CHICAGO AND SOUTHERN AIR LINES, INC. 
YEAR ENDED DECEMBER 31, 1948 
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CHICAGO AND SOUTHERN 
THE STOCKHOLDERS 
AIR LINES 
, INC. 
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General Offices Municipal Airport Memphis 2, Tennessee 
 ROUTES IN OPERATION 
 CHICAGO AND SOUTHERN AIR LINES, INC. 
GENERAL OFFICES, Memphis Municipal Airport, Memphis 2, Tennessee 
CORPORATE OFFICE, 100 West Tenth Street, Wilmington, Delaware 
DIRECTORS 
CARLETON PUTNAM 
SIDNEY A. STEWART 
JUNIUS H. COOPER 
L. RAYMOND BILLETT 
JOHN R. LONGMIRE 
OFFICERS 
CARLETON PUTNAM, Chairman of the Board 
SIDNEY A. STEWART, President 
JUNIUS H. COOPER, Vice President-Treasurer 
R. S. MAURER, Secretary and General Counsel 
T. F. HAMBLETON, Assistant Treasurer 
R. S. SCRIVENER, Assistant Treasurer 
E. MURRAY, Assistant Secretary 
DIVISION MANAGERS 
J. A. YOUNG, Operations Manager 
T. M. MILLER, General Traffic and Sales Manager 
M. H. JONES, Engineering and Maintenance Manager 
W. T. BEEBE, Director of Personnel 
Transfer Agent 
Mississippi Valley Trust Company, Broadway and Olive Street, St. Louis, Missouri 
Co-Transfer Agent 
Northern Trust Company, South LaSalle and West Monroe Streets, 
Chicago, Illinois 
Registrar 
Boatmen's National Bank, Broadway and Olive Street, St. Louis, Missouri 
Co-Registrar 
American National Bank and Trust Company of Chicago, Chicago, Illinois 
[3 
 REPORT TO THE STOCKHOLDERS 
EARNINGS 
Your Company's net profit for the year 1948 was $639,477, equiva 
lent to $1.26 a share on the capital stock, after provision for state and 
federal income taxes of $210,000. 
These earnings, plus retroactive mail pay received during 1948 but 
applicable to 1946 and 1947, converted a surplus deficit of $1,581,750 
into a surplus credit of $111,255, and increased your Company's net 
worth from $3,311,895 to $5,004,900. The stockholders' equity was thus 
increased from $6.50 to $9.83 a share, a gain of 51%. 
This improvement resulted in part from the issuance by the Civil 
Aeronautics Board of a final domestic mail rate order on July 28, 1948, 
awarding your Company retroactive mail pay of $1,053,528 for the 
years 1946 and 1947 and a forward rate effective January 1, 1948, which 
yielded a return of 26.7 cents per plane mile in 1948. The retroactive mail 
pay was credited direct to surplus and allocated $523,862 to 1947 and 
$529,666 to 1946. 
Another factor contributing to the improvement was a vigorous 
program of cost control. Against an inflationary background that car 
ried the average cost of living index up 7.5%, your Company inaugu 
rated service to two foreign countries and three new domestic cities 
writing off all training and development costs as incurred, increased seat 
miles 6.8%, and absorbed a rise of 38% in gasoline prices--all with an 
increase of only 8.6% in total operating expenses. The gasoline price in 
crease alone amounted to more than a quarter of a million dollars, about 
3% of total operating costs. The expanded system was being operated 
at the end of 1948 with 1,350 employees, 44 less than were on the pay 
roll at the beginning of the year. 
4 
] 
 A comparative summary of operating results for 1948 and 1947 fol 
lows. In this comparison the 1947 revenues have been restated to include 
the retroactive mail pay allocated to that year. 
Condensed Comparative Income Statement 
Year 1948 Year 1947 
Per Cent 
Change 
Route miles in operation 5,698 3,026 +88.3% 
Revenue plane miles flown 7,902,183 7,590,824 + 4.1 
Revenue seat miles flown 226,235,050 211,879,327 + 6.8 
Revenue passenger miles 118,939,538 119,264,262 -- 0.3 
Operating Revenue: 
Passenger and excess baggage $ 7,197,189 $ 6,229,475 + 15.5% 
Mail 2,802,827 1,908,914 +46.8 
Express and freight 378,384 354,952 + 6.6 
Miscellaneous 74,452 71,825 + 3.7 
Total operating revenues $10,452,852 $ 8,565,166 +22.0% 
Total operating expenses 9,563,514 8,808,914 + 8.6 
Net income (loss*) from operations $ 889,338 $ 243,748* 
Other deductions (net) 39,861 32,255 +23.6% 
Net income (loss*) before income taxes $ 849,477 $ 276,003* 
Provision for federal and state income 
taxes (Reduced $138,000 by carry- 
of prior years' losses) 
over 
210,000 
Net income (loss*) $ 639,477 $ 276,003* 
In the table on the following page, operating costs for 1948 and 1947 
are classified objectively, and it will be noted that salaries and wages, 
which comprised 50.3% of the total in 1947, were reduced to 47.8% in 
1948. While the average number of employees on the pay roll in 1948 
was down 9% from 1947, the average salary and wage rate was about 
13% higher. Gasoline went up as a result of price increases from 8.0% 
to 10.9% of the total costs. Another sharp increase from 7.5% to 9.2% 
was in the group of costs which include landing fees, rentals, joint facili 
ties, and agency commissions. This reflects the growing complexity of 
ground installations and communications facilities, particularly in foreign 
countries where airways are privately maintained, as well as the constant 
effort of airport managements to obtain increased revenues from their 
air line tenants. Depreciation costs were reduced from 11.0% to 9.4% 
of the total, principally as a result of lower depreciation charges on DC-3 
airplanes, which have now been written down to a residual value of 
$3,000 each. 
[5 
 Comparative Summary of Operating Costs 
1948 1947 Per Cent 
Per Cent Per Cent Change 
Amount of Total Amount of Total 
Salaries and wages $ 4,576,241 
Gasoline.... 1,038,945 
Maintenance materials 
and parts 590,955 
Traveling expenses 291,928 
Taxes (other than income) 250,257 
Insurance 185,668 
Food & passenger supplies 308,634 
Office supplies, forms, tar 
iffs, time tables, pro 
motional literature, & 
advertising space 379,177 
Rentals, landing fees, utili 
ties, joint facilities, and 
agency commissions 883,907 
All other goods and 
services 163,510 
Depreciation 894,292 
Total Operating 
Expenses $ 9,563,514 
Seat miles flown 226,235,050 
Cents per seat mile 4.23$ 
47.8% $ 4,433,326 50.3% + 3.2% 
10.9 700,512 8.0 +48.3 
6.2 506,560 5.8 + 16.7 
3.1 255,540 2.9 + 14.2 
2.6 258,317 2.9 -- 3.1 
1.9 187,422 2.1 -- 0.9 
3.2 266,930 3.0 + 15.6 
4.0 319,913 3.7 + 18.5 
9.2 660,389 7.5 +33.9 
1.7 248,487 2.8 --34.2 
9.4 971,518 11.0 -- 7.9 
100.0% $ 8,808,914 100.0% + 8.6% 
211,879,327 + 6.8% 
4.16$ + 1-7 
BALANCE SHEET 
Your Company is unique in having no bank loans or other long 
term debt outstanding. This contrasts sharply with the industry position 
of the sixteen domestic trunk lines, which are carrying an aggregate long 
term debt of $170,000,000, an amount approximately equal to their com 
bined net worth. Your Company has a working capital of $2,687,607, a 
current ratio of 3 to 1, and $2,320,141 of available cash against total 
liabilities of $1,402,031. Operating property which cost $5,159,916 has 
been depreciated to a net value of $1,883,640. Flight equipment includes 
twelve DC-3 and five DC-4 airplanes together with appropriate spares 
for maintenance, all wholly owned and fully paid for. An additional 
DC-4 airplane was purchased in January 1949. Route certificates are 
carried at $1 and no development or training costs have been deferred 
as charges to future operations. 
DOMESTIC OPERATIONS 
During 1948 your Company added to its domestic system three new 
cities--Kansas City, Springfield, Missouri, and Hot Springs, Arkansas-- 
increasing domestic route miles operated from 2,341 to 2,759 miles. 
In line with the general recession in transportation, passenger miles 
6] 
 declined 6.1% from the previous year. Schedules were reduced 2.5% in 
keeping with the reduced demand and your Company's load factor fell 
only 2.2 percentage points. For the industry as a whole available seats 
were increased 8.6% against a decline in traffic of 3.6%, dropping the 
industry load factor 7 percentage points. Your Company's load factor 
rank among the sixteen domestic trunk lines was thus raised from twelfth 
place in 1947 to ninth place in 1948. 
The 1948 drop in traffic volume was more than offset by fare in 
creases (10% in December 1947 and 5% in September 1948) and pas 
senger revenues showed a gain of 6.5% for the year. The yield per pas 
senger mile was 5.79 cents in 1948 as compared with 5.02 cents in 1947. 
A five-year table of comparative statistics for your Company's 
domestic system follows: 
Comparative Statistics---Domestic Operations 
(1946 and 1947 revenue adjusted to include retroactive mail pay) 
Route miles in 
operation 
Revenue plane 
miles flown 
Revenue seat 
miles flown 
Revenue passenger 
miles 
Load factor 
Operating Revenue: 
Passenger and 
excess baggage.. 
Mail 
Express & freight.. 
Miscellaneous 
Total operating 
revenues 
Total operating 
expenses 
Operating profit 
or loss* 
Operating Revenue: 
Passenger and 
excess baggage 
Mail 
Express and freight 
Miscellaneous 
1948 1947 1946 1945 1944 
2,759 2,341 2,041 2,055 1,386 
7,095,703 7,117,568 8,107,897 5,279,336 2,882,381 
187,381,273 192,132,278 196,289,556 109,596,160 59,653,713 
105,743,648 112,564,277 137,843,727 86,876,826 49,242,103 
56.4% 58.6% 70.2% 79.3% 82.5% 
$6,148,222 $5,774,239 $6,699,813 $4,376,776 $2,545,016 
. 1,891,989 1,465,102 1,672,872 277,238 281,808 
321,940 340,486 218,038 169,396 107,245 
70,090 71,664 24,139 25,413 12,644 
$8,432,241 $7,651,491 $8,614,862 $4,848,823 $2,946,713 
7,797,320 7,853,822 9,221,022 4,555,646 2,774,292 
$ 634,921 $ 202,331* $ 606,160* $ 293,177 $ i 172,421 
CENTS PER SEAT MILE 
3.28 3.00 3.41 3.99 4.27 
1.01 .76 .85 .25 .47 
.17 .18 .12 .16 .18 
.04 .04 .01 .02 .02 
Total operating revenues 4.50 
Total operating expenses 4.16 
3.98 4.39 4.42 4.94 
4.09 4.70 4.15 4.65 
Operating profit or loss* 34 .11* .31* .27 
[7 
 FOREIGN OPERATIONS 
During 1948 your Company continued its daily service to Havana 
and in addition inaugurated service three times a week from Houston 
and New Orleans to Caracas, Venezuela, with intermediate stops at 
Havana and Kingston, Jamaica. This new service proved so promising 
from its beginning on July 31st that a fourth weekly round trip was added 
on December 19th. It is hoped that permission to operate daily service 
may shortly be obtained from the Venezuelan government, since the 
community of interest between the oil industry of California, Texas, 
Oklahoma and Louisiana, and the oil fields of Venezuela is growing 
steadily and presents an attractive potential for development. 
Your Company has also been highly successful in the sale of all 
expense vacation tours to Havana. Twenty-five hundred of these cruises 
were sold in 1948 and promotional work of the same sort is now being 
extended to Jamaica. This merchandising of all-expense tours is unique 
in the air line industry and has contributed greatly to increased traffic 
throughout the system. 
Indeed, as opportunities for expansion in the United States become 
more restricted, your Company's foreign routes may well offer the bright 
est prospects for future development. 
Comparative statistics for your Company's international system from 
the inauguration of service on November 1, 1946, to December 31, 
1948, follow: 
Comparative Statistics--International Operations 
1946 
1948 1947 Two Months 
Route miles in operation 2,939 685 685 
Revenue plane miles flown 806,480 473,256 74,117 
Revenue seat miles flown ... 38,853,777 19,747,049 2,305,710 
Revenue passenger miles .. 13,195,890 6,699,985 895,295 
Load factor 34.0% 33.9% 38.8% 
Operating Revenue: 
Passenger and excess baggage.. 1,048,967 $ 455,236 $ 61,234 
Mail 910,838 443,812 69,580 
Express and freight 56,444 14,466 4,629 
Miscellaneous 4,362 161 8 
Total operating revenues 2,020,611 $ 913,675 $ 135,451 
Total operating expenses .. 1,766,194 955,092 224,624 
Operating profit or loss* ..$ 254,417 $ 41,417* $ 89,173' 
Cost per plane mile $2.19 $2.02 $3.03 
8] 
 MAIL RATES 
Domestic mail pay is being received under a final rate order issued 
by the Civil Aeronautics Board on July 28, 1948. This order provides a 
sliding scale formula based on scheduled miles and load factors, with an 
automatic downward adjustment which became effective when service 
was inaugurated to Caracas on July 31, 1948. Under this order domestic 
mail pay for 1948 amounted to $1,891,989, an average of 26.7 cents per 
plane mile. On the basis of present schedules and load factors, the mail 
rate is currently yielding about 25.4 cents per plane mile. The mileage 
rate will decrease in proportion to any increase in schedules and will also 
decrease about .9 cents for each percentage point gain in load factor 
above 55%. 
Since under the Civil Aeronautics Act of 1938 mail pay is intended 
to aid carriers "to maintain and continue the development of air trans 
portation to the extent and of the character and quality required for the 
commerce of the United States, the Postal Service, and the national 
defense," it seems appropriate to relate the mail pay received to total 
services rendered in commerce--that is, to total ton miles of all traffic 
carried, including passengers, mail, freight and express. On this basis, 
for the twelve months ended June 30, 1937, your Company's mail pay 
amounted to 74 cents per ton mile of total revenue traffic. This was re 
duced to 25 cents per ton mile in 1941, the last prewar year, and fur 
ther to 16 cents per ton mile for the year 1948 on your Company's do 
mestic system. During this period the cost of living index has gone up 
from 99.2 to 171.2. Thus it will be seen that in terms of units of service 
performed, there has been a decline in government aid of 78% since 
1937 while the cost of living index has risen 73%. 
International mail pay is being received under temporary rate orders 
issued by the Civil Aeronautics Board on March 20, 1947, and May 6, 
1948. The rate was 95 cents per plane mile up to the inauguration of 
service to Caracas on July 31, 1948, at which time it was increased to 
$1.25 per plane mile. Here again the rate varies with miles scheduled, 
though not with changes in load factor. International mail pay received 
in 1948 was at the average rate of $1.13 per plane mile. The current rate 
on present schedules is $1.05 per plane mile and this will be reduced to 
70 cents a mile when daily service is inaugurated to Caracas. These in- 
9 
 ternational rates are all temporary and subject to retroactive adjustment 
from the beginning of foreign service on November 1, 1946. The final 
rates may be either higher or lower than the temporary rates. 
EQUIPMENT 
During 1948 your Company operated twelve 21-passenger DC-3 and 
five 50-passenger DC-4 airplanes. At the end of the year the DC-3's were 
fully depreciated to a residual value of $3,000 each. The DC-4's are be 
ing depreciated to a residual value of $30,000 each by June 30, 1950. A 
sixth DC-4 airplane was purchased in January 1949 to provide the equip 
ment needed for expanding schedules in the Caribbean. 
Your Board does not believe that any commitments for new equip 
ment should be made at this time. Until the new types of aircraft are 
thoroughly shaken down, operating costs will continue to be high, and 
the initial cost imposes heavy amortization, interest and insurance 
charges. Assuming the present volume of traffic, the greater capacity of 
the new types will also result in less frequent schedules, which is un 
desirable. Your Company is studying with interest projects now under 
way to modernize the DC-3's and DC-4's. Meanwhile, depreciation re 
serves at the rate of approximately $65,000 per month are being ac 
cumulated, which will be available for the purchase of new equipment 
at the appropriate time. 
ROUTE AWARDS AND CAB DECISIONS 
During 1948 the Civil Aeronautics Board re-affirmed its original 
award to your Company of the route between Memphis and Kansas 
City via Springfield, and service was inaugurated over this new segment 
on September 9, 1948. In addition, the restriction which had been placed 
on Route 8 affecting Chicago-Houston service was removed, permitting 
non-stop flights between these two cities as well as unrestricted service 
over the Little Rock cut-off. 
The investigations of your Company's domestic and international 
routes, begun in 1947, were terminated in 1948 without findings. 
10] 
 APPLICATIONS 
Your Company has several applications for changes in its overall 
route pattern on file with the Civil Aeronautics Board. These include, in 
part, the following proposals: (a) to add Baton Rouge as an intermediate 
point between Jackson and New Orleans; (b) to provide local service 
between New Orleans and Houston; (c) to operate non-stop between 
Chicago and Havana; (d) to add Maracaibo, Venezuela, to the inter 
national service; and (e) to make Kingston rather than Havana the 
branching-off point of the foreign route. 
The several applications are in various procedural stages before the 
Civil Aeronautics Board. At this time no assurance can be given as to 
which, if any, will be acted upon favorably. 
OUTLOOK FOR 194 9 
Enclosed with this report is a reprint of an article by the Chairman 
of your Board which examines the outlook of the industry for 1949 and 
expresses the opinion that a more favorable climate now exists in Wash 
ington for development of the air lines as a whole. Your Company 
should share in this progress and is now in a better position to do so than 
at any time since the war. 
In estimating the forces working in our favor your Board wishes to 
stress the high level of the morale of our employees. It is believed that if 
your Company is under any competitive disadvantage while awaiting 
a choice of new equipment, this is more than offset by the team spirit of 
its organization and the attitude of friendly helpfulness to the public 
which has become more and more an outstanding feature of Chicago and 
Southern service. 
During 1948 your Company completed its twelfth year without an 
accident. 
ANNUAL MEETING 
The annual meeting of stockholders will be held at the Company's 
General Offices at the Municipal Airport, Memphis, Tennessee, at 2 
p. m. on Tuesday, May 3, 1949, for the purpose of electing a Board of 
Directors for the ensuing year and transacting such other business as may 
come before it. It is hoped that you will be able to be present at this 
meeting. 
By authority of the Board of Directors, 
Chairman of the Board President 
February 23, 1949 
[11 
 CHICAGO AND SOUTHERN AIR LINES, INC. 
ASSETS 
1948 1947 
CURRENT ASSETS: 
Cash $1,320,156 $1,463,058 
United States Government securities, at cost 999,985 -- 
Receivables from--- 
Air lines, customers, agencies, etc 699,287 532,188 
United States Government 871,919 272,714 
Materials and supplies, at average cost 198,291 207,582 
Total current assets $4,089,638 $2,475,542 
OTHER ASSETS AND DEFERRED CHARGES: 
Prepayments $ 331,861 $ 229,511 
Miscellaneous 101,791 46,880 
$ 433,652 $ 276,391 
OPERATING PROPERTY AND EQUIPMENT: 
Flight equipment $4,109,679 $4,138,655 
Other property and equipment 1,049,300 954,159 
Work in progress 937 356,821 
$5,159,916 $5,449,635 
Less--Reserves for depreciation (Note 3) 3,276,276 2,807,842 
$1,883,640 $2,641,793 
FRANCHISES AND GOODWILL $ 1 $ 1 
$6,406,931 $5,393,727 
The accompanying notes constitute 
12] 
BALANCE SHEETS-DECEMBER 31, 1948 AND 1947 
LIABILITIES 
1948 
CURRENT LIABILITIES: 
Notes payable to banks $ -- 
Accounts payable 550,300 
Traffic balances and deposits payable 489,454 
Accrued federal and state income taxes 210,000 
Other current and accrued liabilities 31,660 
Total current liabilities $1,281,414 
NOTES PAYABLE TO BANKS, 
Due after one year $ --- 
UNEARNED TRANSPORTATION REVENUE .,,.$ 120,617 
CAPITAL STOCK AND SURPLUS: 
Capital stock--authorized 650,000 shares, 
without nominal or par value; issued and 
outstanding 509,326 shares $4,893,645 
Earned surplus (deficit*) since May 23, 1938. . 111,255 
$5,004,900 
$6,406,931 
an integral part of these statements. 
1947 
$ 500,000 
492,889 
398,004 
36,245 
$1,427,138 
$ 560,000 
$ 94,694 
$4,893,645 
1,581,750* 
$3,311,895 
$5,393,727 
[13 
 CHICAGO AND SOUTHERN AIR LINES 
, INC. 
STATEMENTS OF INCOME 
FOR THE YEARS ENDED DECEMBER 31, 1948 AND 1947 
1948 
OPERATING REVENUES: 
Passenger and excess baggage (Note 1) $ 7,197,189 
Mail (Note 2) 2,802,827 
Express and freight 378,384 
Miscellaneous (net) 74,452 
1947 
(Note 2) 
$ 6,229,475 
1,908,914 
354,952 
71,825 
Total operating revenues $10,452,852 $ 8,565,166 
OPERATING EXPENSES: 
Flying and ground operations $ 4,023,103 
Maintenance 1,960,555 
Traffic, sales and advertising 1,967,533 
General and administrative 718,031 
Depreciation (Note 3) 894,292 
$ 3,245,888 
2,031,170 
1,774,908 
785,430 
971,518 
Total operating expenses $ 9,563,514 $ 8,808,914 
NET INCOME (LOSS*) FROM OPERATIONS....$ 889,338 $ 243,748* 
OTHER DEDUCTIONS (NET) 39,861 32,255 
NET INCOME (LOSS*) BEFORE 
INCOME TAXES $ 849,477 $ 276,003* 
PROVISION FOR FEDERAL AND STATE 
INCOME TAXES (Note 4) 210,000 -- 
NET INCOME (LOSS*) $ 639,477 $ 276,003* 
STATEMENT OF EARNED SURPLUS 
SINCE MAY 23, 1938 
YEAR ENDED DECEMBER 31, 1948 
BALANCE DECEMBER 31, 1947 (Deficit*) $ 1,581,750* 
Add: 
Retroactive mail pay applicable to years 1946 
and 1947 $ 1,053,528 
Net income for the year ended 
December 31, 1948 639,477 1,693,005 
BALANCE DECEMBER 31, 1948 $ 111,255 
The accompanying notes constitute an integral part of these statements. 
14] 
 CHICAGO AND SOUTHERN AIR LINES 
, INC. 
NOTES TO FINANCIAL STATEMENTS 
1. Domestic passenger fares were increased 10% effective December 12, 
1947, and a further 5% effective September 12, 1948. 
2. Domestic mail revenue from the United States Government for the 
year 1948 has been based on final rates fixed by the Civil Aeronautics 
Board in a rate order issued on July 28, 1948. This order also awarded 
the Company additional retroactive mail compensation of $1,053,528 
for 1946 and 1947, of which $523,862 has been allocated to the year 
1947. The income for 1947 has been restated to include this addi 
tional mail revenue. 
International mail revenue from the United States Government has 
been based on temporary rates fixed by the Civil Aeronautics Board 
in rate orders issued on March 20, 1947, and May 6, 1948. The final 
rates for international mail pay will be retroactive to the beginning of 
service on November 1, 1946, and may be either higher or lower than 
the temporary rates. 
3. The Company operates a fleet of 12 DC-3 and 5 DC-4 aircraft. All 
of the DC-3 aircraft (costing $1,339,992, including spares) were fully 
depreciated to a residual value of $118,853 at or prior to June 30, 
1947. In view of continuing operation, these aircraft were further de 
preciated during 1948 to the lower residual value of $37,769. The 
DC-4 aircraft (costing $2,769,687, including spares) are being depre 
ciated to a residual value of $150,000 by June 30, 1950. 
4. The provision for federal income tax for the year 1948 has been re 
duced approximately $138,000 by the carry-over of losses from prior 
years under the provisions of the Internal Revenue Code. Net income 
for 1948 without this tax benefit would be $501,477. 
5. Stock purchase warrants have been granted to two officers, entitling 
one to acquire 10,000 shares of capital stock and the other to acquire 
5,000 shares of capital stock at a price of $10 per share prior to 1956. 
The market quotations of the capital stock at the date of fixing the 
price of the warrants were less than $10. 
[U 
 ARTHUR ANDERSEN & 
co. 
ACCOUNTANTS AND AUDITORS 
506 OLIVE STREET 
ST. LOUIS 1 
TO THE BOARD OF DIRECTORS OF 
CHICAGO AND SOUTHERN AIR LINES, INC: 
We have examined the balance sheet of CHICAGO AND SOUTHERN 
AIR LINES, INC. (a Delaware corporation) as of December 31, 1948, 
and the related statements of income and surplus for the year then 
ended. Our examination was made in accordance with generally 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 related state 
ments of income and surplus present fairly the financial position of Chi 
cago and Southern Air Lines, Inc., as of December 31, 1948 and the 
results of its operations for the year then ended, and were prepared in 
conformity with generally accepted accounting principles applied on a 
basis consistent with that of the preceding year. 
ARTHUR ANDERSEN & CO. 
St. Louis, Missouri 
February 15, 1949. 
16] 
 CHICAGO AND SOUTHERN AIR LINES, INC. 
FINANCIAL ANALYSIS 
Per Share 
of Capital 
Amount Stock 
BALANCE SHEET POSITION--DECEMBER 31, 1948 
Cash and United States Government 
securities $ 2,320,141 $ 4.56 
Less total liabilities 1,402,031 
Cash in excess of total liabilities $ 918,110 $ 1.80 
Accounts receivable 1,571,206 3.09 
Inventories of materials and supplies 198,291 .39 
Net working capital $ 2,687,607 $ 5.28 
Operating property and equipment (Net).... 1,883,640 3.70 
Prepayments, deferred charges, 
and other assets 433,652 .85 
Route certificates, franchises, and goodwill.... 1 
Net worth of stockholders' equity $ 5,004,900 $ 9.83 
OPERATING RESULTS--YEAR 1948 
Total operating revenues $10,452,852 $20.52 
Net income before taxes 849,477 1.67 
Net income after taxes 639,477 1.26 
Ratio of net income after 
taxes to operating revenues 6.1% 
Ratio of net income after 
taxes to net worth 12.8% 
Common stock outstanding 509,326 shares 
Preferred stock outstanding None 
Bank loans, bonds, or other long-term debt None 
[17 
     di*f