Chicago and Southern Air Lines Annual Report 1949

FOR THE YEAR ENDED DECEMBER 31,
1949
C* S, ___ .....,..)
CHICAliD AND SOIJTHERN* AIR LINES, 1wc.
ROUTE MILES
IN OPERATION.
5 , 0 0 0 - - - - - - - - - - -
4 , 0 0 0 - - - - - - - - - - -
5 , 0 0 0 - - - - - - - - - -
2 , 0 0 0 - - - - - - - -
1,000--
MILLIONS OF
a-REVENU
PLANE MILES
6 - - - - - - - - -
4 - - - - - - - -
TOTAL
5,749
1958 '59 '40 '41 '42 '45 '44 '45 '46 '47 '48 '49
2,959
INTEU-
NATIONAL
CHICAGO AND SOUTHERN AIR LINES, INC.
Municipal AirportMe.rnphis 2, Tennessee
CARLETON PUTNAM SIDNEY A STEWART
CHAIRMAN OF THE BOARD PRESIDENT
REPORT TO THE STOCKHOLDERS
Your Company's operating profit for 1949 was $1,165,060 com-
pared to $889,338 for 1948. Income taxes amounted to $463,000 for
1949 compared to $210,000 for 1948 with the result that net earnings
were $630,087, slightly less than the net profit of $639,477 in 1948.
Lower taxes in 1948 were due to carry-over tax credits from previous
years which were not exhausted until August 1948.
A dividend of 35 cents per share was paid on October 1, 1949-
the first since 1945. The total amount of the dividend paid to the
2,795 stockholders owning 509,326 shares was $178,264.
During the year your Company felt increased competition from
other air lines having more modern equipment. This was noticed
primarily on our long-haul segments. An intensive sales campaign
was put into effect during the year to offset this development. Sales
representatives were stationed in New York, Dallas and Los Angeles
and a more comprehensive advertising campaign was inaugurated.
At the same time increased efforts were made to reduce costs. As a
result seat mile costs were reduced by 7.1 % in spite of higher wage
rates and gasoline prices as well as increased cost of materials and
other services.
In September an order was placed with Lockheed Aircraft
Corporation for five of the latest type Constellations. This new
equipment, the first of which will be delivered in the early fall of
1950, should permit your Company to regain its share of the long-
haul competitive business.
In June 1949 your Company increased the number of trips to
Kingston and Caracas from four to seven per week. These and other
schedule changes increased revenue miles flown in 1949 by 17.9%
over 1948.
1
2
Personnel relations remained on an excellent basis as evidenced
by the very low rate of turnover experienced in 1949. This is also
reflected in the friendly and cooperative spirit of our employees
which contributed greatly to the success of our sales efforts as well
as to the service to the public.
There is every indication that business on your Company's do-
mestic system will be equally as good, if not better, in 1950 than it
was in 1949. The oil industry in Venezuela is slowing up materially
which will have an adverse effect on international traffic. However,
the faster service which your Company will be able to provide when
the Constellations are in service should offset to some degree this
decline in business activity.
During 1949 the air lines established the finest safety record
in the history of the industry. The record, domestically and inter-
nationally, shows one fatality for every 100,000,000 passenger miles.
Your Company is entering its 14th year without injury to passenger
or crew.
Flight delays have always been a major problem to the air lines
and to the traveling public. It is gratifying to report that during
1949 your Company decreased controllable delays 41 % at domestic
stations in the face of a 5 % increase in flight departures.
With this record of safety and reliability your Management be-
lieves that air travel will continue to increase and that Chicago and
Southern will get its proportion of the business.
By authority of the Board of Directors,
Chairman of the Board
cS7A.0~
President
March 10, 1950
*
--------C* __ ~> HIGH IGHTS
FOR TH YEAR 1949
*
PAID A DIVIDEND-THE FIRST PAYMENT SINCE 1945-
AMOUNTING TO 35 CENTS PER SHARE.
REDUCED SEAT MILE COSTS IN SPITE OF HIGHER WAGE
RATES AND HIGHER COST OF MATERIALS AND SUPPLIES.
INCREASED NUMBER OF MILES FLOWN WITH SLIGHT
REDUCTION IN NUMBER OF EMPLOYEES.
INAUGURATED DAILY SERVICE TO CARACAS.
ORDERED FIVE NEW TYPE CONSTELLATIONS, THREE OF
WHICH WILL BE DELIVERED IN 1950.
~
IMPROVED ON-TIME OPERATIONS.
~
ACHIEVED ANOTHER YEAR OF PERFECT SAFETY.
3
OPERA N
REVEN E
THOUSANDS OF
4
FINANCIAL REPORT
Your Company's net profit for the year 1949 was $630,087,
equivalent to $1.24 a share on the capital stock after provision for
state and federal income taxes of $463,000. This compares with a
net profit for 1948 of $639,477, or $1.26 a share after taxes of $210,000.
Your Company's tax liability for 1948 was reduced approximately
$138,000 by the carry-over of losses from prior years. Without this
tax benefit net income for 1948 would have been $501,477, or 98 cents
a share on the capital stock.
Operating revenues increased from $10,452,852 in 1948 to
$12,368,524 in 1949, a gain of 18.3 %, while operating expenses in-
creased 17.1 %. Operating profit was thus raised 31.0% from $889,338
to $1,165,060. Passengers and excess baggage accounted for 69.2% of
total operating revenues in 1949, a small increase over the 1948 per-
centage, while mail pay declined slightly to 26.7% of the total.
On your Company's domestic system, seat mile costs were re-
duced from 4.16 cents in 1948 to 3.86 cents in 1949, and at the same
time the yield from passenger fares rose from 5.78 cents to 5.92 cents
per passenger mile. The break-even load factor (based on passenger
fares alone and before taking credit for any of the revenues derived
from freight, express, mail, or excess baggage) was thus lowered
from 72.0% in 1948 to 65.2% in 1949. The actual load factor fell
three percentage points from 56.4% to 53.3 %.
Revenue plane miles flown on domestic routes increased from
7,095,703 in 1948 to 7,497,306 in 1949 and the ton miles of mail car-
ried rose from 481,732 to 520,462. For this increased volume of
service in 1949 your Company received less mail pay than in 1948
($1,800,384 against $1,891,989), thus reducing the plane mile mail
rate from 26.7 to 24.0 cents and the ton mile rate from $3.93 to $3.46.
Your Company carried more ton miles of domestic cargo in
1949 than in 1948, but received less revenue for this service as a re-
sult of the shift of a substantial volume of cargo traffic from air
express to air freight at the cheaper rate.
On your Company's international system, seat mile costs were
reduced from 4.55 cents in 1948 to 4.09 cents in 1949. For the last
six months of 1949, the seat mile cost was 3.92 cents and the passenger
mile yield was 7.42 cents, giving a break-even load factor of 52.8%
on passenger revenue alone. This is the lowest break-even load factor
NET OME
THOUSANDS F DOLLARS
5
NETW
THOUSANDS OF
6
for foreign operations of any American flag carrier. The actual pas-
senger load factor for the year 1949 was 32.7%. At this level of
operations, many more passengers could be carried with relatively
little added cost and most of the additional revenue would be re-
flected in operating profit.
Revenue plane miles flown on your Company's Caribbean
routes increased from 806,480 in 1948 to 1,816,862 in 1949, passenger
miles and passenger revenues more than doubled, and the volume of
mail carried went up three-fold.
The number of domestic passengers carried in 1949 was 313,603,
as compared with 282,010 in 1948, but the average length of each
passenger's trip fell from 37 5 miles to 343 miles. On international
flights the number of passengers increased from 15,472 in 1948 to
23,481 in 1949 and the average passenger haul went up from 853 to
1,164 miles.
Your Company's balance sheet at December 31, 1949, showed
cash and Government securities of $3,345,168, exceeding total liabil-
ities of $1,732,236 by $1,612,932, which was equivalent to $3.17 a
share of the capital stock. Accounts receivable were $1,018,954,
amounting to an additional $2.00 a share. Most of these receivables
represented current mail pay due from the United States Post Office
and traffic balances against other air lines which are settled monthly.
Flight equipment, consisting of twelve DC-3's and six DC-4's
which cost $4,426,909 including spares, was depreciated to a net
value of $735,010. All aircraft were wholly owned and fully paid
for, and your Company had no outstanding bonds, bank loans, or
preferred stock. Ramp, shop, hangar and office equipment costing
$1,101,747 was depreciated to a net value of $448,504. The advance
payment of $1,125,000 shown under "Other Assets" represented a
down payment made to Lockheed Aircraft Corporation when the
contract was signed for five new model 649 Constellations.
All route development, advertising, promotional, and training
costs were written off as incurred and no expenses of this kind were
deferred as charges against future operations. Franchises and good-
will were carried at the nominal value of $1.
Out of the net income of $630,087 for 1949 a cash dividend of
$178,264 was paid to stockholders on October 1, 1949, and the re-
maining $451,823 was added to earned surplus, increasing the net
book value of your Company's stock from $9.83 to $10.71 a share.
4.59 5.98 4.50 4.26
4.87 5.84 5.70 5.61 5.55 4.65 4.15 4.70 4.09
.60 .55 ( .14) .oo .98 .06 .29 .27 (.51) (.11) .54
4.65 5.20
4.84 4.55
.65
REVENUES
EXPENSES
PROFIT or (LOSS)
REVENUES
PROFIT or (LOSS}
7
~
-~-s
... \..
.... ,
Simplified Comparative Income and
Expenditure Statements
FOR THE YEARS ENDED DECEMBER 31, 1949 AND 1948
1949 1948
Amount Per$100 Amount Per $100
of Re'Venue of Revenue
PASSENGERS
........ . ........ $ 8,560,862 $ 69.21 $ 7,197,189 $ 68.86
UNITED STATES MAIL ......... 3,305,090 26.72 2,801,599 26.80
EXPRESS AND FREIGHT ......... 429,156 3.47 378,384 3.62
OTHER SOURCES ............ 73,416 .60 75,680 .72
Total .......... $12,368,524 $100.00 $10,452,852 $100.00
a Net Income of ...... $ 630,087 $ 5.09 $ 639,477 $ 6.12
p AID IN DIVIDENDS ........... $ 178,264 $ 1.44 None None
RETAINED IN THE BUSINESS .. . . 451,823 3.65 $ 639,477 $ 6.12
OPEHA TIONS
DOMESTIC O RATIONS
During 1949 the performance factor on your Company's domes-
tic system was 96.8 % compared to 96.5 % for 1948. This small im-
provement in performance does not, however, reflect the major re-
duction in controllable delays achieved during the year. Despite a
5 % increase in flight departures, from 42,062 in 1948 to 44,245 in
1949, controllable delays were reduced 41 %, from 1,892 to 1,108.
In 1949 service was inaugurated to Pine Bluff, Arkansas; and
permission was obtained from the CAB to omit Peoria and Spring-
field, Illinois, from your Company's routes. Peoria was an unprofit-
able stop and Springfield has not been served recently by C&S.
Revenue passenger miles increased 1.6% in spite of increased
competition from new equipment operated by other air lines in this
area w}:iich affected your Company's long-haul business adversely.
It is confidently expected that this traffic can be regained by your
Company when its new Constellations are put into service.
Comparative statistics for your Company's domestic system for
the years 1946 to 1949, inclusive, are shown on page 16.
DO
OPERATING
STIC
VENUES
6 E PRESS,
ff AND OTHER
AIL
9
IONAL OPERATIONS
INTERN TI
OPER TI
BEV U
In June 1949 your Company increased the number of trips to
Kingston and Caracas from four to seven per week. This increased
service was primarily responsible for the 125 % increase in the inter-
national plane miles flown in 1949 over 1948. The daily service has
put your Company in a substantially better competitive position with
other air lines operating in this territory and has permitted it to ob-
tain a higher percentage of the available passenger business as well
as to carry a larger volume of freight and mail.
Due to a recession in the Venezuelan economy during the latter
part of 1949, revenues from your Company's international operations
have not been as satisfactory as had been anticipated, and it appears
that this trend may continue unless there is an improvement in the
outlook for the all-important oil industry in Venezuela.
On the other hand, sales of all-expense tours to Cuba and J a-
maica have made a major contribution to your Company's interna-
tional revenues. Intensive promotional work and sales effort resulted
in the sale of 2,680 of these cruises in 1949 compared with 2,136 in
1948, an increase of 25 % .
Other air lines have in-
troduced similar tours to
Miami which has resulted
in more intensive compe-
tition for this class of busi-
ness, and the inauguration
of coach flights from Chi-
cago to Miami has also
proved highly competitive.
Your Company's new Con-
stellation service is looked
to as an offset to these devel-
opments.
Comparative statistics for
your Company's interna-
tional system are shown on
page 16.
Domestic mait pay is being received under a final rate order
issued by the CAB on July 28, 1948. Under this order domestic mail
pay for 1949 averaged 24.0 cents per plane mile. International mail
pay is being received under temporary rate orders issued by the CAB
on March 20, 1947 and May 6, 1948. The rate varies with miles
scheduled. International mail pay received in 1948 was at the aver-
age rate of $1.13 per plane mile. In 1949 the average rate was 83
cents per plane mile and the current rate is now 70 cents per plane
mile due to the larger number of miles being flown. These interna-
tional mail rates are temporary and subject to retroactive adjustment
from the beginning of foreign service on November 1, 1946. The
final rate may be either higher or lower than the temporary rates.
It is interesting to note that the ton-mile cost to the Government
of transporting mail on your Company's domestic system declined
12 % between 1948 and 1949, and 25 % between 1946 and 1949. On
your Company's international system the decline was 49% and 77%,
respectively.
Under these circumstances it is not felt that any fears are war-
ranted concerning the participation of the Government in the further
development of your Company's routes, either domestically or inter-
nationally.
Your Company at present operates six DC-4 and twelve DC-3
aircraft. The DC-3's have been depreciated to a residual value of
'$3,000 each and the DC-4's will be depreciated to $30,000 each by
June 30, 1950. To meet increased competition an order was placed
in September 1949 for five of the latest type Constellations at a cost,
including spares, of approximately $5,500,000. Your Company an-
ticipates that it will be able to pay for three of these aircraft from its
cash reserves. The last two, which will be delivered in the early
spring of 1951, will be financed by a bank loan. No difficulty is an-
ticipated in making satisfactory arrangements for this loan. Your
Company plans to sell the majority of its DC-4's after the Constella-
tions have been received.
MAI
EQU
11
Chicago's Downtown
Ticket Office is at
65 E. Monroe Street
In St. Louis the C&S
Ticket Office is in
the Hotel Statler
Kansas Citians Are
Familiar with C&S
at Hotel Muehlebach
Houston, Texas, is
C&S Aerial Gateway
to all Latin America
12
TROIT(j
GHIGAGO,n,: . /~oLEoo jl
,.f OFT. WAYNE
sT ~RE
crj 1NrnANAI1ous
I\ANSAs., .. rnriis
1~:~E 1
CITY.... ~-.. 0 EVANSVILLE
' -., I
SPRINGFIELDO- l~;PADUCAH
~
.... MEMPHIS
LITTLE ROCK
Q----
HOT SPRINGSQ~QPINE~
f 'UFF Q GREENWOOD
OEL '\
DORADO O JACKSON
SHREVEPORT0li \._ ,
,.-
08:EMti~ n!O
HOUSTON(.~~
*
Moisant International
Airport in New
Orleans, Louisiana
I n Havana, Cuba, the
C&S Ticket Office is
"Located on The Prado
Hot Springs, Ark.,
a National Park and
Famous Health Spa
C&S Headquarters in
Caracas, F enezuela,
Near Plaza Bolivar
13
PERSONNEL OF
CHICAGO
SOUTHER
14
PERSONNEL
Your Company's employee termination rate dropped to an av-
erage of 1.59% per month for the year 1949. This compares with
what is considered a normal turnover ratio of 3 % for industry in gen-
eral. This stable working force is indicative of the high morale of
your Company's personnel.
Wages and salaries amounting to $5,082,442 were paid in 1949
and the total number of employees at the end of the year was 1,345.
In 1949 your Company offered a program in the principles and
methods of supervision to its first line of management personnel. In
addition, training facilities were offered to other groups of employees.
Your Company carried on collective bargaining with six unions
during the year without incident or work stoppage. It granted an
improved sick leave policy and continued other personnel benefit
programs. These included free and reduced rate transportation, paid
holidays and vacations, Credit Union sponsorship, and a comprehen-
sive group insurance plan. An employee-edited house organ,
"Sky Steps," was published monthly.
PUBLIC RELATIONS
Newspapers, magazines, radio, direct mail and posters were
used during 1949 to advertise the services of your Company to the
public. In addition, news-worthy information regarding the affairs
of Chicago and Southern appeared in daily newspapers and national
magazines throughout this country, Cuba, Jamaica and Venezuela.
Nine radio stations in as many cities used the aviation news programs
prepared by your Company as a weekly public service feature, with
C&S traffic managers acting as commentators.
STOCKHOLDERS
Your Company had 2,795 stockholders residing in 39 states, the
District of Columbia, and the Canal Zone. On September 20, 1949,
the average holding was 182 shares and 79% of the stockholders
owned 100 shares or less. The holdings of 2,674 stockholders were
registered directly in the names of individuals on the books of the
Company.
NERS OF
ICAGO AND
UTHERN
15
COMPARA IVE
OPERA ING
STATIS ICS
16
CHICAGO AND SOUTHERN AIR LINES, INC.
DOMESTIC
Operating Revenue
Passenger and excess baggage . . .. . .. ... .
United States Mail ... ....... . ....... .. .
Express and freight .. . .. . ... . . .. . .. . . . .
Miscellaneous . . . . ...... . . . .. . . . . . . ... .
Total Operating Revenues . ..... . . .. .. .. . .
Total Operating Expenses . .... . . .. ...... .
Operating Profit or Loss* ... .. . . .. . . . .. .. .
Other Deductions (net) ..... . . . ......... .
Provision for Federal and State Income Taxes
Net Income or Loss*
Operating Revenue
Passenger and excess baggage ... .. ... .. .
United States Mail .. . .... . ...... . .. .. .
Express and freight . .. . . . .... . .. . ..... .
Miscellaneous . . ............... .. .. ... . .
Total Operating Revenues ..... . . . ... .... .
Total Operating Expenses . . .. . ....... ... .
Operating Profit or Loss* .. .. . . . . ... .... . .
Other Deductions (net) . . .... . ...... . .... .
Provision for Federal and State Income Taxes
Net Income or Loss* . ....... ... . .. .... . . .
INTERNATIONAL
Operating Revenue
Passenger and excess baggage ....... .. . .
United States Mail ......... . . ... .. ... . .
Express and freight . . . . . .. .. . . . . ... .. . .
Miscellaneous .... .... ... ...... . ... . ... .
Total Operating Revenues . ......... . .. . . .
Total Operating Expenses . ... . ... . ... . .. . .
Operating Profit or Loss* .. . . .. .. . . . ... . . .
Reserve Provision for Foreign Operations . . .
Other Income or Deductions* (net) ....... .
Provision for Federal and State Income Taxes
Net Income or Loss*
Operating Revenue
Passenger and excess baggage . ... . ..... .
United States Mail .. . . .. . ... ... .. . ... . .
Express and freight . . .. .. .... . ........ .
Miscellaneous .. .. . .. . ....... . ... . .... . .
Total Operating Revenues . ........... .. . .
Total Operating Expenses .. . ... .. . . .... . .
Operating Profit or Loss* . .. ... . . . . .. . ... .
Reserve Provision for Foreign Operations .. .
Other Income or Deductions* (net ) .. .. . . . .
Provision for Federal and State Income Taxes
Net Income or Loss* ... . . . .. ... . .. . .... . .
1949
$6,407,449
1,800,384
319,722
56,175
$8,583,730
7,783,557
$ 800,173
16,322
313,000
$ 470,851
3.18
.89
.16
.03
4.26
3.86
.40
.01
.16
.23
1949
$2,153,413
1,504,706
109,434
17,241
$3,784,794
3,419,907
$ 364,887
65,000
9,349
150,000
$ 159,236
2.58
1.80
.13
.02
4.53
4.09
.44
.08
.01
.18
.19
1948 1947
TOTAL AMOUNTS
$6,148,222 $5,774,239
1,891,989 1,465,102
321,940 340,486
70,090 71,664
$8,432,241 $7,651,491
7,797,320 7,853,822
$ 634,921 $ 202,331 *
42,784 29,998
146,000
$ 446,137 $ 232,329*
CENTS PER SEAT MILE
3.28 3.00
1.01 .76
.17 .18
.04 .04
4.50 3.98
4.16 4.09
.34 .11*
.02 .01
.08
.24 .12*
19-!8 1947
TOTAL AMOUNTS
$1,048,967 $ 455,236
909,610 443,812
56,444 14,466
5,590 161
$2,020,611 $ 913,675
1,766,194 955,092
$ 254,417 $ 41,417*
2,923 2,257*
64,000
$ 193,340 $ 43,674*
CENTS PER SEAT MILE
2.70 2.31
2.34 2.25
.1 5 .07
.01
5.20 4.63
4.55 4.84
.65 .21*
.01 .01 *
.16
.50 .22*
t International Ser'Vice was inaugurated on No'Vember 1, 1946.
1946
$6,699,813
1,672,872
218,038
24,138
$8,614,861
9,221,022
$ 606,161 *
17,237
207,346 Credit
$ 416,052*
3.41
.85
.12
.01
4.39
4.70
.31 *
.01
.11 Credit
.21*
1946t
$ 61,234
69,580
4,629
8
$ 135,451
224,624
$ 89,173*
654*
29,865 Credit
$ 59,962*
2.65
3.02
.20
5.87
9.74
3.87*
.03*
1_:]_Q_ Credit
2.60*
--
CHICAGO AND SOUTHERN All\ LINES, INC.
1949 1948
OPERATING REVENUES:
Passenger and excess baggage ....... $ 8,560,862 $ 7,197,189
United States Mail (Note 1) ....... 3,305,090 2,801,599
Express and freight ................ 429,156 378,384
Miscellaneous (Net) .............. 73,416 75,680
Total operating revenues ....... $12,368,524 $10,452,852
OPERATING EXPENSES:
Flying and ground operations ....... S 4,980,602 $ 4,023,103
Maintenance ..................... 1,955,808 1,960,555
Traffic, sales and advertising ........ 2,382,452 1,967,533
General and administrative ......... 782,202 718,031
Depreciation (Note 3) ............. 1,102,400 894,292
Total operating expenses ....... $11,203,464 $ 9,563,514
NET INCOME FROM
OPERATIONS .................. S 1,165,060 $ 889,338
Reserve provision for foreign operations 65,000
Other deductions (Net) .............. 6,973 39,861
NET INCOME BEFORE INCOME
TAXES ......................... $ 1,093,087 $ 849,477
PROVISION FOR FEDERAL AND
STATE INCOME TAXES (Note4) 463,000 210,000
NET INCOME ................... $ 630,087 $ 639,477
1949
BALANCE DECEMBER 31, 1948 . . . . . . . . . . . . . . $ 111,255
Net income for the year ended December 31, 1949 . . . 630,087
$ 741,342
Cash dividend of 35 a share . . . . . . . . . . . . . . . . . . . . . 178,264
BALANCE DECEMBER 31, 1949 . . . . . . . . . . . . . . $ 563,078
The accompanying notes constitute an integral part
of these statements.
ST EMENTS
OF COME
For th ears ended
Dec. 31 1949 and 1948
ST TEMENT
OF ARNED
SU PLUS
Since ay 23, 1938
Year ded Dec. 31, 1949
17
AS TS
18
CURRENT ASSETS:
Cash ........................... .
United States Government securities ..
Receivables from-
United States Post Office ......... .
Air lines, customers, agencies, etc .. .
Maintenance and operating supplies,
at average cost ................. .
Total current assets ............ .
OTHER ASSETS:
1949
$1,345,168
2,000,000
293,364
725,590
171,697
$4,535,819
Advance payment on flight equipment
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . $1,125,000
Advances for leased facilities, being
amortized . . . . . . . . . . . . . . . . . . . . . . 211,584
Other prepayments . . . . . . . . . . . . . . . . 56,248
Miscellaneous . . . . . . . . . . . . . . . . . . . . 141,793
OPERATING PROPERTY AND
EQUIPMENT:
Cost
Flight
Equipmmt
1949 . . . . . $4,426,909
1948 . . . . . 4,109,679
Other
Property and
Equipment
$1,101,747
1,050,237
Depreciation reserves (Note 3)
1949 . . . . . $3,691,899 $ 653,243
1948 . . . . . 2,752,867 523,409
FRANCHISES AND GOODWILL
$1,534,625
$5,528,656
4,345,142
$1,183,514
$ 1
$7,253,959
1948
$1,320,156
999,985
852,909
718,297
198,291
$4,089,638
$
219,485
61,490
152,677
$ 433,652
$5,159,916
3,276,276
$1,883,640
$ 1
$6,406,931
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities ...................... .
Accrued federal and state income taxes
Air travel plan deposits ........... .
Total current liabilities ....... .
UNEARNED TRANSPORTATION
1949
$ 922,353
498,244
202,300
$1,622,897
REVENUE . . . . . . . . . . . . . . . . . . . . . . $ 109,339
RESERVE FOR FOREIGN
OPERATIONS .. .. .. . .. . .. . .. .. . $ 65,000
CAPITAL STOCK AND SURPLUS:
Capital stock- authorized 650,000
shares, without nominal or par
value; issued and outstanding
509,326 shares ................. .
Earned surplus since May 23, 1938 .. .
$4,893,645
563,078
$5,456,723
1948
$ 865,289
210,000
206,125
$1,281,414
$ 120,617
$
$4,893,645
111,255
$5,004,900
$7,253,959 $6,406,931
The accompanying notes constitute an integral part of these statements.
LIABI ITIES
CAP AL
19
NOT
FINA
STATEM
20
CHICAGO AND SOUTHERN Alll LINES, INC.
1. Domestic mail revenue from the United States Government has
been based on final rates fixed by the Civil Aeronautics Board
in a rate order issued on July 28, 1948.
International mail revenue from the United States Government
has been based on temporary rates fixed by the Civil Aero-
nautics 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.
2. The Company has entered into a contract with Lockheed Air-
craft Corporation for the purchase of five Model 649 Con-
stellation aircraft to be delivered three in the fall of 1950 and
two in the spring of 1951. These aircraft, together with the
necessary spares, will cost approximately $5,500,000. An ad-
vance payment of $1,125,000 has been made to Lockheed and
the remainder of the purchase price is payable upon delivery.
5. The Company operates a fleet of 12 DC-3 and 6 DC-4 aircraft.
All of the DC-3 aircraft ( costing $1,304,830 including spares)
were fully depreciated to a residual value of $3,000 each at
December 31, 1948. The DC-4 aircraft ( costing $3,122,079
including spares) are being depreciated to a residual value of
$30,000 each by June 30, 19 50.
4. The provision for federal income tax for the year 1948 was 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 have been
$501,477.
5. Stock purchase warrants have been granted to two officers, en-
titling 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.
ARTHUR ANDERSEN & Co.
ACCOUNTANTS AND AUDITORS
506 OLIVE STREET
ST. Lours 1
TO THE STOCKHOLDERS 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, 1949 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 audit-
ing procedures as we considered necessary in the circum-
stances.
In our opinion, the accompanying balance sheet and
related statements of income and surplus present fairly
the financial position of Chicago and Southern Air Lines,
Inc. as of December 31, 1949 and the results of its op-
erations for the year then ended, and were prepared in
conformity with generally accepted accounting prin-
ciples applied on a basis consistent with that of the pre-
ceding year.
St. Louis, Missouri
February 10, 1950
AU TORS'
CER IFICATE
21
*
- ------CaMPARAT~
-------------* ~TAT/ST/CS---~
Net Net Income Net Income Dividends Paid Numb'er Wa,ges Revenue Aoailable nevenue l1c1ssenger
Opel'atin~ Operatin~ Income befol'e Income after Income Taxes on Common Stocfl Earned of and l1lane Miles Flown Seat Miles Flown Passenger Miles Flown Load Factor
Reoenues Expenses from Op- Income Taxes
Per Per Surplus Persons Salaries
el'ations Taxes Total Share Total Share
Employed Paid Domestic lntemat'l Domestic Intemat'I Domestic Intemat'l Domestic Intemat'l
THOUSANDS THOUSANDS THOUSANDS THOUSANDS THOUSANDS THOUSANDS
DOLLIH\S THOUSANDS DOLLARS THOUSANDS THOUSANDS THOUSANDS THOllSANIJS THOUSANDS THOUSANIJS THOUSANDS THOUSANUS PERCENT l'EI\GENT
OF DOLLARS OF UOLLARS OF DOLLARS OF DOLLARS OF DOLLAl\S OF DOLLARS UF DOLLARS UF DOLLARS OF DOLLARS OF MILES OF MILES OF MILES OF MILES .OF MILES UF MILES
1949 12,369 11,204 1,165 1,093 463 630 $ 1.24 178 $0.35 563 1,345 5,082 7,497 1,817 201,599 83,559 107,440 27,327 53.3% 32.7%
1948 10.453 9,564 889 849 210 639 1.26 None None 111 1,350 4,576 7,096 806 187,381 38,854 105,744 13,196 56.4 34.0
1947 8,565 8,809 244* 276* None 276* 0.54* None None 1,s82t 1,394 4,433 7,118 473 192, 132 19,747 112,564 6,700 58.6 33.9
1946 8,750 9.445 695* 713* 237 476* 0.93* None None 719t I, 771 4,753 8,108 74 196,290 2,306 137,844 895 70.2 38.8
1945 4,849 4,556 293 298 125 173 0.56 77 0.25 288 1,375 2.481 5,279 (a) 109,596 (a) 86,877 (a) 79.3 (a}
1944 2,947 2,775 172 223 94 129 0.44 73 0.25 193 761 2,337 2,882 (a) 59,654 (a) 49,242 (a) 82.6 (a)
1945 2,268 2,243 25 168 68 100 0.34 143 0.625 . 100 932 2,730 2,179 (a) 42,057 (a) 35,293 (a) 83.9 (a)
1942 2,100 1,652 448 380 162 218 . 0.95 84 0.50 133 890 1,251 2,210 (a) 45,720 (a) 28.438 (a) 62.2 (a)
1941 1,732 1,735 3* 23 24 I* 0.01* None None 35 401 760 2,328 (a) 46,813 (a) 23.414 (a) 50.0 (a)
1940 I ,191 1,235 44* 52 3 49 0.16 None None 8 272 568 1,983 ( a) 32,152 (a) 15,979 (a) 49.7 (a)
1959 863 776 87 81 22 59 0.35 15 0.15 65 163 391 1,769 (a) 15,932 (a) 9,242 (a) 58.0 (a)
1958 746 660 86 79 10 69 0.44 None None 48 147 315 1,442 (a} 14,357 (a) 6,895 (a) 48.0 (a)
* Loss Note: ( a) International Service Was Inaugurated on November I, 1946
Credit
t Deficit
DIRE TORS
OFFI RS
CHICAGO AND SOUTHERN AIR LINES, INC.
GENERAL OFFICES, MEMPHIS MUNICIPAL AIRPORT, MEMPHIS 2, TENNESSEE
CORPORATE OFFICE, 100 WEST TENTH STREET, WILMINGTON, DELAWARE
SIDNEY A. STEWART
JUNIUS H. COOPER
CARLETON PUTNAM
L. RAYMOND BILLETT
JOHN R. LONGMIRE
CARLETON PUTNAM ................................... Chairman of the Board
SIDNEY A. STEWART ............................................. President
JUNIUS H. COOPER .................................. Vice President-Finance
WILLIAM T. ARTHUR ............................. Vice President-Operations
R. S. MAURER ............. . ................. . Secretary and General Counsel
T. F. HAMBLETON ............................................... Treasurer
R. S. SCRIVENER ......................................... Assistant Treasurer
E. MURRAY ............................................ . Assistant Secretary
DIVI ON MANAGERS
24
OPERATIONS DIVISION
WILLIAM T. ARTHUR
Vice President-Operations
TRAFFIC AND SALES DIVISION
T. M. MILLER
General Traffic and Sales lvl anager
TREASURY DIVISION
JUNIUS H. Coo PER
Vice President-Finance
LEGAL DIVISION
R. s. MAURER
Secretary and General Counsel
PERSONNEL DIVISION
w. T. BEEBE
Director of Personnel
TRANSFER AGENT
MISSISSIPPI VALLEY TRUST COMPANY
Broadway and Olive Street
St. Louis, Missouri
REGISTRAR
BOATMEN'S NATIONAL BANK
Broadway and Olive Street
St. Louis, Missouri
CO-TRANSFER AGENT
NORTHERN TRUST COMPANY
South LaSalle & West Monroe Streets
Chicago, Illinois
CO-REGISTRAR
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
Chicago, Illinois
LISTED
Printed in U.S.A.
NEW YORK CURB EXCHANGE AND
MIDWEST STOCK EXCHANGE
Designed and produced by PICK-S, N. Y.
MILLIONS OF
AVAILABLE
TOTAL
'285 85
250- SEAT MILES ___ _ INTER-
NATIONAL
1 5 0 - - - - - - - - - -
1 0 0 - - - - - - - -
125-- MILLIONS OF- - - - -
REVENUE
' mo-PASSENGER- -
MILES
7 5 - - - - - - - - -
1958 '59 '40 '41 '4'2 '45 '44 '45 '46 '47 '48 '49
202
DOMESTIC
'27
INTER-
NATIONAL
108
DOMESTIC
CHICAliO
ANO
SOIJTHERN
AIR LINES,
INC.
*
---------------fi-~---------------
~