BONANZA AIR LINES 1966 ANNUAL REPORT 
 
3 
20 YEAR HIGHLIGHTS AT A GLANCE 1946 
System route miles 346 
Number of aircraft in service 1 
Average number of employees 11 
Aircraft miles flown in revenue service 
Revenue passengers carried 
Revenue passenger miles flown (000) 
Total operating revenues (000) 
*Exact information unavailable 
1951 
1956 
1961 
1966 
639 
1,422 
2,153 
2,330 
4 
8 
9 
15 
129 
306 
510 
897 
928,371 
2,870,214 
4,397,396 
8,296,040 
29,522 
127,860 
316,040 
848,063 
7,531 
27,641 
79,748 
218,665 
i 996 
$ 3,076 
$ 9,282 
$ 18,012 
1946 
1959 
1966 
20 YEAR HIGHLIGHTS 
 
 
5 
Nineteen hundred sixty-six marked Bonanzas 21st 
year as a company and its 17th year as a federally 
certified airline. During these years we have en- 
joyed continued growth as part of a dynamic Indus- 
try. During the past three years, however, the 
stage has been set for our most significant growth 
by the emergence of the short-to-medium range 
pure jet airliner, a development which has opened 
the door to enormous service possibilities. Your 
company, in pursuit of its expressed goal to elimi- 
nate the need for federal subsidy in its operations, 
seized upon the short-to-medium range DC-9 fan/ 
jet as the most effective tool available for the ac- 
complishment of this purpose. 
Increased public demand for more and better 
air transportation over the years, together with our 
pure jet equipment program, created the need for 
larger, more adequate maintenance and opera- 
tions facilities; for extensive personnel training pro- 
grams; and for additional personnel to accommo- 
date these increased requirements. These projects, 
primarily consummated during 1966, were, indeed, 
a large bite to digest as reflected in the sharp in- 
crease in operating costs. Yet, it is our firm belief 
that such costs are directly associated with a great 
stride forward in this companys present and fu- 
ture service capability; and, in fact, were necessary 
to insure our future in the airline industry. 
It may well be said that our assets, in terms of 
capability, are at an all time high. With respect to 
earnings for 1966, increased costs more than off- 
set increased income obtained from commercial 
revenues, thus, results were not favorable when 
compared with prior performance. The 1966 net 
earnings from operations were $530,703 plus a 
gain of $331,780 arising from the sale of aircraft, 
making a total of $862,483 added to retained earn- 
ings. This result compared to $842,903 of net 
earnings for 1965, which included a carry-back 
application of investment tax credit to prior years 
of approximately $300,000. The non-recurring ex- 
penses of moving the companys base and integrat- 
ing fan/jet aircraft were instrumental in depressing 
the 1966 earnings result. Yet, viewed in light of 
what has been accomplished, 1966 was a very 
good year. 
Your companys flight equipment and route de- 
velopment programs were further implemented 
during 1966 in several important respects. First, 
the Civil Aeronautics Board, in response to the 
companys request for expedited hearings on var- 
ious route proposals, set two most important route 
cases down for hearing. In addition, our effort to 
acquire authority for service into Mexico is pro- 
grossing favorably. The award of all, or a substan- 
tial portion, of the various route proposals now 
pending, would result in the most significant route 
strengthening in this companys entire history. 
Moreover, the Civil Aeronautics Board has under 
study a proposed policy change with respect to 
nonstop operating rights for the local service in- 
dustry. Should this policy be adopted, it could 
further strengthen our overall operating capability. 
The support of our employees, stockholders and 
the traveling public throughout the changing cir- 
cumstances encountered in 1966 was deeply ap- 
predated. I firmly believe that 1967 and future 
years will open new horizons to all of us. 1966 will 
be viewed as a strong and necessary base for this 
advancement. 
Sincerely, 
i5i. ^  
President and Chairman of 
The Board of Directors 
PRESIDENTS LETTER 
 
6 
The climate has changed,There are a number of 
new and significant developments moving across 
the national aviation scene. Several of these will 
in all likelihood have great impact on the future 
direction and growth of Bonanza Air Lines. 
At the root of most of these developments has 
been the rapidly advancing technology of aviation. 
The development, adaptation and mastery of the 
jet aircraft and its selective employment for the 
benefit of commercial aviation has been a partic- 
ularly significant achievement. 
While these great strides forward were being 
made, there was also developing a growing con- 
cern in Congress, the Civil Aeronautics Board and the Executive 
Branch of the government over the continuing and growing need 
for federal subsidy support of the local airline industry. 
Out of this concern there gradually grew a resolute government 
determination to reduce this subsidy burden, and ways and means 
by which this could be done became the subject of intense study. 
One fact became clear.- A local service airline route system cannot 
be dominated by loss (or subsidy requiring) markets and be op- 
erated on a subsidy-free basis. Thus, access to more profitable 
markets became a matter of prime focus, as it had been many 
years before when the trunk airlines were dependent upon the 
federal government for subsidy and necessary route strengthening. 
In the light of this new focus, the evolution of the highly efficient 
jet aircraft became an increasingly more interesting companion 
piece, particularly when the smaller versions of the new jets came 
into production, specifically designed to meet the economic de- 
mands of the shorter-haul, high density traffic markets. Here then, 
was an opportunity to match aircraft-to-market-to-carrier and 
emerge with improved public service at a reduction in federal sub- 
sidy and, overall, a stronger national airline industry. This was 
indeed a worthwhile national objective. 
Partly because of its important role in the formation of these 
developments, and partly because of an acutely developing sense 
of responsiveness to them, the Civil Aeronautics Board began to 
move with unmatched speed and determination toward a realiza- 
tion of the opportunities thus evolving. 
In a clearly designed effort to reap the fruits of these oppor- 
tunities and strengthen the local airline industry, the Board com- 
menced a sweeping series of activities including, among others, 
the use of a streamlined show-cause procedure, the initiation of 
route cases through the investigatory technique, the granting 
of motions for priority hearings, a rule-making proposal for new 
nonstop authority and a program to confine its 
proceedings more nearly to the specific purposes 
for which they were originally intended. Finally, 
the Board took to the podium, in a sense, to sug- 
gest somewhat subtly that the individual airline 
members of the aviation industry might more in- 
telligently and productively concentrate their at- 
tention on proceedings which were vital to their 
economic welfare, rather than opposing virtually 
all efforts on all fronts to the great detriment of 
the administrative process and the major public 
interest objectives of the Board. Moreover, the 
Board appears to be attempting to discourage 
each airline from making unwarranted forays into areas of oppor- 
unity on which another carrier may be more urgently dependent. 
In all of these matters the Board appears to have the endorse- 
ment or assent of the aviation leaders in the Congress. 
Viewing our own pending route projects very carefully in the 
light of these recent developments, we can reasonably conclude 
that after the long, lean period of new route development through 
which Bonanza has passed, there are indeed bright prospects for 
the near future. 
The Board has granted Bonanzas motions for priority hearings 
in most of the important route applications that were filed as a part 
of the companys subsidy elimination program, and two cases that 
are vitally important to the company are now underway on an ex- 
pedited basis. In addition, the company has an excellent oppor- 
tunity for nonstop authority on its important Phoenix-Los Angeles 
segment under the Boards proposed nonstop rule-making pro- 
cedure. Lastly, the companys prospects for important new route 
authority into Mexico are certainly encouraging. 
All of these proposals meet the Boards standards and objectives. 
All will effectively utilize modern and efficient aircraft especially 
suited to the task. From the companys standpoint the goal is clear; 
improved public service with the concurrent elimination of the 
need for federal subsidy. 
Clearlythe regulatory climate for the achievement of these objec- 
tives is now most favorable. The company has prepared for this 
change. It has fought long and hard to help bring it about. We 
would hope that we have made at least a modest contribution to- 
ward that end. Such objectives are not without their associated 
costs but the investment inherent in this program now offers every 
prospect of providing a handsome return in the not too distant 
future. The company, its stockholders and employees and the 
public it serves should all benefit greatly. 
G. Robert Henry, Director 
and Executive Vice President 
 
-vstyoming 
SALT LAKE CITY 
RENO 
; VEGAS 
GRAND CANYON 
KINGMAr 
APPLE VALLEY 
NEW 
^riversidI 
LOSANGELE5 
PHOENIX 
SANTA ANA? 
ALM SPRINGS 
SAN DIEGO 
TUCSON 
ENSENADA 
GUAYMJ 
MA2ATLAN 
j^/s-NSAS 
TEXAS 
LOS MOCHIS 
PUERTO VALLARTA 
The route map shown above includes Bonanzas 
present route system; all of the route authority 
requested in the SERVICE TO TUCSON CASE; 
the SALT LAKE CITY - LAS VEGAS - SOUTHERN 
CALIFORNIA CASE; and Bonanzas MEXICAN 
ROUTE PROPOSALS. The map illustrates the 
nature of the companys route system in the 
event Bonanza is successful in obtaining all of 
the authority requested. 
Present Route System 
7 
THE REGULATORY CLIMATE 
 
8 
Present System ARIZONA 
OC-9 FAN/JET 
F-27AJET/PROP ^ 
PRESENT ROUTE STRUCTURE 
Bonanzas present route structure, comprised of 2,330 
route miles, involves service to 19 cities in the states of 
Arizona, California, Nevada and Utah. The company cur- 
rently flies 24,000 miles daily, utilizing twelve Fairchild 
F-27As and three Douglas DC-9 fan/jets. The company 
system provides service to most of the important tourist 
and commercial centers in the Pacific Southwest. 
F-27A JET/PROP 
SERVICE TO TUCSON CASE 
On October 24, 1966, the Civil Aeronautics Board di- 
rected that there be set down for hearing. Bonanzas ap- 
plication to provide service between Tucson, Arizona and 
various cities on Bonanzas system to the north and 
west. The proceeding entitled SERVICE TO TUCSON 
CASE will consider Bonanzas application for nonstop 
authority for DC-9 service between Tucson, Arizona on 
the one hand, and Los Angeles, San Diego, Las Vegas, 
Reno and Salt Lake City on the other; and for a Tucson- 
Phoenix authority. Additionally, route authority is being 
sought between Tucson and Yuma, Arizona. Thus Tucson 
would be tied-in directly with every point on Bonanzas 
existing system. The award of these routes would be 
granted on a subsidy-ineligible basis. Applications of other 
carriers involving requests for the same or similar ser- 
vice will be heard at the same time in accordance with 
Civil Aeronautics Board policy. The case is proceeding 
on an expedited basis, with hearings to begin in Tucson 
on May 4, 1967. 
 
Present System Proposed 
DC-9 FAN/JET 
F-27A JET/PROP 
UTAH 
SALT LAKE CITY-LAS VEGAS-SOUTHERN CALIFORNIA 
CASE 
By the same order, the Civil Aeronautics Board also di- 
rected for hearing, Bonanzas application involving the 
company's proposal to provide service from Salt Lake 
City to various points in Nevada and California. The com- 
panys route applications in this case are also being con- 
sidered on a subsidy-ineligible basis. In this proceeding 
entitled SALT LAKE CITY - LAS VEGAS - SOUTHERN CALI- 
FORNIA CASE the Civil Aeronautics Board will consider 
the companys proposal to provide nonstop service be- 
tween Salt Lake City and Los Angeles and Salt Lake City 
and Las Vegas in addition to the companys application 
for Salt Lake City-Cedar City-Las Vegas service. The com- 
panys proposals for Las Vegas-San Diego service, both 
nonstop and via Palm Springs, and Los Angeles-Palm 
Springs turnaround service are likewise to be heard in 
the same case. Hearings are scheduled to commence in 
Salt Lake City July 25 on the SALT LAKE CITY - LAS 
VEGAS - SOUTHERN CALIFORNIA CASE. 
The successful conclusion of both the SERVICE TO 
TUCSON CASE and the SALT LAKE CITY - LAS VEGAS - 
SOUTHERN CALIFORNIA CASE, which were set down for 
priority consideration at Bonanzas request, would provide 
substantial opportunities for new public service and traf- 
fic development and result in increased operating profit. 
MEXICO 
During 1966 and early 1967 the governments of the 
United States and Mexico met for bilateral discussions 
to determine whether the two countries would authorize 
new air routes between the respective countries. In 1966 
Bonanza filed an application with the Civil Aeronautics 
Board requesting authority to provide service between 
the Phoenix-Tucson gateway and Guaymas, La Paz, Maza- 
tian and Puerto Vallarta; between the co-terminals of Las 
Vegas and Yuma and Los Mochis, Mazatlan and Guadala- 
jara; and between Los Angeles and Ensenada. The com- 
panys proposals constitute a logical extension of our 
present route system and we are confident that the pro- 
posals, if agreed to between the governments of the 
United States and Mexico, will be most beneficial to the 
traveling public, to the respective countries and to 
Bonanza. 
To date, the results of the bilateral conferences have 
not been formally approved by the two governments and 
we are, therefore, unable to say as yet what authorizations, 
if any, will finally be accorded. Should additional route 
authority be granted for a U.S. carrier by the Mexican 
government, the companys application now pending be- 
fore the Civil Aeronautics Board would, in whole or in part, 
then be set down for hearing. Competitive applications 
of other carriers, if any, would be heard at the same time. 
m 
cn 
m 
> 
73 
O 
X 
9 
AND DEVELOPMENT 
 
Bonanzas Avionics Division, an FAA licensed agency, 
overhauls and maintains aircraft instruments and radio equipment. 
Scheduled service with the company's first two 
Douglas DC-9 fan/jets, was commenced on March 
1, 1966, with the third DC-9 being added to sched- 
uled service in August. Our fourth DC-9 is sched- 
uled for delivery in mid-1967. The companys two 
DC-9-30 model aircraft, a stretched version of the 
DC-9-10 now in service, are scheduled for delivery 
during the first half of 1968 and will be placed in 
service in the companys high-density markets. 
Since the inauguration of jet service, the DC-9s 
have been utilized on an average of eight hours 
daily and have been most favorably accepted by 
both the traveling public and the companys flight 
and maintenance personnel. Of the 8,296,040 air- 
craft miles flown during 1966, the DC-9s ac- 
counted for 2,186,164 aircraft miles, or 26.4 per- 
cent. 
Bonanzas continuous-maintenance program, ap- 
proved by the Federal Aviation Agency with respect 
to the companys F-27A fleet, has now been ap- 
proved for the DC-9. The companys entire fleet is 
now being maintained in accordance with that 
program. 
In order to reduce the costs generally related to 
the Federal Aviation Agency authorized time be- 
tween overhauls on a limited number of Pratt and 
Whitney JT8D jet engines. Bonanza and Allegheny 
Air Lines originated a program, unique in the air- 
line industry, which joins nine regional carriers in 
a Federal Aviation Agency approved program giv- 
ing the combined carriers the maintenance and 
time between overhaul benefits associated with 
airlines operating large fleets of aircraft. The pro- 
gram should result in a substantial savings to all 
participants. 
Early in 1966, as a further improvement in main- 
tenance service, a new Maintenance Services - 
Production Control Department was created. The 
new department is comprised of a maintenance 
planning and statistical group, which schedules 
maintenance work, modifications, provides data 
on mechanical problems, and produces equipment 
routing analyses. The department utilizes the com- 
panys IBM 1440 computer for maintaining time 
records on aircraft and components. The results, 
to date, of the activities of this new department 
have been improved production and reduced main- 
tenance delays. 
 
One of Bonanzas two spacious hangars at its new facility in Phoenix. 
Each hangar is large enough to accommodate three DC-9 Funjets. 
 
12 
A group of Japanese visitors enroute to the Grand Canyon via Bonanza. 
bonanza air 
limes 
R/kDAR 
EQUIPPED 
Celebrating new nonstop service Bonanza training and administrative personnel 
to the Grand Canyon. with a recent graduating class of hostesses. 
With the commencement of DC-9 service in 1966, a new emphasis 
was placed on freight sales. In an effort to fully utilize the greatly 
increased capacity, freight rates were revised and several addi- 
tional specific commodity rates were introduced. To further supple- 
ment freight sales efforts, a manager of cargo sales was appointed. 
It is expected that these efforts will result in substantially increased 
freight revenues. 
New traffic highs were set in 1966. The 848,063 passengers 
served in 1966 represented a 26.8% increase over the 668,568 
served in 1965. Utilization of the DC-9 in the companys high den- 
sity longer distance markets resulted in an increase in revenue 
passenger miles in 1966 of 28.5% or 218,665,000 compared to 
170,151,000 in 1965. 
Efficient utilization of the 72 seat DC-9 aircraft plus additional 
miles flown in 1966 over 1965 increased available seat miles 
29.9% for the year. The slightly larger increase in available seat 
miles over revenue passenger miles caused the passenger load 
factor to edge below the 55.1% achieved in 1965 to 54.5%. 
Dramatic proof of the public acceptance of the DC-9 is found 
in the Las Vegas-Los Angeles story. By February of 1966, im- 
mediately prior to the introduction of the DC-9 in that market, 
Bonanzas F-27A traffic in competition with a high volume of pure 
jet service was 44% below February of 1965. For the 11 months 
following the DC-9 introductory month of March, 1966, Bonanzas 
traffic was 84% ahead of the same 11 months a year earlier. 
A positive space military furlough fare went into effect in 1966, 
which allows military personnel to travel at a 40% discount on a 
reservation basis, a departure from the usual standby fare gen- 
erally offered to military personnel. In view of the many service 
personnel now in travel status, the new fare was deemed to be a 
necessary accommodation. 
A new sales manager was added in the Los Angeles area in 
order to more adequately serve the fast-growing Orange County 
and adjacent Pacific coast cities. Increased traffic resulting from 
the companys newly inaugurated nonstop service between Orange 
County and Las Vegas, as well as between Orange County and 
Phoenix, Arizona, necessitated the additional sales representation 
for that general area. 
Again for the sixth year, the company engaged in a hostess ex- 
change program, this time with Airlines of New South Wales. The 
Bonanza hostess flew the routes of Airlines of New South Wales en- 
compassing all of Australia, for a two-week period, and a hostess 
from Airlines of New South Wales flew Bonanzas routes for a 
similar period, each acquainting the passengers with the travel 
and tourism benefits of their respective areas. 
 
13 
The major thrust of the companys advertising effort in 1966 was 
directed to improving the companys revenue position in various 
of its markets being served with DC-9 fan/jet equipment. New and 
improved services in F-27A markets were also highlighted in the 
companys advertising. 
Following the award of nonstop authority between Las Vegas 
and Santa Ana, and in order to exploit the untapped traffic poten- 
tial felt to exist in that market, extensive and varied advertising 
and sales promotion was conducted throughout Orange County, 
California and in Las Vegas during September and October. 
At year end, planning was nearing completion on a Discover 
BonanzaLand 67 advertising and promotion campaign in the 
major travel markets of the East. The object of this promotion is 
to publicize Bonanza as the four season symbol of the many tour- 
ist attractions and vacation opportunities available In the West. 
Still another major advertising and publicity effort was undertaken 
to support the newly awarded nonstop service between Las Vegas 
and Grand Canyon, and to promote the many improved routings 
into Grand Canyon which resulted from the new route award. 
The advertising and promotion of DC-9 fan/jet service during 
the year provided many opportunities for public and press con- 
tact both in the system area and nationally. Several major stories 
on Grand Canyon, the new Grand Canyon National Park Airport 
and the improved service also appeared. 
Trading of transportation for advertising in accordance with 
Civil Aeronautics Board approval and procedures gave the com- 
pany additional advertising exposure while conserving dollar out- 
lay. Under this plan for regional carriers, airline seats are ex- 
changed for advertising space and time at market value with 
media companies who have need for the travel. In 1966 the 
company utilized the full limit of trading authorized by the Civil 
Aeronautics Board. 
AIR LINjES 
to las Vegas 
bonanza 
Fl y a DC-9 Funjet to LA- 
we'll give you one 
to take home! 
Around-the-clock FUNJETS to Los Angeles 
DC-9 I DC-9 I DC-9 | DC-9 [ DC-9 I 00-9 
7;50ain h0:55am| 1:30pm | 2:40pm | 4:05pm | 7;00pm 
Give you a $3,500,000 jet? Not really-but an exact copy in 
a DC-9 Funjet model kit. Its 10 inches long, to scale in every 
detail, packed in a wild sort of tote bagwe call a Funjet Funkit. 
Get one on every Bonanza 
DC-9 flight to Los Angeles- 
plus more of the same when 
you Funjet back. Have fun. 
BONANZA 
AIR LINES 
Bonanza utilizes all types of advertising media to promote its routes. 
SALES & SERVICE/ADVERTISING & PUBLICITY 
 
14 
Earnings before taxes for 1966 were $810,703 compared with 
$884,903 in 1965. Provision for taxes for 1966 was $280,000 
while the 1965 provision was only $42,000 due to investment tax 
credits generated through equipment purchases in 1965 and ap- 
plied to 1965 as well as carried back in the amount of $296,070 
for refund of prior years taxes paid. The 1966 provision for taxes 
contained application of investment tax credits to prior years of 
only $13,135. Net earnings from operations for 1966 were $530,703, 
equivalent to 44 cents per share as compared to $842,903 for 
1965 or 75 cents per share, computed on the average number of 
common shares outstanding during the respective years. A gain of 
$331,780, net of tax obligation, was recorded in 1966 from the 
sale of two F-27A aircraft. The addition to retained earnings in 
1966 from net earnings aggregated $862,483 or 71 cents per 
average number of shares outstanding. 
Total revenues for 1966 were $18,011,807 up 24 percent from 
the $14,514,911 realized in 1965. Operating expenses however 
increased 25 percent from $13,414,268 recorded in 1965 to 
$16,749,361. Depreciation and amortization charges increased 
48 percent from $1,187,272 in 1965 to $1,753,829 due to the 
inauguration of DC-9 fan/jet aircraft in 1966. 
The increase in cash operating expense was in part related to 
the relocation of the companys administrative and operating base 
from Las Vegas to Phoenix and in part to costs associated with the 
inauguration of the DC-9 service. The company also experienced 
marked increases in the cost of materials, wages and outside ser- 
vices. Interest expense increased to $470,383 in 1966 from 
$212,254 in 1965 from term loans incurred for the purchase of 
the DC-9 aircraft. 
The company experienced depression in the average revenue 
received per mile from passengers in 1966 with the rate showing a 
decline from 6.34 cents per mile in 1965 to 6.30 cents in 1966.The 
decline resulted primarily from more rapid growth in traffic in the 
low fare Las Vegas-Los Angeles market, where the $13 one-way 
fare equals 5.53 cents per mile, than on the remainder of the 
routes. The company increased its fare in this market on March 
1, 1967 to $15, equal to 6.30 cents per mile. The results to date 
indicate that no major diversion of traffic has occurred following 
the fare increase. Another factor in reduction in the average reve- 
nue received per mile from passengers in 1966 resulted from the 
prolonged strike of trunk airlines. During this period, and in line 
with industry practice, the company transported passengers on cir- 
cuitous routings over its system at the fare collected by the struck 
carriers for more direct service, thereby lessening the revenue 
per mile below the companys established fares. 
Near the end of 1966 a favorable decision was rendered by the 
review panel of the Federal Aviation Agency with regard to the 
companys claim for an aircraft destroyed in a training accident 
in 1965. The claim was settled in January 1967 for $1,100,000 less 
salvage value of $47,874 or a net of $1,052,126. Prepayment of 
$400,000 was made on a bank term loan from this recovery. Addi- 
tionally the company prepaid $1,675,000 on a bank term loan 
with net proceeds from the sale of two F-27A aircraft. The balance 
of a $6,500,000 loan was taken down in 1966 and applied to pay- 
ment of the second and third DC-9 aircraft and spare engines. 
During 1966 the company arranged for the purchase of a fourth 
DC-9 by a Trust formed by the United California Bank, the First 
National Bank of Nevada and the First National Bank of Arizona. 
The aircraft was leased by the Trust to the company for a period of 
13 years and in turn was subleased to another regional airline, 
who had originally placed the order for the aircraft, until mid-1967, 
when it will revert to the company for the balance of the lease term. 
The company has on order two DC-9 series 30 fan/jet aircraft 
scheduled for delivery in early 1968. It is tentatively planned to 
have such aircraft purchased by a Trust for long term lease to the 
company. The order for these aircraft was placed well before sus- 
pension of the investment tax credit in 1966. Investment tax 
credits generated from equipment purchases in 1966 amounted 
to $525,553 of which $410,611 is available for application to 
future income taxes. 
During the year, debentures having a face value of $1,517,300 
were surrendered for conversion to common stock resulting in 
the issuance of 136,557 shares and the elimination of the associ- 
ated indebtedness. 
Finalization of Bonanzas acquisition of fourth DC-9. 
 
SUMMARY OF SOURCE AND DISPOSITION OF FUNDS FOR 1966 
Source of funds: 
Net earnings $ 862,483 
Depreciation and overhaul amortization . . . 1,971,189 
Amortization of deferred charges 178,884 
Deferred taxes 250,000 
Proceeds from sale of capital stock 66,083 
Increase in long-term debt 2,540,753 
Decrease in working capital 1,220,524 
Total $7,089,916 
OPERATING AND FINANCIAL STATISTICS 
1966 
Traffic and Capacity 
System route miles operated as of last day of period.... 2,330 
Total aircraft miles flown in revenue service 8,296,040 
Scheduled aircraft miles flown 8,279,578 
Percent of scheduled aircraft miles flown 98.8% 
Revenue passengers carried 848,063 
Revenue passenger miles flown (000) 218,665 
Available seat miles flown (000) 401,144 
Passenger load factor 54.5% 
Available ton-miles flown (000) 43,503 
Revenue ton-miles flown (000) 21,676 
Overall load factor 49.8% 
Average number of employees 897 
Revenue passenger miles per employee 243,774 
Financial 
Total operating revenue (000)* $ 18,012 
Passenger revenue (000) 13,766 
Total commercial revenue (000)^ 14,431 
Public service revenue (subsidy) (000)* 3,581 
Total operating expense (000) 16,749 
Total operating expense per revenue ton-mile of traffic. . 0.773 
Public service revenue required to provide operating 
break-even need: (Total (000) ) 2,319 
Per available ton-mile flown 0.053 
Per revenue ton-mile of traffic 0.107 
Break-even need as percent of commercial revenue .... 16% 
Commercial revenue as percent of operating expenses . . 86% 
Net earnings from operations* ^ $530,703 
Net earnings* ^ $862,483 
iReflects adjustment related to retroactive subsidy determinations. 
^Adjusted for 1963 and 1962 investment tax credits reported as special item in 1964. 
^Operating revenue less public service revenue. 
Disposition of funds: 
Investment in property and equipment .... $7,114,834 
Deposits on equipment purchase contracts. (661,519) 
Deferred preoperating and other costs .... 636,601 
Total $7,089,916 
Calendar Years 
1965 1964 1963 1962 
2,106 
7,729,660 
7,720,324 
98.5% 
668,568 
170,151 
308,812 
55.1% 
30,881 
16,885 
54.7% 
808 
210,583 
$ 14,515 
10,782 
11,348 
3,167 
13,414 
0.794 
2,066 
0.067 
0.122 
18% 
85% 
$842,903 
$842,903 
2,106 
7,618,013 
7,599,716 
99.2% 
620,497 
160,653 
292,480 
54.9% 
28,673 
16,014 
55.9% 
748 
214,777 
$ 14,085 
10,244 
10,773 
3,312 
12,560 
0.784 
1,787 
0.062 
0.112 
17% 
86 % 
$677,166 
$677,166 
2,106 
6,354,940 
6,349,638 
99.3% 
536,377 
139,139 
241,284 
57.7% 
23,494 
13,818 
58.8% 
645 
215,719 
$ 12,763 
9,156 
9,565 
3,198 
10,750 
0.778 
1,185 
0.050 
0.086 
12 % 
89% 
$874,129 
$865,129 
2,135 
5,445,869 
5,443,441 
99.0% 
425,475 
108,688 
206,849 
52.5% 
20,188 
10,785 
53.4% 
572 
189,682 
$ 10,946 
7,441 
7,810 
3,136 
9,426 
0.874 
1,616 
0.080 
0.150 
21 % 
83% 
$711,144 
$717,808 
15 
FINANCIAL RESULTS & OPERATIONS & FINANCIAL STATISTICS 
 
December 31, 1966 with comparative figures for 1965 
16 
New computer facility at General Headquarters. 
ASSETS 1966 1965 
Current assets: 
Cash $ 786,049 1,220,761 
Receivables; 
United States Government Departments (note 8) 1,464,395 1,525,289 
Traffic, net 599,947 281,951 
Other 127,996 226,007 
2,192,338 2,033,247 
Less allowance for doubtful accounts 10,000 10,000 
Net receivables 2,182,338 2,023,247 
Federal income taxes refundable (note 3)  173,678 
Spare parts, service materials and supplies, at average cost 834,464 711,596 
Prepaid expenses 165,143 115,002 
Total current assets 3,967,994 4,244,284 
Properties and equipment, at cost (note 1): 
Flight equipment 23,120,337 16,775,647 
Ground equipment 912,550 1,027,046 
Buildings and improvements on leased property 206,478 724,394 
Other property and equipment 579,097 31,527 
Construction in progress 71,694 248,886 
24,890,156 18,807,500 
Less allowance for depreciation and amortization 6,778,296 5,839,285 
Net properties and equipment 18,111,860 12,968,215 
Deposits on equipment purchase contracts (note 6) 1,006,307 1,667,826 
Unamortized development and preoperating costs 829,979 360,045 
Deferred loan costs and other assets 154,504 250,028 
$24,070,644 19,490,398 
See accompanying notes to financial statements. 
 
17 
December 31, 1966 with comparative figures for 1965 
LIABILITIES AND STOCKHOLDERS EQUITY 1966 
Current liabilities: 
Current maturities of notes payable $ 1,931,971 
Accounts payable 1,322,564 
Amounts collected for others 196,637 
Accrued salaries and wages 558,580 
Other accrued liabilities 215,738 
Unused transportation 90,181 
Federal income taxes (note 3) 29,222 
Total current liabilities 4,344,893 
Notes payable to banks, less current maturities (note 1) 7,469,845 
5^^% convertible subordinated debentures (note 2) 1,552,100 
Deferred federal income taxes (note 3) 594,000 
Stockholders equity: 
Common stock $1.00 par value per share. 
Authorized 3,000,000 shares; issued 1,288,896 and 
1,139,754 shares, respectively (notes 2 and 5) 1,288,896 
Additional paid-in capital 4,286,860 
Retained earnings (note 1) 4,534,050 
Total stockholdersequity 10,109,806 
Commitments and contingent liabilities (note 6). 
$24,070,644 
1965 
1,419,778 
1,076,415 
165,693 
458,818 
207,413 
72,542 
3,400,659 
4,929,092 
3,069,400 
344,000 
1,139,754 
2,935,926 
3,671,567 
7,747,247 
Pkat, Ma-rwick, Mitchell & Co. 
CERTIFIED PUBLIC ^VCCOUNTANTS 
629 SOUTH SPRING STREET 
LOS A.NGELES 14, CALIF. 
The Board of Directors 
Bonanza Air Lines, Inc.: 
We have examined the balance sheet of Bonanza 
Air Lines, Inc. as of December 31, 1966 and the re- 
lated statements of earnings, retained earnings and 
additional paid-in capital for the year then ended. 
Our examination was made in accordance with gen- 
erally accepted auditing standards, and accordingly 
included such tests of the accounting records and 
such other auditing procedures as we considered 
necessary in the circumstances. 
In our opinion, the accompanying balance sheet 
and statements of earnings, retained earnings and 
additional paid-in capital present fairly the financial 
position of Bonanza Air Lines, Inc. at December 31, 
1966 and the results of its operations for the year 
then ended, in conformity with generally accepted 
accounting principles applied on a basis consistent 
with that of the preceding year. 
PEAT, MARWICK, MITCHELL & CO. 
March 25, 1967 
19,490,398 
BALANCE SHEET 
 
18 
STATEMENT OF EARNINGS 
Year ended December 31, 1966 
with comparative figures for 1965 
1966 1965 
Operating revenues: 
Passenger and excess baggage 
Mail, express and freight 
Charter and incidental 
Public service (subsidy) 
$13,855,483 
456,064 
119,260 
3,581,000 
10,887,534 
357,992 
102,828 
3,166,557 
18,011,807 14,514,911 
Operating expenses: 
Flying operations 
Maintenance 
Passenger service 
Aircraft and traffic servicing 
Promotion and sales 
General and administrative 
Depreciation and amortization 
Amortization of development and 
preoperating costs 
3,995,318 
3,422,564 
811,384 
3,454,429 
1,911,960 
1,399,877 
1,593,805 
160,024 
3,193,826 
2,560,719 
634,501 
2,840,125 
1,757,809 
1,240,016 
1,145,306 
41,966 
16,749,361 
13,414,268 
Operating income 
1,262,446 
1,100,643 
Non-operating revenue (expense): 
Interest (note 7) 
(470,383) 
(212,254) 
Other, net 
18,640 
( 3,486) 
Earnings before taxes on income 
810,703 
884,903 
Provision for taxes on income (note 3) 
280,000 
42,000 
Net earnings from operations . . . 
530,703 
842,903 
Gain on sale of aircraft. 
less applicable taxes of $312,000 
331,780 
 
Net earnings 
. $ 862,483 
842,903 
See accompanying notes to financial statements. 
STATEMENT OF RETAINED EARNINGS 
AND ADDITIONAL PAID-IN CAPITAL 
Year ended December 31, 1966 
Retained 
Earnings 
Additional 
Paid-in 
Capital 
Amount at beginning of year . . 
$3,671,567 
2,935,926 
Net earnings 
862,483 
 
Excess of proceeds over par 
value of 136,557 shares of 
common stock issued upon 
conversion of debentures . . 
1,297,436 
Excess of proceeds over par 
value of 12,585 shares of 
common stock issued under 
options (note 5) 
53,498 
Amount at end of year 
$4,534,050 
4,286,860 
See accompanying notes to financial statements. 
ANNUAL MEETING 
The Annual Meeting of Stockholders of Bonanza Air Lines, Inc., 
is held on the third Monday of May in each year. This year the 
Annual Meeting will be held at 10:00 A.M. on May 15, 1967, in 
the company offices, 3737 Bonanza Way, Sky Harbor Airport, 
Phoenix, Arizona. 
The record date for the determination of stockholders entitled 
to receive notice and to vote at the meeting and any adjourn- 
ment thereof has been fixed by the Board of Directors as of the 
close of business on April 7, 1967. 
Stockholders are cordially invited to attend the meeting or to 
send in their proxies. 
Q B 
 
19 
BONANZA AIR LINES, INC., Notes to Financial Statements December 31, 1966 
NOTE 1. NOTES PAYABLE TO BANKS 
The notes payable to banks as of December 31, 1966 are summarized as follows: 
Payments 
Final 
Outstanding 
(Including Interest) 
Maturity 
Dec. 31, 1966 
5V2% note payable 
$ 51,621 monthly 
1968 
$ 867,162 
6% note payable 
1970 
512,109 
6% note payable 
5%% notes payable: 
.... 23,853 monthly 
1970 
1,012,593 
Series A 
1970 
962,227 
Series B 
. . .. 178,583 quarterly 
1975 
5,097,725 
6y2% note payable 
.... interest only 
1968 
950,000 
9,401,816 
Less current maturities 
1,931,971 
$7,469,845 
The notes are secured by chattel mortgages on three DC-9 and twelve F-27A aircraft. 
In connection with the loan agreements relating to two of the above notes, the Company 
has agreed, among other things, to maintain certain minimum working capital and stock- 
holders equity (net worth) requirements. Under the most restrictive provision of these 
agreements $3,850,459 of retained earnings as of December 31, 1966 was restricted as to 
the payment of cash dividends. 
The Company is required to offer to prepay the 5Va% Series B notes in an amount equal to 
15% of the annual net earnings (as defined) up to $1,000,000 plus 25% of the net earnings 
in excess of $1,000,000; accordingly, a prepayment of $79,605 will be offered to the note- 
holders during 1967. 
NOTE 2. 5V4% CONVERTIBLE SUBORDINATED DEBENTURES 
The debentures, which mature May 1, 1979, are subordinated to the bank loans and are 
convertible into shares of common stock of the Company at the initial conversion price of 
$11% per share. The conversion price increases to $12V2 per share on May 1, 1968 and to 
$14% per share on May 1, 1972. The trust indenture relating to the debentures provides for 
a sinking fund payment of $160,000 annually beginning May 1, 1969 and for the payment 
of interest semiannually. 
As of December 31, 1966, 139,689 shares of common stock were reserved for conversion 
of the outstanding debentures. 
The indenture further provides for certain restrictions on the payment of cash dividends 
which, as of December 31, 1966, were less restrictive than the provisions of the agree- 
ments relating to the bank loans described in note 1. 
NOTE 3. INCOME TAXES 
The Companys Federal income tax returns for 1963 and subsequent years are subject to 
review by the United States Treasury Department. 
Differences in the treatment of certain expenses result in substantial variations between 
net earnings as reflected in the Companys financial statements and as reported in its 
income tax returns. These differences are primarily in connection with aircraft preopera- 
tional costs which were expensed for tax purposes in the year in which incurred, although 
such costs are being amortized on the books, and the use of accelerated depreciation 
methods for tax purposes. 
The 1966 provision for income taxes is summarized as follows: 
Current taxes $ 144,942 
Deferred taxes 250,000 
394,942 
Less investment credits (including amounts carried back to prior years) 114,942 
Provision for income taxes $ 280,000 
The Company records investment credits as a reduction of Federal income taxes in the 
year in which such credits are realized. 
NOTE 4. RETIREMENT PLANS 
The Company has contributory retirement plans for all eligible employees, which are 
implemented by trust funds. The plans are cancellable by the Company. The cost of these 
plans charged to operating expense in 1966 totaled $347,443 for both current and past 
services. As of December 31, 1966, the remaining portion of the originally computed past 
service liability amounted to $35,929, which management contemplates fully funding 
during the next year. 
NOTE 5. OPTIONS TO PURCHASE COMMON STOCK 
The Company has a qualified stock option plan for officers and key employees of the 
Company. The plan provides that options may be granted to purchase 55,810 shares of 
the Companys common stock at not less than 100% of the fair market value on the date 
of grant. The options are exercisable in equal instalments over a period of five years. As 
of December 31,1966 options to purchase 8,700 shares were outstanding; the options were 
exercisable through 1971 at $15.13 per share and represented total option prices aggregat- 
ing $131,631. 
As of December 31, 1966, certain officers and employees held options to purchase 4,300 
shares under the Companys restricted stock option plan. The options were exercisable 
through May 20, 1968 at prices ranging from $3.38 to $6.65 per share and represented 
total option prices aggregating $19,290. 
NOTE 6. COMMITMENTS AND CONTINGENT LIABILITIES 
At December 31, 1966 the Company had on order two additional DC-9 aircraft scheduled 
for delivery in 1968. Such purchases represent commitments of approximately $6,125,000 
in excess of related deposits. The Company contemplates that such aircraft will be pur- 
chased by a Trust formed by banks who will lease the aircraft to the Company over a 13 
year term. It is anticipated that lease payments for both aircraft under such an agreement 
will approximate $685,000 annually. 
The Company also had on order at December 31,1966 two engines scheduled for delivery 
in May 1967 and April 1968 representing a commitment of $463,880 in excess of related 
deposits. 
At December 31, 1966 the Company had a DC-9 aircraft under a 13 year lease from a 
Trust formed by banks. Such aircraft is subleased to another airline until June 30, 1967 
at which time the Company is obligated to assume the lease payments amounting to 
$302,167 annually. 
During the year the Company moved its general offices and principal maintenance facili- 
ties to Phoenix, Arizona. In connection therewith, the Company has entered into a lease 
agreement requiring payments not to exceed $168,000 annually for the first five years 
and not to exceed $264,000 annually during the remaining twenty-three years of the 
lease. 
The estimated minimum annual rentals under other long-term leases, the majority of 
which expire prior to 1990, were approximately $100,000 at December 31, 1966. 
As of December 31, 1966 the Company was contingently liable for claims and lawsuits 
in which it is or may be a defendant; however, management and its counsel believe the 
ultimate liability, if any, will not materially affect the financial positon of the Company at 
December 31, 1966, or the results of its operations for the year then ended. 
NOTE 7. CAPITALIZED INTEREST 
Interest expense included in the statement of earnings does not include $136,424 for 
1966 and $186,900 for 1965 which were capitalized as aircraft acquisition costs. 
NOTE 8. CLAIM RECEIVABLE 
The Companys claim against the Federal Aviation Agency (included as a receivable) 
which was filed in 1965 was approved in December 1966 and payment was received in 
January 1967. 
STATEMENT OF EARNINGS & NOTES 
 
One of the more important activities of this depart- 
ment during 1966 was the task of moving 388 of the 
companys employees from Las Vegas to the com- 
panys new administrative offices and maintenance 
facilities in Phoenix, Arizona. The move was ac- 
complished with a minimum of disruption to ser- 
vice; and only 6.3 percent,or 26 employees, elected 
not to transfer with the company. Bonanza made 
every effort to assist each family in its move, by 
providing additional time off, transportation, lodg- 
ing, and other help; most employees were able 
to relocate with a minimum of difficulty. 
The expansion of the company's facilities and 
its jet aircraft fleet, together with increased traffic 
and larger terminal buildings, produced the need 
fora significant increase in personnel during 1966. 
Year-end employment (as distinguished from aver- 
age employment for the year) was 962. This rep- 
resents an 18.2 percent increase over the 814 
employees at year-end 1965. The companys pay- 
roll for the year was $7,451,912, an increase of 
22 percent over 1965. 
Intensive training, both in the classroom and 
on the aircraft, was conducted early in 1966 for 
pilots and mechanics on the DC-9 fan/jet aircraft. 
The thoroughness of such training and the apti 
tude of the personnel involved resulted in excellent 
operational performance with the DC-9 from the 
inception of service. 
During 1966 a jet-oriented hostess training pro- 
gram for all hostess personnel was initiated, to 
acquaint them with the new and additional custo- 
mer service requirements of the DC-9. The com- 
panys training section also provided continuing 
training programs for all personnel including new 
employees, and conducted field programs aimed 
toward further improving customer service. At the 
close of 1966, all company personnel affected by 
the addition of jet equipment had completed this 
training. 
In keeping with corporate policy, the company 
effected a general salary increase for all employees 
not covered by one of the companys five collective 
bargaining agreements. The companys compensa- 
tion program is designed to sustain its level of 
competent personnel. New collective bargaining 
agreements were signed with the hostesses repre- 
sented by the Air Line Pilots Association and with 
the aircraft mechanics and supply personnel rep- 
resented by the airline division of Teamsters Inter- 
national. The duration of both agreements was in 
excess of two years. 
20-year pins are awarded by President Converse to Vice President Operations, 
Myron W. Reynolds and Captains Dick Hall and George Martin. 
Bonanzas attractive new employee cafeteria. 
 
21 
INDUSTRIAL RELATIONS 
 
BOARD OF DIRECTORS 
EDMUND CONVERSE 
President and Chairman of the Board of 
Directors. He has served as director and 
chief executive of Bonanza since the 
company was incorporated. 
FRANK \W. BEER 
A director of Bonanza Air Lines since 
February of 1951. He is the senior member 
of the law firm of Beer and Kalyna; 
director of Peoples State Bank, Mineola, 
Kansas; director of KOOL and KOLD 
radio, CBS affiliates; director of F.A. 
Gillespie and Sons Company, Tulsa, 
Oklahoma; director of Adams Hotel 
Company, Phoenix, Arizona. 
GEORGE L. VARGAS 
A director since 1952. A senior partner in 
in the law firm of Vargas, Dillon, Bartlett & 
Dixon; also a director of Johnson Service 
Co. of Milwaukee; director of Valley Bank of 
Nevada in Reno; director of the Balboa 
Club de Mazatlan, S.A. Mazatlan, 
Sinaloa, Mexico. 
ROGER CONVERSE 
Became a director of Bonanza Air Lines in 
May of 1955. He is a director of Island 
Farms, Inc. and Cave des Roys. His other 
interests include investments, public 
relations and real estate. 
CHESTER M. GLASS, JR. 
Became a director of Bonanza Air Lines in 
January of 1959. He is an independent 
financial advisor. He has been active in the 
investment banking business for 37 years. 
WILLIAM D. PABST 
Elected to the Bonanza Board of Directors 
in March of 1959. He is former executive 
vice president and general manager of San 
Francisco-Oakland Television, Inc.; also 
president and director, St. Claire Finance 
Corporation. 
G.ROBERT HENRY 
Elected to the Bonanza Board of Directors 
in March of 1959. He has been Executive 
Vice President of Bonanza since 1953 and 
associated with Bonanza top management 
since 1949. 
JAMES D. MOYLE 
Elected to the Bonanza Board of Directors 
in February of 1960. A Salt Lake City 
industrialist, Mr. Moyle is vice president 
and director. Ideal National Insurance 
Company, Industrial Uranium Company and 
Empire Capital Corporation, also chairman 
of Utah State Park and Recreation 
Commission. 
ROBERT 0. REYNOLDS 
Became a director of Bonanza Air Lines in 
May of 1962. He is president of Golden West 
Broadcasters and Golden West Baseball 
Co., owners of the California Angels baseball 
team; also president of Board of Trustees, 
the Webb School of California. He is a 
member of the advisory board of the 
Guaranty Bank; and vice president and 
director, Los Angeles Rams and Gene 
Autry Hotel Co. 
COMPANY OFFICERS 
EDMUND CONVERSE, President 
G. ROBERT HENRY 
Executive Vice President 
MYRON W. REYNOLDS 
Vice President, Operations 
ROBERT J. SHERER 
Vice President, Finance 
LARRY DECKER 
Vice President, Traffic and Sales 
JOHN D. LINDSAY 
Vice President, Advertising 
and Publicity 
DONALD R. NEILSON 
Vice President, Research and 
Development and Assistant Secretary 
RICHARD A. ROGERS 
Vice President, Industrial Relations 
ARTHUR M.TAYLOR 
Vice President, Legal and Secretary 
NOLAND H. RYAN 
Vice President, Community Affairs 
JOHN R. MacKENZIE 
Vice President, Governmental Affairs 
RUDOLPH ZEPEDA 
Vice President, International Affairs 
FRANK R. CHABOT, Treasurer 
THOMAS J. VAN BOGART 
Controller and Assistant Secretary 
WILLIAM C. BURT 
Assistant Secretary 
Board room at new General Headquarters. 
 
OFFICERS 
 
BONANZA AIR LINES, INC. 
TRANSFER AGENTS: 
First National Bank of Nevada, Las Vegas, Nevada 
Bankers Trust Company, New York, New York 
REGISTRARS: 
Bank of Nevada, Las Vegas, Nevada 
First National City Bank, New York, New York 
CORPORATE OFFICES: 
Bonanza Air Lines 
P.O. Box 12405 
3737 E. Bonanza Way 
Phoenix, Arizona 85034 
f