_ \nident in charge of Engineering and Maintenance, \nMr. Robert H. Purcell as Assistant Treasurer and Con- \ntroller, and Mr. D. P. Renda as Assistant Secretary. \nMr. Charlie N. James has been appointed Director of \nSafety following his resignation as Vice President of \nOperations. \nRespectfully submitted, \nTerrell C. Drinkwater, President \nl 7 J \n CONSOLIDATED \nCurrent Assets: \nCash in banks and on hand \nAccounts receivable: \nASSETS \nUnited States Post Office Department . . . \nUnited States and State Government Departments \nInterline and agents' traffic balances \nCustomers' accounts receivable . . . \nOther (including $23,235.00 due from officer and \nemployees) \nLe : Re erve for doubtful account \nInventory of part and supplies at the lower of cost \n(first-in, fir t-out) or replacement market (partially \npledged) ( ote 1) \nundry securities \nProperties and Equipment, at cost (Sub tantially all pledged) \n( ote 1) : \nLand \nBuildings and improvements on lea ed property . \nAirplanes, engines, propeller , and flying equipment \nRadio stations, furniture, fixture , hop and \nother equipment . . . . \nProperty not used in operation \nCon lruction work in proce \nLes Reserve for depreciation \nDeposits on equipment purchase contracts oles 1 and 2) \nRoutes, conlracls and lea e le amorlizalion $18,396.00 \nPrepaid insurance, rent, taxe and undry . \n[ s J \n$ 257,499.33 \n134,074.44 \n412,141.89 \n108,600.23 \n264,888.63 \n1,177,204.52 \n9,838.56 \n5,719.96 \n2,996,739.59 \n5,445,402.15 \n1,023,298.85 \n252,901.07 \n98,767.47 \n9,822,829.09 \n3,531,129.20 \n$ 2,136,681.09 \n1,167,365.96 \n229,466.11 \n3,533,513.16 \n11,541.73 \n6,291,699.89 \n484,492.50 \n165,618.98 \n269,395.88 \n$10,756,262.14, \nas of DECEMBER 31, 1947 \nCurrent Liabilities: \nAccounts payable - trade \nAir Travel Plan deposits \nLIABILITIES \nInterline and agent ' traffic balances \nAccrued alaries, wage , taxes, insurance and other \nProvi ion for federal taxe on income . \nDeferred income ( unu ed portion of tickets sold) \nRe erve for overhaul of equipment \nLong term debt due to Recon truction Finance Corporation \n( 1ote 1) \nMinority Stockholders' intere t in ub idiary \nCapital tock - $1.00 par value per hare ( ote 1): \nAuthorized 2,000,000 hare (25,000 hare re erved for \noption to officer) I ued 525,164 hare \nurplu: \nCapital urplu (no change during year) \nEarned urplu from December 31, 1934 \nontinaent liabilitie ( ote 3) \n[ 9 J \n$2,760,247.10 \nJ ,020,266.11 \n$ 522,914.30 \n243,525.00 \n8,664.06 \n769,373.13 \n579,082.23 \n2,12:-3,558.72 \n238,796.23 \n260,351.94 \n3,800,000.00 \n19,878.04 \n525.161.00 \n;~, 788.5 l:-3.21 \n$10,756, 262.14 \n CONSOLIDATED \nFOR THE YEAR ENDED DECEMBER 31 , 1947 \nOperating Revenue: \nPassenger \nMail \nExpress and freight \nExcess baggage and other \nIncidental revenue -- net \nTotal OperatiPg Revenue \nOperating Expenses : \nFlying operations \nGround operations \nDirect maintenance flight equipment \nGround and indirect maintenance . \nPassenger service \nTraffic and sales \nAdvertising and publicity \nExtension and development \nGeneral and administrative \nDepreciation \nOperating Loss \nNon-operating Income: \nDiscounts received \nOther . \non-operating Charges: \nInterest \nAmortization of routes, contracts and leases . \nOther . \nPr1 \n)vision for Federal Taxes on Income \n(including $44,225.76 for prior years) \nLess: Amount applicable to the gaiJ?. on disposition of Los \nAngeles-Denver route and related property \nLoss for the Year ' \n$2,534,776.57 \n2,065,920.73 \n1,748,454.75 \n919,445.59 \n924,506.63 \n1,425,966.32 \n401,565.44 \n26,644.07 \n1,147,907.92 \n1,845.497.10 \n3,842.43 \n6,635.39 \n108,891.34 \n18,396.00 \n76,014.76 \n618,000.00 \n530,000.00 \nSTATEMENT OF CONSOLIDATED EARNED \nAmount at December 31, 1946 \nAdd: \nGain on disposition of Los Angeles-Denver route and related \nproperty less provision for federal tax thereon $5'.-30,000 $1,593,917.25 \nPortion of mall rate increase received in 1947 applicable \nto 1946 344,300.89 \nDeduct: \nLoss for the year \nAmount at December 31, 194,7 \n[ 1 o I \n$10,114,227.92 \n1,570,124.49 \n288,228.01 \n121,453.92 \n12,094,034.34 \n282,141.57 \n12,376,175.91 \n13,040,685.12 \n664,509.21 \n10,477.82 \n654,031.39 \n203,302.10 \n857:333.49 \n88,000.00 \n$ 945~333.49 \nSURPLUS \n$ 27,381.46 \n1,938,218.14 \n1,965,599.60 \n945,333.49 \n$ 1,020,266.11 \n NOTES TO FINANCIAL STATEMENTS \n1. The amount due to the Reconstruction Finance Corporation, $3,800,000.00, represents borrowings against a \n$4,500,000.00 line of credit extended thereby and is ecured by certain inventories, property and equipment, \ndeposits on equipment purcha e contracts and the company' investment in the capital tock of Inland Air \nLines, Inc., a 95% owned subsidiary. The amount borrowed is payable in unequal monthly in tallments ag- \ngregating $1,200,000.00 per year, commencing January 1, 1949, plus intere tat 4% per annum. Additional \npayments on principal are to be made annually within two months after the close of each calendar year, \ncommencing with the year ending December 31, 1948, equal to the excess of 50% of the company's annual \nnet profit (before provision for depreciation) over the monthly principal payments made during the year. \nThe unpaid balance, if any, is due on December 24, 1950. The credit agreement provides, among other \nthings, that no dividends on the capital stock of the company are to be paid without the approval of the \nReconstruction Finance Corporation. \n2. The deposits on equipment purchase contracts represent, for the most part, payments made on the purchase of \nten Convair Liner airplanes and eight R-2800 Pratt \u0026 Whitney airplane engines. At December 31, \n1947 the balance of the purchase commitments aggregated approximately $2,280,000.00. \n3. The company and its subsidiary were contingently liable as of December 31, 1947 on certain damage claims \nand lawsuits in which they are or may be defendants, but the management believes that any liability result- \ning therefrom in excess of insurance coverage will not be material in amount. \nACCOUNTANTS' REPORT \nTo the Board of Directors \nWESTER AIRLI ES , I c. \nWe have examined the Consolidated Balance Sheet of Wes tern Air Lines, Inc., and its \nubsidiary Inland Air Lines, Inc., as of December 31, 1947 and the tatements of Con oli- \ndated Profit Loss and Surplu for the year then ended, have reviewed the sy tern of \ninternal control and the accounting procedure of the Companie and, without naking a \ndetailed audit of the tran actions, have examined or te ted accounting record of the \nCompanie and other upporting evidence, by method and to the extent we deemed ap- \npropriate. Our examination wa made in accordance with generally accepted auditing \ntandard and included all procedure which we con idered nece ary in the circum tan- \nces ; it was not practicable to confirm receivables from United States and State Govern- \nment department and agencie but we have sati fied our elve by other mean a to the e \nitem. \nIn our opinion, the accompanying Con olidated Balance heet and related tate- \nments of on olidated Profit and Lo and urplu pr ent fairly the con olidatecl po i- \ntion of We tern Air Line , Inc., and uh idiary, at December 31, 1947, and the r ults of \ntheir operation for the year, in conformity with g nerally accepted accounting prin- \nciple applied on a basi con i t nt with that of th preceding year. \nLo Angele , California \nMarch 16, 1948 PEAT, MARWfCK, MITCHELL \u0026 Co. \nl 11 J \n a(Y~ \n~ \n1941 1942 1943 1944 1945 1946 1947 \nRevenues: x- \nPassengerx- $1,056 $ 1,243 $ 1,709 $ 3,169 $ 5,654 $10,474 $10,114 \nMai1-x- ... 848 761 261 837 1,239 l ,326 (a) 1,570 \nExpress, Freight and \nExcess Baggage -r,     84 191 14,8 155 206 318 410 \nOther-r. ....... 31 180 43 97 59 118 282 \nTotal Revenues-r. $2,019 $ 2,375 $ 2,161 $ 4,258 $ 7,158 $12,236(a) $12,376 \nOperating Expenses: -r.- \nDepreciation* . $ 198 $ 216 $ 204 $ 321 $ 555 $ 1,369 $ 1,845 \nOther-r. ....... 1,827 1,582 1,851 3,702 6,298 11,744 11,196 \nTotal Operating \n$2,025 $ 1,798 $ 2,055 $ 4,023 $ 6,853 $13,113 \nExpenses-r. .. $13,041 \nRevenue Miles Flown\u003e:- 3,137 2,318 2,057 4,057 7,279 10,594 9,607 \nRevenue Passengers ... 69,791 77,801 80,907 147,854 303,931 602,302 491,680 \nAverage Length in Miles per \n328 314 403 \nPassenger Trip .. 427 385 355 396 \nAverage Revenue per \n$.0461 $ .0509 $ .0525 $ .0502 $ .0483 $ .0489 \nPassenger Mile .. $ .0519 \nPassenger Seat Miles \n48,592 39,349 \nFlown-r. ...... 38,499 73,101 138,852 301,856 312,615 \nRevenue Passenger Miles* . 22,892 24,394 32,589 63,073 117,106 214,023 194,923 \nPassenger Load Factor ... 47.11% 61.99% 84.65% 86.28% 84.34% 70.90% 62.35% \nMail Ton Miles Flownx- . 273 316 435 893 1,120 706 733 \nExpress and Freight Ton \n141 \nMiles* .......... 284 221 221 312 635 912 \nTotal Revenue per Revenue \nMile ............ $.6436 $1.0246 $1.0506 $1.0495 $ .9834 $1.1550 $1.2882 \nTotal Operating Expenses \n$.6454 $ .7755 \nper Revenue Mile ..... $ .9988 $ .9915 $ .9414 $1.2377 $1.3574, \nPercent of Scheduled Service \nPerformed ......... 96.85% 96.17% 94.44% 95.43% 98.41% 96.59% 96.77% \number Employee End of \nYear .... ........ 361 587 817 1,120 1,674 2,396 1,529 \n* 000. omitted (a) Adjusted for $344,300.89 in mail pay applicable to 1946 but received in 1947. \n[ 12 ] \n To Canada \nWESTERN \nAIRLINES \nINLAND DIVISION \nTo Seattle \\ GREAT FALL~'- \n~ \nTacoma \nI LEWISTOWN - \n.- MINNEAPOLIS \n~-- ST. PAUL \nTo Los Angeles \nBLACK HILLS PIERRE HURON \nSCOTTSBLUFF \n ,e:-., .... ..... .  To Kansas City, \n~ \n\\ Chicago \u0026 East \nTo Los Angeles \nDEN VER \n\\ \nTo Tulsa, Oklahoma City, \nAlbuquerque \u0026 El Paso \n' \nROCHESTER T Ch' \no 1cago \n~ \nand \n4 New York \nPASSENGERS -MAIL -EXPRESS -FREIGHT \nServing: Colorado - Wyoming - Nebraska \nMontana - South Dakota - Minnesota \nCanada with connections to The West Coast \n - ~ \n~ . i \n~ ~-u:::~~~:~~ . -~--~- \n- \n- .,,. \n. \n.- \n. ~ \n~ \n-~~~ \n- \n~~ \n.. \n~ \n~ \n- \n-- \n--- - \n \u003cnsfll: .. :.:.C \n.... \n..... __ d _) \n~~-- \nEATnE- \n1  \nOMA I \\ \n' \n' ' \\ \n-\"\"\"\"- ETHBRIDGE \n--- \nUT BANK \nGREAT FALLS \nHELENA \n~ \n,, \n-....:\u003e--1.os \nANGELES \nIDAHO FAL \n- ::.. I \n---- \n---- I ILO \n-... I \n' \n-- lo \n-- --- \n' \n:t I \nKCANP \n__ ' LAS \n--- ~ \n~:: VEGAS \nLONG8EACH ~ \nSAN OIEGO \nt__ :\"'~YUMA \nELCENTRo'' \n.---.--\u003c..~----:'.= ' \nSALT LAKE CITY \n8 \nThe 23rd anniversary of \nWestern Air Lines- \ntruly America's pioneer \nairline \nEXPRESS FREIGHT \n "},{"id":"delta_wal-ar_wal-ar-1946","title":"Western Air Lines Annual Report 1946","collection_id":"delta_wal-ar","collection_title":"Western Airlines Annual Reports","dcterms_contributor":null,"dcterms_spatial":["United States, California, Los Angeles County, Los Angeles, 34.05223, -118.24368"],"dcterms_creator":["Western Air Lines, Inc."],"dc_date":["1947-03-21"],"dcterms_description":null,"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":null,"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/CNE/1.0/"],"dcterms_is_part_of":["Western Airlines Serial Publications"],"dcterms_subject":["Annual reports","Corporation reports","Finance","Investor relations","Corporations--Investor relations","Shareholder information","Western Airlines"],"dcterms_title":["Western Air Lines Annual Report 1946"],"dcterms_type":["Text"],"dcterms_provenance":["Delta Flight Museum"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:delta_wal-ar_wal-ar-1946"],"edm_is_shown_at":["https://dlg.usg.edu/record/delta_wal-ar_wal-ar-1946"],"dcterms_temporal":["1946-01-01/1946-12-31"],"dcterms_rights_holder":null,"dcterms_bibliographic_citation":["Cite as: [Title], Western Airlines Serial Publications, Delta Flight Museum"],"dlg_local_right":null,"dcterms_medium":["annual reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":" Officers and Directors \nRegistrar \nStock Transfer Agent \nAuditors \nGeneral Offices \nTerrell C. Drinkwater, President and Director \nLeo H. Dwerlkotte, Executive Vice President and Director \nCharlie N. James, Vice President \nin Charge of Flight Operations, Engineering and Maintenance \nMarvin W. Landes, Vice President \nin Charge of Customer and Station Service \nRichard A. Dick, Vice President \nin Charge of Traffic and Advertising \nPaul E. Sullivan, Vice President and Secretary \nRonald C. Kinsey, Vice President \nJ. J. Taylor, Treasurer \nRobert K. Light, Assistant Secretary \nWilliam A. Coulter, Director \nStanley W. Guthrie, Director \nGeorge Albert Smith, Director \nChase National Bank, New York, New York \nCitizens National Trust \u0026 Savings Bank, Los Angeles, California \nNew York Trust Company, New York, New York \nSecurity-First National Bank of Los Angeles, California \nPeat, Marwick, Mitchell \u0026 Co. \n135 South Doheny Drive, Beverly Hills, California \n T 0 T H E STOCKHOLDERS 0 F \nMARCH 21 , 1947 \n* Submitted herewith is the \nConsolidated Balance Sheet of your Company \nand its subsidiary (Inland Air Lines, Inc.) as \nof December 31, 1946, together with a state- \nment of Consolidated Profit and Loss for the \ncalendar year 1946 to which is appended the \nreport of Messrs. Peat, Marwick, Mitchell \u0026 \nCo., Accountants and Auditors. \nOperations of the company and its subsid- \niary for the year 1946 resulted in a loss of \n$943,238.36 after all taxes and charges includ- \ning provision of $1,368,595.68 for deprecia- \ntion and credits resulting from the \"carry \nback\" provisions of the Federal Internal Rev- \nenue Code of $278,036.16 and net profit of \n$107,211.77 derived from the disposition of \nequipment. In comparison, the year 1945 re- \nsulted in a net profit of $208,102.24 after a11 \ntaxes and charges, including provision of \n554,724.00 for depreciation and $150,900.00 \nfor estimated Federal taxes on income. \nThe loss for the year 1946 may be attributed \nto the following: \n(a) Added costs resulting from the upward \ntrend of prices and wages. On January \n1, 1946 the working hours for ground \nemployees in the entire airline indus- \ntry were decreased from 48 to 40 hours \nper week without reduction in \"take \nhome\" pay. Further wage increases \nwere granted generally throughout the \ncompany during the year. \n (b) Decrease in mail loads and a severe \ndrop in passenger loads beginning in \nOctober 1946. \n( c) Delayed deliveries of new and con- \nverted four-engine airplanes. 1 cchnical \npersonnel, such as pilots, mechanics, \netc., must be employed and trained \nweeks in advance and the delay of sev- \neral months in the delivery of the air- \nplanes which they were employed to \noperate and maintain, caused the com- \npany to absorb an abnormal salary bur- \nden, without benefit of the revenue \nanticipated, during the period the de- \nlivery of the airplanes was delayed. \n( d) Training of pilots for operation of four- \nengine Douglas DC-4' s. \n( e) Decrease in personnel efficiency occa- \nsioned b; a high rate of turnover and \nrapidly augmented personnel during a \nperiod of labor shortages. \n( f) Expenses incidental to the inaugura- \ntion of service on April 1, 1946 on the \nLos Angeles-Denver route. \nREVENUES \n* Substantial percentage increases \nin all types of revenue, except mail, were re- \ncorded in the year 1946 as compared with \n1945. During the first nine months of the year, \n*EXPRESS POUNDS CARRIED \n1943 957,291 \n1944 943,415 \n1945 1,508,847 \n1946 3,262,751 \nyour company experienced a demand for air- \nplane passenger accommodations in excess of \nthe mun her of scats available, but in the last \nthree months a reverse condition existed as a \nresult of the added number of planes in opera- \ntion and the severe decline in load factors \nwhich started in October. The latter decline is \nattributed to a general decrease in travel and \nthe adverse publicity directed at the airline \nindustry and inadequate service. \nA total of 1 o, 594,182 revenue miles were \nflown in 1946 as compared with 7,279,009 in \n1945, an increase of 45 % . 31 % of the 1946 \nmileage was flown with four-engine equip- \nment. Passenger revenue for 1946 amounted \nto $ 10,473,695.18 as compared vvith $5,653, \n829.86 in 1945 or an increase of 84 % . Mail \nrevenue amounted to 981,676.78 as com- \npared to 1,239,396.6o for 1945. Express and \nfreight revenue amounted to 2_p,400.25 m \n1946 as against 205,980.94 in 1945. \nOPERATING EXPENSES* A fair comparison of \nexpenses per revenue mile for 1946 ,, ith those \nof the previous year cannot be obtained due \nto the substantial mileage flown in 1946 with \nthe larger four-engine airplanes, while onl, \ntwin-engine airplanes were operated in 1945. \nHowever, basic costs, such as materials and \nwages, increased materially during 1946. The \n*MAIL POUNDS CARRIED \n1943 1,914,391 \n1944 4,534,732 \n1945 6,694,856 \n1946 3,704,185 \n BREAKDOWN OF WESTERN AIR LINES' REVENUE DOLLAR \nPASSENGER REVENUE ... $0.87 \nMAIL REVENUE. ........ .08 \nEXPRESS, FREIGHT \u0026 \nEXCESS BAGGAGE . . . . .03 \nOTHER .. . .. .. .. .. . .. .. .02 \n$1.00 \nWAGES \u0026 SALARIES ..... $0.50 \nDEPRECIATION . . . . . . . . .11 \nTAXES . . . . . . . . . . . . . . . . .02 \nEQUIPMENT \nMAINTENANCE . . . . . . .12 \nGASOLINE \u0026 OIL. ...... .08 \nINSURANCE . . . . . . . . . . . .04 \nOTHER . . . . . . . . . . . . . . . . .21 \n$1.08 \nCHARGE \nTO SURPLUS ........... . .08 \n$1.00 \nfactors contributing to increased costs have \nbeen hereinbefore outlined. In the summer of \n1946, engineering surveys to reduce costs and \nincrease personnel efficiency were undertaken. \nConsiderable improvement was made but the \nprogram has been seriously handicapped be- \ncause of the lack of adequate shop and hangar \nfacilities at Lockheed Air Terminal, Burbank, \nCalifornia, where your company's principal \noperations base is located. A new building is \nnow under construction at Los Angeles Air \nTerminal and will be fully occupied by July 1, \n1947 \nFINANCIAL POSITION \n* The financing \nprogram previously arranged with commercial \nbanking institutions could not be completed \nin 1946. \nDue to adverse market conditions, the oper- \nating losses sustained by a majority of the air- \nlines during the last quarter of 1946, and the \nadverse publicity occasioned by accidents, a \nproposed sale of new common stock could not \nbe consummated during 1946. Consequently \nyour management has been obliged to defer \n\\Vestern Air Lines major financing program \nuntil later in the year 1947. During the interim \nyour company will operate with temporary \nfinancing and will curtail costs and capital ex- \npenditures in every possible way. \nGenerally the necessary deferment of the \nmajor financing program, coupled with heavy \noperating losses, have seriously impaired your \ncompany's working capital and financial posi- \ntion. Both must be remedied in 1947. \nThe attached Consolidated Balance Sheet \nas of December 31, 1946 shows current assets \nof 3,770,964.46, including cash of $1,137,- \n094.22 as against current liabilities of 8, 328,- \n313.35 The latter includes substantial \namounts which should be converted to long \nterm financing, or paid from the proceeds of \nsale of additional stock. As of December 31, \n1945 current assets amounted to 2,534,- \n865.61, including cash of 1,407,813.89 as \nagainst current liabilities of $1,770,717.66. \nEQUIPMENT AND FACILITIES \n* As of December \n31, 1946 your company, and its subsidiary, \noperated eleven Douglas DC-3 twenty-one \npassenger airplanes, two Douglas C-4 7 cargo \nairplanes, four Douglas DC-4 forty-four pas- \nsenger airplanes, seven Douglas C-54 fifty-four \npassenger airplanes, one Douglas C-54 cargo \nairplane and two single engine airplanes. \n On October 30, 1946 your company noti- \nfied the Douglas Aircraft Company of its in- \ntention to cancel its order for five Douglas \nDC-6 airplanes contracted for on November \n30, 1945, leaving a balance of five on order \nwhich were contracted for on December 12, \n1944. On November 7, 1946 notice was given \nConsolidated-Vultee Aircraft Corporation of \nthe company's intention to reduce by one-half \nthe mun ber of Convair 240 airplanes con- \ntracted for on March 2 5, 1946. Ten Convair \n240 airplanes remain on order and these are \nscheduled for delivery to your company in the \nlast six months of 1947. Such cancellations, \ntogether with decreases in related equipment \norders, reduced outstanding commitments ap- \nproximately $7,500,000.00. \nUnder date of October 2 5, 1945 your com- \npany entered into a standard commission con- \ntract with The Austin Company for the con- \nstruction of a combination hangar, shop and \noperations office building on ground leased by \n80,907 \n- \n147,854 \n- \n303,931 \n602,302 \n1943 \n1944 \n1945 \n1946 \n32,589,240 \n- \n63,073,101 \n- \n117,105,887 \n214,022,511 \nyour company at the Los Angeles Airport. This \nbuilding, which will cost approximately \n$2,000,000.00, is about 90% completed and \npartially occupied and should have a marked \neffect on the efficiency and costs of operation \nof your company because of the inadequacy \nof facilities presently used at the Lockheed Air \nTerminal. \nNEW ROUTES * On May 17, 1946, the Civil \nAeronautics Board awarded your company a \nroute from Los Angeles, California to Mexico \nCity via San Diego, California and La Paz, \nMexico, and on August 1, 1946 a route from \nLethbridge, Canada to Edmonton, Canada \nvia Calgary, Canada. These franchises are \nsubject to the approval of the Mexican and \nCanadian Governments, respectively, and no \ninformation has been received as to whether \nand when such approval may be obtained by \nour government. \nIn addition to these international routes, \nyour company's subsidiary, Inland Air Lines, \nInc., was awarded a route from Huron, South \nDakota to Minneapolis, Minnesota via Brook- \nings, South Dakota and Rochester and Man- \nkato, Minnesota on December 19, 1946, and \na route from Sheridan, Wyoming to Rapid \nCity, South Dakota on March 28, 1946. Serv- \nice on these routes will be inaugurated April 1, \n1947 \nSALE OF LOS ANGELES-DENVER ROUTE \n* On \nMarch 6, 1947, your company entered i11to an \nagreement to sell its Los Angeles-Denver route \nand certain ground facilities, airplanes, parts \nand other equipment necessary to operate the \nroute to United Air Lines for 3,750,000.00. \n The sale is subject to approval by the Civil \nAeronautics Board. As a part of the sales agree- \nment your company borrowed $1,000,000.00 \nin cash from U nitecl Air Lines, evidenced by \na note clue September 1, 1947 secured by a \nchattel mortgage on four-Douglas four-engine \nairplanes. This amount was used to meet cur- \nrent obligations and will be applied on the \npurchase price of $3,750,000.00 if the sale is \napproved by the Civil Aeronautics Board. \nIn addition, your company's contract with \nthe Douglas Aircraft Company for the pur- \nchase of five Douglas DC-6 airplanes at a total \ncost of approximately $3,265,000.00 is ex- \npected to be assigned to U nitecl Air Lines. \nT \negotiations are in process to cancel previous \ncommitments for spare parts, engines, etc., \nordered for these airplanes. \nRATES* On 1arch 10, 1947 the domestic air- \nlines, including your company, filed an agree- \nment with the Civil Aeronautics Board pro- \nviding for a 10% increase in passenger fares. \nEarly approval of this increase is expected. A \npetition for a permanent air mail rate revision \nwas filed by your company with the Civil Aero- \nnautics Board on May 1, 1944 and on February \n24, 1947, a second petition was filed with the \nCivil Aeronautics Board for an emergency \ntemporary mail rate adjustment. A hearing \nregarding the latter petition was held by the \nCAB on March 1 7, 194 7 and an early decision \nis anticipated. \nWe wish to express our appreciation to our \nemployees who have so loyally and energeti- \ncally devoted their efforts to overcoming the \nproblems which have presented themselves \nduring this post war readjustment period. Mr. \nvVilliam A. Coulter resigned as President of \nyour Company on December 31, 1946. Mr. \n1 errell C. Drinkwater was elected President \nand a Director on January 1, 1947. \nl ~ C - ~ \nPresident \n Current Assets: \nCash in banks and on hand (Note 1) \nAccounts receivable: \nASSETS \nUnited States Post Office Department . . . . . \nUnited States and State Government Departments \nInterline and agents' traffic balances . . . . . \nCustomers' accounts receivable . . . . . . \nOther (including $16,035.25 due from officers and \nen1ployees) . . . . . . . . . . . . \nFederal taxe on income refundable \n(Note 2) . . . . . . . . . \nInventory of parts and supplies at the lower of cost ( first-in, \nfirst-out) or replacement market ( otc 1) . . . . . . \nSundry securities . . . . . . . . . . \nPropertie and Equipment, at cost ( ote 1) : \nLand . . . . . . . . . . . . . \nBuildings and leasehold improvements \nAirplanes, engines, propellers, and flying equipment . \nRadio stations, furniture, fixtures, shop and \nother equipment . . . . . \nProperty not used in operations \nLess Reserve for depreciation . \nConstruction work in progress ote 3) \nDeposits on equipment purchase contract \n( ote 3) . . . . . . . \nRoutes, contract and lea es . . . \nPrepaid insurance, rent, taxes, etc .. \n[ 6 I \nOF DECEMBER 31, 1946 \n$ 1,137,094.22 \n$ 251,624.93 \n166,026.91 \n602,864.06 \n85,887.09 \n140,161.51 1,246,564.50 \n60,999.85 \n429,801.20 \n7,466,601.94 \n989,042.65 \n49,263.49 \n8,995,709.13 \n2,625,324.66 \n6,370,384.47 \n344,615.95 \n1,042,689.79 \n3,770,964.46 \n10,737.71 \n1,211,072.57 7,581,457.04 \n652,902.86 \n183,963.32 \n404,199.47 \n$12,604,224.86 \nl \nJ \nL I AB I L I T I J ,, S \nCurrent Liabilities: \notcs payable ( Note 1): \nBank \nWar Assets Administration, portion clue in 194 7 . \n3% equipment notes payable to bank, portion clue in 1947 \nOther . , \nAccounts payable-trade: \nDouglas Aircraft Company, Inc. ( ote 1) \nOther \nAir Travel Plan deposits \nAccrued salaries, wages, taxes, insurance, etc. \nDeferred income ( unused portion of tickets sold) \nLong Term Debt (Note 1): \n3% equipment notes payable to bank, clue 1ay 15, 1948 \n\\Var Assets Administration, portion due after 1947 \nReserve for overhaul of equipment \nMinority tockholder ' intere tin ubsidiary \nCapital Stock-$1.00 par value per share. \nuthorized 2,000,000 shares (105,918  hares re erved for \nmanagement and employees stock purchase plans and for \noption to officer) \nIssued 525,164 shares \nSurplu : \nCapital urplu \nEarned urp]u from December 31, 1934 \nContingent lia bilitie ( ote 5) \nSee pages 9, 10 and 11 for Notes to Financial Statements \n$ 3,000,000.00 \n134,785.36 \n96,000.00 \n600,000.00 $ 3,830,785.36 \n915,664.40 \n2,554,783.18 \n40,000.00 \n247,106.60 \n2,768,247.10 \n27,381.46 \n3,470,447.58 \n240,273.76 \n786,806.65 \n8,328,313.35 \n308,092.24 \n287,106.60 \n339,263.84 \n20,656.27 \n525,164.00 \n2,795 628.56 \n$12,604,224.86 \n ~ \nFOR THE YEAR ENDED DECEMBER 31, 1946 \nOpera ting Revenue: \nPassenger \nMail . . . . \nExpress and freight \nExcess baggage \nIncidental revenue-net \nTotal Opera ting Revenue \nOperating Expenses: \nFlying operations . . . . . \nGround operations . . . . \nFlight equipment maintenance-direct \nGround equipment maintenance-direct . \nEquipment maintenance-indirect . \nPassenger service . . . . \nTraffic and sales . . . . \nAdvertising and publicity . \nExtension and development \nGeneral and administrative \nDepreciation (Note 4) \nOpera ting Loss . . . \nNon-operating Income: \nGain on disposition of equipment-net \nDiscounts received . . . . . . . \nAdjustment of over provision for insurance . \nOther . . . . . . . . . . . . . \nNon-opera ting Charges: \nInterest . . . . \nProvision for financing expense \nOther . . . . . . . . \nDeduct: \nLoss before credits resulting from \"carry-back\" provisions of \nFederal Internal Revenue Code . . . . . . . . . \nFederal taxes on income of prior years recoverable under \"carry-back\" \nprovisions of Internal Revenue Code (Note 2) \nLoss . . . . . . . . . . . . . . . . . . .  \n$ 2,514,097.13 \n2,507,437.74 \n1,962,248.48 \n156,627.75 \n767,442.67 \n1,022,919.97 \n1,178,502.83 \n510,286.43 \n80,878.69 \n1,043,633.25 \n1,368,595.68 \n107,211.77 \n8,541.23 \n22,690.66 \n2,456.92 \n65,067.33 \n75,000.00 \n735.00 \nSee pages 9, 10 and 11 /01' Notes to Financial Statements \n[ 8 ] \n$10,473,695.18 \n981,676.78 \n242,400.25 \n75,738.21 \n11,773,510.42 \n117,787.43 \n11,891,297.85 \n13,112,670.62 \n1,221,372.77 \n140,900.58 \n1,080,472.] 9 \n140,802.33 \n1,221,274.52 \n278,036.16 \n$ 943,238.36 \n STATEMENT OF CONSOLIDATED SURPLUS \nFOR THE YEAR ENDED DECEMBER 31, 1946 \nCapital Surplus: \nAmount at December 31, 1945 . . \nExcess of proceeds from sale of ] 15,210 hares of capital stock \nover par value thereof . . . . . \nLess-Expenses re offering of capital stock \nAmount at December 31, 1946 . . . . . \nEarned Surplus: \nAmount at December 31, 1945 \nLoss for the year . . . . . \nAmount at December 31, 1946 \n$ 628,249.68 \n$ 2,148,477.50 \n8,480.08 2,139,997.42 \n$ 2,768,247.10 \n$ 970,619.82 \n943,238.36 \n$ 27,381.46 \nNOTES TO FINANCIAL STATEM EN TS \n1. Cash in bank in the amount of $402,000.00 deposited from the proceeds of sale of one Douglas DC-4 air- \nplane, together with certain airplanes, engines, propellers and other flying equipment, having a gross \nbook cost of approximately $2,375,000.00, are pledged as security for note payable to bank in the sum of \n$3,000,000.00. Also two converted C-54B airplanes and related equipment having a gross book cost of \napproximately $725,000.00 are subject to chattel mortgages executed to secure the note payable-other \nin the amount of $6oo,ooo.oo. These notes matured on January 10, 1947, but were extended to February \n10, 1947, and negotiations for a further extension to May 1, 1947, are pending. In addition, flying equip- \nment consisting of six converted Douglas C-54B airplanes, four Douglas DC-3 airplanes, engines, pro- \npellers, etc., having a gross book cost of approximately 2,550,000.00 is subject to chattel mortgages to \nsecure the notes payable to the War Assets Administration aggregating $381,891.36 and the 3 % equip- \nment notes payable amounting to $136,000.00. \nSubsequent to December 31, 1946, the accounts payable to Douglas Aircraft Company, Inc., were evidenced \nby non-interest bearing notes secured by second chattel mortgages on two Douglas C-54B airplanes and \nrelated equipment. The e note matured on February 10, 1947, and negotiations for the extension thereof \nto May 1, 1947 are pending. \nOn March 6, 1947, the Company entered into an agreement to ell to United Air Line , Inc., subject to the \napproval of the Civil Aeronautics Board, its Los Angeles-Denver route together with certain airport \nfacilities, airplanes, parts and other equipment nece sary to the operation therof for a con ideration of \n$3,750,000.00. Pending approval of thi sale United Air Lines, Inc., advanced 1,000,000.00 to the Com- \npany on notes payable which mature on September 1, 1947, and ~hich are ecured by second chattel \nmortgages on four Douglas C-54B airplanes and related equipment. \nIn the event the Civil Aeronautics Board approve and the ale of the Lo ngeles-Denver route i con- \nsummated within the next few months the Company's inventory of part and upplies and certain other \nflying equipment may be exce ive. o e timate can be made at thi time by the Management as to the \nextent of such excessive inventories and flying equipment, if any, or of the loss which may re ult from \nthe disposition thereof. \n2. Federal income tax refundable results primarily from the loss carry-back provision of the Internal  Revenue \nCode and the adjustment of charges to Army Air Forces contracts agreed upon as a result of renegotiation \nproceedings consummated during February, 1946. Of the amount refundable 305,952.66 wa received by \nthe Company during March, 1947. \n 3. TI1c deposits on equipment purchase contracts and purchase commitments as of December 31, 1946, may \nbe summarized as follows: \nDescription \n5 DC-6 airplanes including engines under contract with \nContract \nor Estimated \nPurclrnse price \nDouglas Aircraft Company, Inc. . . . . . . . . 3,000,000.00 (a ) ( b ) \nl 0 Convair Model airplanes including engines under contract \nwith Consolidated Vultee Aircraft Corporation . . . 2,300,000.00 (a) ( c) \n30 R-2800 airplane engines under contract with Pratt \u0026 Whit- \nney Aircraft Division of United Aircraft Corporation . . 697, 500.00 (c) \nSpare engine parts on order with Pratt \u0026 Whitney Division of \nUnited Aircraft Corporation and Aviation Activities . . 1,012,500.00 (cl ) \nSpare airplane parts on order with Douglas Aircraft Company, \nInc., and others . . . . . . . . . . . . . . 400,000.00 (cl ) \nRadio equipment on order with Aeronautical Radio, Inc. and \nBendix Aviation Corporation . . . . . . . . . . \nOther parts and equipment on order with various suppliers . \nHangar, shop and operations building under construction by \n118,000.00 \n310,000.00 (cl ) \n7,8 38,000.00 \nThe Austin Company . . . . . . . . . . . . 2,000,000.00 \n9,838,000.00 \nNotes: \nDeposits and \nProgress \nPayments \n50,046.86 \n353,033.40 \n139,512.60 \n93,960.00 \n_ l~,.?l_ \n0.00 \n652,902.86 \n597,062.06 ( e) \n1,249,964.92 \nBalance of \nCommitment \n2,949,953.14 \nl ,946,966.60 \n557,987.40 \n1,012,500.00 \n400,000.00 \n24,040.00 \n- ~-93,650.Q_0 \n7,185,097.14 \n1,402,93 7.94 \n8,588,035.08 \n(a) Subject to increase under escalator provisions of contract in amounts which it is estimated will not \nexceed $400,000.00 in the aggregate. \n(b) Negotiations are in progress with United Air Lines, Inc., whereby it will be assigned the contract to \npurchase these airplanes and Douglas Aircraft Company, Inc. will apply the deposits and progress \npayments made, less $25,000.00 for the prior cancellation of a contract to purchase five additional \nDC-6 airplanes, as a credit to the Company's liability thereto. \n. ( c) Progress payments in the amount of $86,675.00 were due Consolidated Vultee Aircraft Corporation on \nMarch 1, 1947, and a note payable due May 1, 1947, was accepted from the Company in lieu thereof. \nIn addition 16 of the R-2800 airplane engines contracted for with Pratt \u0026 Whitney Aircraft Division \nof United Aircraft Corporation are to be assigned to Consolidated Vultee Aircraft Corporation and \nthe related deposits and progress payments of approximately $70,000.00 refunded to the Company. \n( d ) It is expected that deliveries of certain equipment on order will be extended into the year 1948 and that \norders placed for equipment relating to Douglas DC-6 airplanes will be cancelled or transferred to \nUnited Air Lines, Inc. \n( e) On October 25, 1945, the Company entered into a contract with The Austin Company for the \nconstruction of a hangar, shop, and operations building on leased ground at Los Angeles Airport at a \ncost presently estimated at $2,000,000.00. At December 31, 1946, the Company had recorded as \nconstruction work in progress the accumulated charges to that date of $1,106,035-40 and payments on \naccount thereof aggregating $597,062.06 had been made. The balance of $508,973.34 is included in \naccounts payable and The Austin Company has agreed to defer until February 10, 1947, any further \npayment due under the contract in consideration of Mr. William A. Coulter's pledge of 70,000 shares \nof the Company' capital stock owned by him. Negotiations for the deferment of such further pay- \nments to May 1, 1947 are pending. The Company has agreed with Mr. Coulter that in the event \nhis pledged shares shall be sold or otherwise disposed of by The Austin Company to satisfy that com- \npany's claims against the Company, or if Mr. Coulter shall be required to pay the amount secured, in \norder to relea e his stock, the amount paid upon the Company's obligation shall be a valid claim \nagainst the Company. To secure any uch claim, the Company has executed second chattel mort- \n[ 10] \n gages on two converted C-54B airplanes. Subsequently on March 5, 1947, Mr. Coulter voluntarily \nreleased these chattel mortgages to make this collateral available as security to the United Air Lines, \nInc. note payable described in Note 1 hereof. \n4. A of December 1, 1945, the Company redetermined the estimated remaining useful life of its Douglas DC-3 \nairplanes and related equipment so as to fully depreciate the co t thereof les residual value by December \n31, 1947, instead of by December 31, 1946. Had the useful life of uch equipment as so redetermined been \nadopted from the respective dates such equipment was placed in service, the provision for depreciation \nfor the three years ended December 31, 1945, would have been reduced approximately $16i,ooo.oo, \nwhereas for the year ended December 31, 1946, the provision would have been increased approximately \n$90,000.00. \n5. The Company and its subsidiary were contingently liable as of December 31, 1946, on certain damage claims \nand lawsuits in which they are or may be defendants but the Management believes that any liability, \nresulting therefrom, in excess of insurance coverage, will not be material in amount. The compensation \nof pilots of four-engine airplanes is in process of negotiation and may be subject to retroactive adjustment \nto the respective dates commencing in 1946 when the pilots started to operate four-engine airplanes. The \namount of such adjustment, if any, cannot now be determined. \nACCOU TANTS ' REPORT \nTo the Board of Director , \nWESTER AIR LI ES, I C. \nWe have examined the Consolidated Balance Sheet of Western ir Lines, Inc., \nand its subsidiary Inland Air Lines, Inc., as of December 31, 1946, and the \nstatements of Consolidated Profit and Loss and Surplus for the year then \nended, have reviewed the system of internal control and the accounting \nprocedures of the Companies and, without making a detailed audit of the \ntransactions, have examined or tested accounting records of the Companies and \nother supporting evidence, by methods and to the extent we deemed appropriate. \nExcept that it was not practicable to confirm the accounts receivable from United \nStates Government departments and agencies, as to which we have satisfied \nourselves by means of other auditing procedure , our examination was made in \naccordance with generally accepted auditing standards applicable in the \ncircumstances and included all procedures which we considered necessary. \nIn our opinion, the accompanying Consolidated Balance Sheet and related \nstatements of Consolidated Profit and Loss and Surplus present fairly the \nconsolidated position of Western Air Lines, Inc., and subsidiary at December 31, \n1946, and the results of their operations for the year, in conformity with generally \naccepted accounting principles applied on a basi consistent with that of the \npreceding year, except for the change in the ba i of providing for depreciation \nas set forth in Note 4 of \"Notes to Financial tatements.\" \nLos Angeles, California, \nMarch 17, 1947. \n[ ll \nI \nPEAT, MARWICK, MITCHELL \u0026 CO. \n Revenue: \nPassenger .......... ..... . \nMail ................... . \nExpress, Freight and Excess \nBaggage ............... . \nOther .................. . \nTotal ................. . \nRevenue Miles Flown ....... . \nRevenue Passengers ......... . \nAverage No. Passengers per \nRevenue Mile ........... . \nAverage Revenue per Passenger \nMile ................... . \nPassenger Seat Miles Flown .. . \nRevenue Passenger Miles .... . \nLoad Factor ............... . \nMail Pounds Carried ........ . \nExpress and Freight Pounds \nCarried ..... .. . ......... . \n( ) Denotes Decrease \n1943 1944 1945 \n$ 1,709,402 $ 3,168,828 $ 5,653,830 \n260,906 836,556 1,239,397 \n148,473 154,991 205,981 \n42,672 97,280 58,721 \n$ 2,161,453 $ 4,257,655 $ 7,157,929 \n- - - - - -- --- \n2,057,028 \n80,907 \n15.84 \n.0525 \n38,498,693 \n32,589,240 \n84.65 \n1,914,391 \n957,291 \n4,057,495 \n147,854 \n15.54 \n.0502 \n73,101,222 \n63,073,101 \n86.28 \n4,534,732 \n943,415 \n7,279,009 \n303,931 \n16.09 \n.0483 \n138,852,497 \n117,105,887 \n84.34 \n6,694,856 \n1,508,847 \na~ \nExpense: 1943 1944 1945 \nDepreciation ............ . $ 203,886 $ 321,322 $ 554,724 \nOther Operating and \nGeneral Expense ....... . 1,850,699 3,701,527 6,297,890 \nTotal ............. . $ 2,054,585 $ 4,022,849 $ 6,852,614 \nOperating Expenses per \nRevenue Mile ............ $ .9988 $ .9915 $ .9414 \nPercent of Scheduled \nService Performed ......... 94.44 95.43 98.41 \nNo. of Employees-end of year 817 1,120 1,674 \n( ) Denotes Decrease \n[ 12] \nPrinted in U.S. A \nPercent of \nIncrease Increase \n1946 1946 \n1946 over 1945 over 1945 \n$ 10,473,695 $ 4,819,865 85.25% \n981,677 (257,720) (20.79%) \n318,139 112,158 54.45% \n117,787 59,066 100.59% \n$ 11,891,298 $ 4,733,369 66.13% \n10,594,182 3,315,173 45.54% \n602,302 298,371 98.17% \n20.20 4.11 25.5Hr \n.0489 .0006 1.24% \n301.855,694 163,003,197 117.39% \n214,022,511 96,916,624 82.76% \n70.90 (13.44) (15.94%) \n3,704,185 (2,990,671) (44.67%) \n3,262,751 1,753,904 116.24% \nPercent of \nIncrease Increase \n1946 1946 \n1946 over 1945 over 1945 \n$ 1,368,596 $ 813,872 146.72% \n11,744,075 5,446,185 86.48% \n$ 13,112,671 $ 6,260,057 91.35% \n$ 1.2377 $ .2963 31.47% \n96.59 (1.82) (1.85%) \n2,396 722 43.13% \n   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