Delta Air Lines annual report 1958

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PASSENGER TICKET
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AND BAGGAGE CHECK
FLIGHT COUPON NO.
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DATE ANO PLACE OF ORIGINAL ISSUE
AC(
JUN 301
58
DATE TIME sr~ius
DELTA AIR LINES, INC.
UNIFORM AIRBILL
NON-NEGOTIABLE
FROM
(CONSIGNOR)
AMERICAN METAL WORKS
CONSIGNOR'S STREET ADDRESS
4616 E. 55TH STREET
CllY ZONE STATE
CHICAGO 32 ILLINOIS
BY I CONSIGNOR'S No.
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w. A. CROUCH BELOW
DECLARED VALUE Agreed and understoocf to be not more than the value stated in the
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less a higher value ii declared ond appli<oblo chorgos pahf'thereon.
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CONSIGNoRs
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TERMINAL
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No. of Pieces DESCRIPTION OF PIECES AND CONTENTS
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PACKING-MARKS-NUMBERS
1 CTN MK 1821
COMPARATIVE SUMMARY OF OPERATIONS
Operating Revenues ......... . ......... .
Operating Expenses (excluding
depreciation) ................... .
Operating Income (excluding
depreciation) . .. . .. . .. ...... . ... .
Depreciation ......................... .
Operating Income after depreciation ..
Net Income from Operations, after Taxes
and other charges . . . . . . . . . . . . . . . . . .
Total Earnings . . ........... . ..... . ... .
Shares Outstanding ................... .
Earnings per Share ... . ................ .
Cash Dividends Paid . . ............... . .
Dividends per Share . .. ........ ... . . .. . .
Total Stockholder Equity .............. .
Stockholder Equity per Share .......... .
Revenue Passengers Carried ... .. ....... .
Available Seat Miles (000) .......... . .. .
Revenue Passenger Miles (000) ......... .
Passenger Load Factor .......... . . . ... .
Average Return per Passenger Mile ..... .
Number of Employees .. ............... .
1958
$88,173,000
$76,277,000
$11,896,000
$ 9,354,000
$ 2,542,000
$ 932,000
$ 1,063,000
1,122,045
$ .95
$ 1,009,791
$ .90
$34,020,000
$30.32
2,728,220
2,479,428
1,408,857
56.82 %
5.69
6,058
THE COVER:
The various tickets,
receipts and forms
illustrated on this
year's cover depict
the principal sources
from which Delta
derives its revenue.
YEARS ENDED JUNE 30
1957 1956
$78,596,000 $66,804,000
$65,782,000 $53,169,000
$12,814,000 $13,635,000
$ 6,729,000 $ 5,661,000
$ 6,085,000 $ 7,974,000
$ 2,539,000 $ 3,369,000
$ 2,622,000 $ 4,678,000
1,121,944 996,219
$2.34 $4.70
$ 1,346,109 $ 922,990
$1.20 $1.20
$33,966,000 $28,358,000
$30.27 $28.47
2,572,982 2,261,770
2,206,408 1,726,941
1,299,482 1,080,267
58.90 % 62.55 %
5.53 5.61
5,842 5,294
Annual Report
TO THE STOCKHOLDERS:
For the air transportation industry as for other
major domestic industries-and indeed the
entire nation-the 12 months ending June 30,
1958 was a period of great challenge. Inter-
national events and world economic trends
were reflected on the business barometer of
our country and your own Company. Never-
theless, it was a year in which Delta Air Lines
continued to make definite gains.
* * *
Delta's operations in the 1958 fiscal year reflect
many extraordinary developments, some of
general application and others primarily affect-
ing your Company and the airline industry.
There are valid indications that the 12
months between July 1, 1957 and June 30,
1958 bore the brunt of this country's economic
recession, with the downward trend beginning
early and leveling off late in that period.
Political unrest in three of the five Carib-
bean countries served by your Company was
given widespread (and, in some instances,
exaggerated) publicity which tended to inhibit
travel to those areas.
South Florida's worst winter in half a cen-
tury completely ruined the 1958 winter season
in that perennially popular vacation resort,
sharply reducing the traffic of every airline
serving the state.
Concentration of Delta-
liners at Atlanta Airport
loading finger during
mid-day connecting period.
1
Despite a marked decline in industrial
activity and mounting unemployment, cost
levels continued to rise. Accordingly, the Civil
Aeronautics Board-after denying airline peti-
tions for fare relief in August, 1957-in Jan-
uary, 1958 authorized an increase in domestic
passenger fares approximating 6.6% for the
industry. This increase, generally considered
inadequate, has had no discernible effect upon
traffic volume and is providing badly needed
additional revenues.
Congress repealed, effective August 1,
1958, the 3 % Federal tax on freight, including
air cargo, but failed to repeal the more onerous
10% tax on passenger travel. Delta and the
industry are pressing for the repeal of this
discriminatory tax-imposed during World
War II to discourage travel-which penalizes
the domestic traveler and hinders expansion
of airline traffic.
Your Company completed its piston-en-
gined airplane acquisition program during the
year. Additions to the aircraft fleet, coupled
with aggressive sales and traffic develop-
mental activities, enabled Delta to maintain
a rate of traffic growth for the year slightly
above the industry.
Major progress has been made in complet-
ing financing arrangements for our jet aircraft
commitments, and planning for their opera-
tion next year is going forward at a vigorous
pace. Among the first to place orders for jet
transports, Delta will be first in bringing jet
travel to many cities on its system.
Passenger traffic again produced more than
92% of total revenues for the year. Passen-
ger and excess baggage revenues rose to
$81,601,000-a gain of $8,516,000 over the
$73,085,000 received from this source in the
preceding year. Higher traffic volume ac-
counted for $6,616,000 of the increase, while
the passenger fare increases placed into effect
on February 10 developed $1,900,000 addi-
tional revenue in the last 141 days of the year.
Low-fare aircoach services continued to
play a major role in our operations. This class
of service accounted for 37.60% of available
seat miles and 38.38% of revenue passenger
miles for the year.
The additional capacity provided by your
Company and its competitors, general eco-
nomic conditions, and unusually adverse
weather during the peak winter vacation sea-
son combined to reduce the percentage of
available seat miles sold to 56.82% from
58.90% in the 1957 fiscal year. This drop of
two percentage points was much less than the
industry average, however, and your Com-
pany's participation in total passenger miles
flown by the domestic trunk lines increased
slightly. The following tabulation shows that
participation for recent years:
1952* ..... .
1953 .... .
1954 ... .
1955 .... .
1956 . . .
1957 .. .
1958.
. .. ... .. . . . . 3.91 %
.3.73
. .4.77
.5.06
. .. 4.99
. ..... 5.34
. ...... 5.40
*Last full year of Operations prior to the mer-
ger with Chicago and Southern Air Lines, Inc.
Five CAA-certificated, modernized C-46
all-cargo airplanes were added to our operat-
ing fleet during the year, replacing two C-47
aircraft. These additions, coupled with inten-
sified sales and promotional efforts, produced
all-cargo (mail, air freight, and express) reve-
nues of $5,703,000, a gratifying 17% increase.
EXPENSES
The effects of inflation-inspired cost level in-
creases and a slackening in the year-to-year
rate of growth could not be offset entirely by
operating economies and management efficien-
cies. Consequently, the cost of producing a
seat mile rose from 3.29 to 3.45 and the cost
of an available ton mile from 27.84 to 28.44.
The largest percentage increase, by ex-
pense category, was the 39.02% increase in
depreciation charges, reflecting the addition of
nine DC-7B's and five C-46's to the operating
fleet during the year.
The largest dollar increase occurred in
salaries, wages, and related costs, which in-
creased $5,430,000 to $37,328,000 and repre-
sented 43.59% of total expenses. Those higher
personnel costs reflect a net increase of 216
employees during the year and higher wage
and sala~y scales that were placed into effect
during the year; the total of 6,058 employees
at year-end is 119 below the high of 6,177
reached on February 28, 1958.
Net non-operating charges (interest in-
come and expense, incidental property sale
profits and losses, foreign exchange costs, etc.)
were $600,000 for the year, up only slightly
from $556,000 in the preceding year. Begin-
ning with the 1958 fiscal year, however, in-
terest applicable to advance deposits on jet
flight equipment is being removed from cur-
rent charges against income and capitalized as
an additional cost of acquiring the related
equipment. This capitalization reduced in-
terest charges by $395,000, and increased de-
ferred taxes by $205,000; had interest not been
capitalized, net income in 1958 would have
been approximately $200,000 lower.
As shown by the June 30, 1958 Balance
Sheet, advance deposits for new flight equip-
ment were $11,722,000 as of that date and
will, rise to approximately $20,113,000 during
the forthcoming fiscal year.
TAXES ON INCOME
Net income from operations reflects a charge
of $1,010,000 for taxes on reported income. In
determining actual tax liability, reported pre-
tax income is reduced by the difference be-
tween normal depreciation on fixed assets and
the higher depreciation accruals recognized
for tax purposes under the accelerated depre-
ciation and amortization provisions of the
Internal Revenue Code. Those higher depre-
ciation accruals resulted in a tax _
loss for the
1958 fiscal year, permitting recovery of an
appropriate portion of the taxes on income
paid in earlier periods. Those recoverable
taxes appear on the June 30, 1958 Balance
Sheet under ((Current Assets" as the item of
$1,665,000 captioned ((Estimated Federal In-
come Tax Refund."
PERSONNEL
by Length of Service
(AS OF JUNE 30)
OVER 20 YEARS ..... .
15 -20 YEARS .... . . . .
10 -15 YEARS . . ..... .
5-10 YEARS . .. .. .. .
1 - 5 YEARS ... . .. . .
LESS THAN 1 YEAR . . .
TOTAL ..... . ........
.I
1957 1956
67 50
233 171
1,137 960
1,199 1,148
1,923 1,723
1,283 1,242
5,842 5,294
4
Sources
Passenger and Excess
Baggage $81,601,417
92.26---+_.z ...:::::~~ ...
Mail $1 ,795,885
2.03
Freight and Express
$3,907,406
4.42
Other (Including Flight
Equipment Sale Profits)
$1 ,141,396
1.29
Total Dollar Revenue
$88,446,104
Twelve months ended June 30, 1958
1958 REVENUE DOLLAR
Distribution
Employees salaries and
related costs* $37,328,252
42.20
Depreciation and
Obsolescence of Property
and Equipment
$9,354,358
10.58
Gasolin; and Oil
$13,239,776
14.97
Materials and
outside repairs for
Maintenance of Equipment
$7,877,610
8.91---+-
Food and supplies for
Passengers $2,545,196
2.88----i----...1
Advertising $2,666,145
3.01--+--------
0ther operating costs
$10,879,054
12.30
Capital Costs
(Interest and Dividends)
$1,622,366
1.83
Taxes $2,879,983
3.26
Retained for use in
business $53,364
.06
Operating Revenues $88,172,695
Gross profit on
equipment sales 273,409
$88,446,104
*Salaries, travel, employee welfare, and payroll taxes
The current use of accelerated depreciation
and amortization provisions of the Internal
Revenue Code to develop a taxable income
less than reported income means that in a
future period taxable income will be greater
than reported income. Accordingly, a total
reserve of $6,671,400 was provided at June
30, 1958 for the future payment of taxes de-
ferred to date; this reserve was increased
$2,817,000 during the 1958 fiscal year.
EARNINGS AND DIVIDENDS
Totai earnings (including equipment sale pro-
fits) of $1,063,000 and $.95 for each share of
common stock outstanding marked the com-
pletion of the eleventh consecutive year of
profitable operations; losses have been re-
corded in only two years (1941 and 194 7) since
passage of the Civil Aeronautics Act under
which the Company has operated since 1938.
However, the 1958 per share earnings were
the lowest since 1948 and dollar earnings were
the lowest since 1950. A comparison of income
from operations (before taxes) for each of the
quarters in the 1957 and 1958 fiscal years
demonstrates the impact of the downward
pressures upon earnings, and the increase in
passenger fares, during the later year:
OPERATING INCOME
1957 1958
Quarter Ended Fiscal Year Fiscal Year
September 30 . . ........ .. . . $1,107,000
December 31. . . . . . . . . . . . . . . 808,000
March 31 . . . . . . . . . . . . . . . . . . 1,738,000
June 30. . . . . . . . . . . . . . . . . . . 2,432,000
$ 898,000
113,000
376,000
1,15~,ooo
Operating income for the year before de-
preciation charges was $11,896,000, only
slightly below the $12,814,000 for the 1957
fiscal year and the third highest in the Com-
pany's history. Cash earnings ( total earnings
after taxes on income plus depreciation) were
$10,418,000, equivalent to $9.28 per share of
common stock.
Three cash dividends of 30 on each share
of common stock were declared during the
year, payable on September 3, 1957, Decem-
ber 2, 1957, and March 3, 1958. No dividend
was declared in the June, 1958 quarter; in the
opinion of the Directors, the interests of the
stockholders were best served by limiting
dividends in the 1958 fiscal year to the 90 a
share and the resulting $1,010,000 in dividend
p~yments.
Cash dividends have been paid in each
year since 1949, aggregating $8.95 per share
and representing 30.96% of total earnings.
A cash dividend will not be paid in the
September, 1958 quarter, but your Company
is hopeful that earnings will soon justify its
reestablishing a dividend record that had
become outstanding in the industry.
FARE LEVELS
In August, 1957 the Civil Aeronautics Board
denied (one member dissenting) a 6% increase
in domestic passenger fares proposed by Delta
and several other carriers earlier in the year.
Concurrently the Board ordered that the in-
vestigation of passenger fares which it initiated
in May, 1956 be expedited and stated that it
would keep the matter under continuing sur-
veillance.
Taking note of the continued sharp decline
of indust_
ry earnings, the Board on January
24, 1958 approved an interim increase in
passenger fares of 4% plus $1 a ticket effective
February 10. It will remain in effect at least
until January 31, 1959. This fare adjustment,
coupled with a 1952 increase, has increased
airline fares about 9% since 1949. But in terms
of constant dollars-taking into account the
declining purchasing power of the dollar-the
real price of passenger fares has declined by
9% during the period.
In terms of average return per passenger
mile, growing aircoach volume and promo-
tional fares have depressed the industry pass-
enger-mile yield to the 1942 level-and actu-
ally to a much lower level if the shrinking
value of the dollar is considered.
Hearings in the General Passenger Fare
Investigation Case were concluded in July.,
1958, and a final decision in early 1959 is
possible. The staff of the Board participating
in these hearings now takes the position that
Golden Crown Network
Delta's deluxe Golden Crown DC-7
services == Interchange Flights
ST.
TO CARIBBEAN POINTS
the interim increase should be continued in
effect at least until June 30, 1960, although it
earlier opposed any increase in passenger fares.
The CAB staff finds that continuance of
this increase will make possible earnings by
Delta equivalent to an approximate annual re-
turn of 9.45 % on computed investment-which
it contends should be recognized a's a reason-
able earnings level for Delta. Your Company
believes that the dollar earnings, and the
margin between revenues and expenses, em-
bodied in the staff's position ( which includes
proposed adjustments to reported investments
and operating results of major significance) are
inadequate. Delta will continue to press vigor-
ously for establishment of higher levels by the
Board and the requisite fare adjustments.
NEW ROUTE AWARDS
Significant new route authority for your Com-
pany was indicated in announcements by the
Civil Aeronautics Board in March, 1958, that
decisions had been reached in several major
cases involving Delta. These included the
Great Lakes-Southeast Case, the portion.of the
New York-Florida Case reserved for later
decision (Delta's certification to serve Tampa/
St. Petersburg), the St. Louis-Southeast Case,
and the TWA Route Transfer Case.
The Board's announcement stated that
Delta will be authorized to serve seven new
cities on its north-south Route 54-Dayton
and Columbus, Ohio; Louisville, Kentucky;
Aircoach Network
Delta's "Flying Scot" day and night air-
coach services == Interchange Flights
Douglas DC-8. Jetliner,
of the type ordered by
Delta, on its initial
test flight.
6
and Orlando, Tampa/St. Petersburg, and
West Palm Beach, Florida. In addition, Delta
will receive authority to operate between
Memphis on the one hand and Birmingham
and Atlanta on the other, and will serve
Indianapolis in a north-south direction on
Route 54 as well as on Route 8 between
Houston and Detroit.
Those authorizations will permit direct
service between (among others) these cities:
Kansas City and Atlanta, Kansas City and
Florida cities
Detroit and Atlanta, Detroit and Cincinnati,
Detroit and Florida cities
Indianapolis and Chicago, Indianapolis and
Atlanta, Indianapolis and Florida cities
Delta's reported new operating authority,
substantially all subject to competition, will
give your Company access to traffic markets
which in 1956 represented 658 million revenue
passenger miles (approximately $36,000,000 in
passenger revenues) and 1,280,000 passengers.
It is not possible to forecast the extent to
which your Company will benefit from its
entry into the new markets, nor to estimate
the effects of the significant north-south com-
petition and east-west traffic diversion we
may face until the Board's final decision is
made official. In any event, operations by
Delta and the other carriers cannot begin
even on a limited basis before late 1958.
PENDING ROUTE PROCEEDINGS
Major route cases being currently processed
by the Civil Aeronautics Board in which Delta
has an interest are:
Chicago-Milwaukee-Twin Cities Case -In
this proceeding Delta seeks an extension of its
Route 54 from Chicago to Milwaukee and
Minneapolis/St. Paul. The Hearing Examiner
has recommended that this route be awarded
another carrier. Briefs in response to that re-
commendation have been filed with the Board
and oral argument is the only remaining pro-
cedural step before final Board decision, which
may or may not support the Examiner's re-
commendation.
Southern Transcontinental Service Case-
This proceeding was begun by the Board in
March, 1958 to determine whether there is a
need for single-carrier service between Hous-
ton and the West Coast and for single-carrier
transcontinental service between Florida and
California, in each instance via numerous
intermediate cities.
In July, 1958, the Board announced de-
ferral of that portion of the Dallas-to-the-West
Case involving new service between Dallas
and the West Coast for decision at the same
time this case is decided. The original scope of
the case has been expanded to include the
need for single-carrier service between Atlanta
and Birmingham and the West Coast, via
various intermediate points.
Delta has participated in direct connect-
ing service since 1929 and in through-plane
service between the South and California since
1949 and will be a primary contender for any
new operating authority that may be granted
in this proceeding. Final decision in the case
may be two years away.
PERSONNEL
Successful accomplishment of an airline's
basic objective-the movement of people and
property swiftly, safely and comfortably-
represents more than any other single thing
the culmination of the many skills and abili-
ties of its employees. Your Company feels that
the competence, courtesy and loyalty of the
6,058 men and women who comprise Delta
Air Lines are unsurpassed.
Stabilization of employment has further
raised experience levels. Employees with less
than one year's service constituted only 14.13%
of total employment on June 30, 1958, com-
pared to 21.96% a year earlier, while those
with more than five years of service repre-
sented 46.57% of the totals.
General wage and salary scales were in-
creased during the year, in keeping with in-
dustry trends. Delta employees continue to
receive substantial benefits such as liberal
allowances for free "space available" trans-
portation, group insurance providing life in-
surance for employees and extensive medical
and surgical coverage for both employees and
their families, and a comprehensive retirement
income plan.
EQUIPMENT AND FACILITIES
The nine remaining DC-7B aircraft on order
were received and placed in service during the
year; there are no outstanding commitments
for piston-engined aircraft. Modification and
conversion to CAA spec~fications of the five
C-46 all-cargo airplanes was completed, and
they were placed in service in the latter part
of 1957; their operating experience to date has
been quite satisfactory. Three DC-3 passenger
airplanes became surplus to our requirements
during the year and were sold, resulting in an
aircraft fleet at June 30, 1958 as follows:
Manufacturer Model
Douglas . .. . . .. DC-3
Douglas . . .. . .. DC-6
Douglas . .. .... DC-7 /DC-7B
Curtiss .. . ... . . C-46
Lockheed . .. .. L-049
Convair . ... . .. 340/ 440
*Includes two all-cargo planes.
Seating
Number Configuration
12* 25
7 76
21 69/90
5 Cargo
4 72
28 44
Your Company's first Douglas DC-8 jet-
liner is scheduled for delivery in June, 1959,
with five more to be delivered by October,
1959. It is expected that these delivery dates,
and the projected certification date of Octo-
ber 1, 1959, will be met or bettered. The two
DC-S's programmed for 1961 delivery are
being placed on an option basis, to be exer-
cised at a later date by Delta if appropriate.
Your Company also has an outstanding
commitment for ten Convair Model 880, 620-
mile-per-hour jetliners, for 1960 delivery, with
a scheduled CAA certification date of May
1, 1960.
The Convair Model 880, powered by the
General Electric CJ-805-3 engine (the com-
mercial equivalent of the model J-79 used
extensively in military aircraft), is specially
designed for intermediate flight distances and
normal runway lengths. Its operating charac-
teristics will enable Delta to bring the benefits
of 10-mile-a-minute jet transportation to a
large portion of the traffic we serve.
Delta's DC-8 aircraft will be powered by
Pratt and Whitney J-57 jet engines, specified
by many other purchasers of the DC-8 and
Boeing Model 707 jet transport.
FLIGHT EQUIPMENT
90
Both engines have run up impressive per-
formance records in military aircraft-the
J-57 (which by the end of 1959 will have been
flown some 7,000,000 hours) in such airplanes
as the B-52 and RB-66 jet bombers, F4D and
F-100 fighter-interceptors, and the J-79 in
the F-104, FllF and B-58.
Manufacturers of both engines initially
established a maximum cost for engine parts
usage expressed in dollars per engine flight
hour. This guaranteed "not to exceed" cost, the
first ever provided for such an important 7
SOURCES AND DISPOSITION OF FUNDS
Fiscal Years Ended June 30
(all amounts In thousands)
1958
FUNDS PROVIDED BY:
Net earnings, excluding equipment sales $ 932
Equipment sales proceeds, less taxes . . . . . . 158
Deferred income taxes, payable in later years 2,817
Depreciation accruals . . . . . . . . . . . . . .. . . . . . 9,873
Sale of common stock .. . .... . . . .... . .. . .
Borrowings under bank credit agreement . . . . 12,600
Miscellaneous, principally expenses not
requiring cash expenditures 16
FUNDS USED FOR:
Flight equipment purchases . . . . .. .. . . . . . . .
Advances for flight equipment on order (net) .
Ground facility and equipment additions .....
Debt reduction:
Redemption of 5% convertible debentures .
Repayment of bank borrowings . ....... . .
Cash dividends .... . . .. ... . . .. ... . .. . . .
All other purposes .......... . .. . .. . .. . .
$26,396
$20,452
3,404
1,298
1,010
161
$26,325
Net change In Wqrking Capital .. . . .. ......... +$ 71
Working capital at beginning of year . . . . . . . . . . . ~
Working Capital at end of year . . .. : . . . . . . . . . . . $ 5,752
11111
ACTUAL EARNINGS
ADJUSTED EARNINGS
5 YEAR TOTAL
--
ACTUAL DIVIDENDS
1957
$ 2,539
93
1,420
7,239
4,329
6,000
71
$21,691
$12,058
4,310
1,240
1,346
542
$19,496
+$ 2,195
3,4~6
$ 5,681
INCLUDING PROFITS FROM SALE OF EQUIPMENT
'54 '55 '58 '57 '58
EARNINGS AND DIVIDENDS PER SHARE
1956
$ 3,369
2,499
1,109
6,983
283
$14,243
$ 7,029
4,008
1,181
1,111
2,425
923
156
$16,833
-$ 2,590
6,076
$ 3,486
DOLLARS PER SHARE
STOCKHOLDER EQUITY PER SHARE*
*ADJUSTED TO REFLECT 25'tt STOC1< DIVIDEND PAID JUNE 29, 11156
32
30
28
26
24
22
20
18
16
14
12
10
8
6
element of operating expense, is most benefi-
cial. Particularly encouraging is the fact that
cost ceilings initially established have been
voluntarily lowered by both manufacturers
because of favorable military operating
experience.
Intensive planning for jet aircraft opera-
tions-begun months ago-is being pushed
forward by the airlines, the manufacturers,
airport operators and the Civil Aeronautics
Administration. This advance planning,
coupled with the experience gained by those
few airlines who will inaugurate jet service
earlier than Delta, will do much to minimize
your company's problems when it introduces
jet service next year.
Total expenditures of $1,298,000 were
made during the year for servicing and main-
. tenance tooling and equipment . and for the
additional groung facilities required by the
increase in the aircraft fleet and expanded
operations.
A new maintenance hangar adequate for
jet aircraft was recently completed for your
Company at Dallas and has been occupied
under a long-term lease. Arrangements are
being made for construction of all major facil-
ity requirements over the system on a similar
basis, thereby minimizing the amount of cor-
porate funds required for those purposes.
CAPITALIZATION AND FINANCING
The remaining $12,600,000 of the $30,000,000
credit available under the 1956' Bank Credit
Agreement was taken down during the year.
Total capitalization at June 30, 1958 con-
sisted of that $30,000,000 of bank debt (upon
which repayments will begin in 1961) and
stockholder equity of $34,020,000.
As shown by the tabulation above, the bor-
rowings of $12,600,000 were applied to . the
total expenditures of $25,154,000 made during
the year for flight equipment purchases and
advances and other property acquisitions.
For the three years ended June 30, 1958,
payments for flight equipment acquisitions
and net advances totalled $51,261,000, and
an additional investment of $3,719,000 was
made in ground equipment and facilities.
During this three-year period, debt increased
$15,064,000, equity capital was increased
$4,329,000 through the sale of 125,000 shares
of common stock in July, 1956, and the re-
maining $35,587,000 was obtained from
internally generated funds.
Delta's outstanding firm commitments for
six DC-8 and ten Convair 880 jet aircraft and
related spares and inventories will require
total payments estimated at $74,000,000.
Through June 30, 1958, $11,522,000 had been
deposited with manufacturers as advance
payments against these commitments.
Negotiations are being conducted with a
group of insurance companies for a $25,000,000
long-term credit, requiring no repayments
until 1968 and with minimum repayments of
$2,500,000 a year beginning in 1968. Funds
available from this credit, together with a
slight increase in borrowings under the pres-
ent Bank Credit Agreement, can reasonably
be expected to cover substantially the out-
standing purchase commitments.
THE FUTURE OUTLOOK
One of the most hopeful developments in re-
cent years is the apparent growing awareness
in the highest levels of government and in the
Congress of the importance of an economically
sound airline industry-and the need for co-
ordinated governmental policies to achieve
that objective.
An example of this trend is the letter to the
President from General E. R, Quesada, Special
Assistant to the President, released by the
White House on August 5, 1958, which accom-
panies this 1958 Annual Report . . This letter
and the report to which it refers have received
widespread attention. It could prove the be-
ginning of a change in the regulatory climate
in which the industry operates.
The air transportation industry has a
proud record of past achievements. How suc-
cessfully it meets the challenges of the future
will be determined to a large degree by the
policies of the Civil Aeronautics Board.
The Board has heavy responsibilities to
maintain the continued orderly growth of this
country's air transportation system, un-
matched in the world. In meeting these re-
sponsibilities, we believe the Board will permit
reasonable fares, geared to the costs of doing
business, and avoid the pitfall of burdening
the industry with destructive competition.
If. these things are done, the airlines can
face the jet era with confidence, sure of their
ability to discharge the industry's responsi-
bility to the nation's commerce, the postal
service and the national defense.
Your Company counts as its principal
resources an orderly, well balanced route
structure, the finest flight equipment and
experienced, devoted personnel. These re-
sources should enable Delta Air Lines to main-
tain its full participation in the industry's
service to the traveling and shipping public
in the years ahead.
PRESIDENT AND GENERAL MANAGER
September 10, 1958
Delta's General Offices
and principal maintenance
base buildings on
Atlanta Airport.
9
The Routes of Delta Air Lines
- I
A compact network linking more than 50 mid-American cities with the
New York-Washington "Main Street" and the Capitals of the Caribbean.
LEGEND
- Present Delta routes,
= Interchange (through plane)
routes with other airlines.
- New routes announced in CAB
Press Release - subject to
issuance of final decision.
NEW ROUTES AND
NEW WINGS
Delta's routes now serve the principal
cities in the eastern half of the nation,
linking the financial and industrial cen-
ters of the East and the Mid-West with
the rapidly growing new South.
When the new operating authority
becomes effective, seven new cities will
be added to the system and enable Delta
to offer direct services from additional
Mid-West points to the Florida area.
ABOVE:
Interior of new Jetliner
sets new standards in
aerial decor and comfort.
LEFT:
The first DC-8 Jetliner
is rolled out of the
Douglas factory,
ushering in a new era in
air transportation.
11
12
Delta Air Lines, Inc.
ATLANTA, GEORGIA
CURRENT ASSETS:
Cash . . . .. . ..... . . . ...... , . . .. . . . ....... . ... .. .. ... ... .
Accounts receivable-
Traffic (net) .. . ....... .. .. . . . ....... . ...... . ........ .
Other . .. ..... .. . ... . .. .. . . . ... ............. . .. .. ... .
Estimated Federal income tax refund . ... . ..... . .. . .... . .. .
Maintenance and operating supplies, at average cost . ...... .
Other current assets. . . . . . . . . . . . . . ...... . ... . ..... .
Total current assets . . . . ... . ... . . . ......... . .... .
OTHER ASSETS (Net assets of dusting division and
other investments) .. . .. .. .. .... .. .. . ............. . ..... .
PROPERTY AND EQUIPMENT (Including approximately
$13,000,000 fully depreciated in 1958 and 1957):
Cost-
Flight
Equipment
1958. . . . . . . . . . . . . . . . . . . . . . $83,951,218
1957 .. . . . . . . . . . . . . . . . . . . . . 63,704,714
Reserves for depreciation-
1958 .. . .. . . .. ... ..... . ... .
1957 . . .. . ....... .. . . .... . .
35,988,677
27,186,278
Other
Property and
Equipment
$10,000,870
8,825,114
4,815,370
4,101,362
Advance payments for new flight equipment ... . . . ...... .
DEFERRED CHARGES, ETC.:
Advances for leased facilities, being amortized .. : . .... . .. .. .
Other deferred charges .. . . . ....... .. ... .. .... . .. . ... . .. .
1958
$ 7,278,455
5,037,270
2,281,505
1,665,000
823,736
298,375
$17,384,341
$ 410,497
$93,952,088
40,804,047
$53,148,041
11,721,900
$64,869,941
$ 124,712
82,557
$ 207,269
$82,872,048
1957
$ 8,547,757
5,200,170
2,151,066
649,446
224,741
$16,773,180
$ 347,123
$72,529,828
31,287,640
$41,242,188
8,318,362
$49,560,550
$ 129,332
120,842
$ 250,174
$66,931,027
LIABILITIES
AND
STOCKHOLDER EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities ... .. . .... . .. . . .. . .
Advance sales of tickets for transportation . .. .. ...... .. ... .
Accrued Federal and state taxes on income .. . .. . .. . . .. . . . . .
Air travel plan deposits .... . ... . ......... . . . ..... .. . ... . .
Total current liabilities . ... .. ... .. . .. . .... . . . ... .
NOTES PAYABLE TO BANKS, bearinginterestatnotlessthan
3% nor more than 4%, due in installments from 1961 through
1965 . . ,.. . ...... .. . ... ...... . .. . ..... ....... ...... .
RESERVES AND DEFERRED CREDITS:
Deferred Federal income taxes . .. .. . . . .. ..... ... . . . . ... . . .
Reserve for contingencies (Note 2) . .. . . . .. . .. . . .... . .... . .
Other .......... . .... . . .. . .. .. . . . . . . .... ... .. . . . . .. .. . .
STOCKHOLDER EQUITY:
Common stock, par value $3.00 per share-
Authorized 1,500,000 shares
Issued and outstanding 1,122,045 shares at June 30, 1958,
and 1,121,944 shares at June 30, 1957 . . . .......... . .. .
Capital surplus . . . . . . . . ..... . ...... . . .. . . . .. . . . ..... ... .
Retained earnings (of which $10,672,155 is not presently avail-
able for cash dividends under terms of credit agreement) . ..
PURCHASE COMMITMENTS (Note 1)
The accompanying notes are an integral part of these statements.
Balance Sheets
JUNE 30,1958 & 1957
1958
$ 7,420,630
3,140,523
1,071,425
$11,632,578
$30,000,000
$ 6,671,400
500,000
48,352
$ 7,219,752
$ 3,366,135
15,961,710
14,691,873
$34,019,718
$82,872,048
1957
. $ 5,653,107
2,655,479
1,838,870
944,775
$11,092,231
$17,400,000
$ 3,854,400
500,000
118,631
$ 4,473,031
$ 3,365,832
15,961,424
14,638,509
$33,965,765
$66,931,027
13
14
Statements of Income
F O R T H E Y E A R S E N D E D J U N E 3 0, 1 9 5 8 A N D 1 9 5 7
OPERATING REVENUES:
Passenger . ... ... . . .. .. . .. . . ... ..... .. . ... . . .... . .. . .. . .
U.S. Mail . . . ... ...... . .. ... .. .. . . . . . .... .... .. .. .... . .
Freight . . . .... .. ... . ..... . . .... ....... ... . . .. . . . ... . .. .
Express .. . . . . . ... . . ... . .. . ... ......... .. ..... ... . . . ... .
Excess baggage .. ..... ...... . ...... . .. .. . . . . ... .... . .. . .
Other operating revenue-net ..... ... . . . . . . . ... . . . ...... .
Total operating revenue ... . .... . ... . .. .... .. .. . .
OPERATING EXPENSES:.
Flying operations ... ... . . ..... ... .... .. .......... . .. ... .
Maintenance . .. .. .. . . . .. .... . . . . ... ... . .. .. . . .. .. . .... .
Aircraft and traffic servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Promotion and sales . ..... ... .. .. ... . . . .. .. .. . . ........ .
Passenger service .. . ... . .... .. ... . .. ... . . . .... . . . ... .. . .
General and administrative .... . . . . ... . ... . .. ,_ ... .. ... .. .
Operating expenses before
depreciation and amortization . ....... . . .... . , . .
Depreciation and amortization-
Flight equipment owned . . ..... .... . . .. ...... .... . . . . . .
Less-Net depreciation credits arising from equipment
interchange and lease agreements . . . ..... . .... . .. .. .
Ground property and equipment ... . ... .... . .. .. . ... ... .
Depreciation and amortization . ... . . .. . . . ....... .
Total operating expenses . .... . .. . ..... .. .. . . . ... .
Income .from operations before income taxes ....... .
OTHER EXPENSE (INCOME):
Interest expense-net (Note 1) . ..... .. . .. . . .......... . .. .
Other-net . . . . . . . . . . ... . ... .. .. . . . .. .... . .. .. . . ....... .
Total other expenses .. . . ... .... . .. . . . . ... . ... . . .
Income before income taxes ... . ... . . . . ..... .... . .
PROVISION FOR TAXES ON INCOME:
Current Federal and state income taxes . ...... . .. . . .... .. .
Deferred Federal income taxes (Note 1) . . .. . . ... ... . ..... .
Estimated Federal income tax refund arising from 1958 tax
loss carry back .... .. .... .. .... .. . .. . . .. . . . ... . .. .. . .. .
Net income .. ... . ... ... ...... . .. ........ ...... .
SPECIAL ITEM-Profit on disposition of flight equipment,
less applicable income taxes of $142,000 in 1958 and $32,000
in 1957 .... . . . .. . . .. ... .... .. ...... . .. . . .. . ..... ... . .. .
Net income and special item ..... . .... . . . .. . ... . .
1958
$80,217,086
1,795,885
2,954,896
952,510
1,384,331
867,987
$88,172,695
$26,269,023
18,468,191
13,255,327
10,210,394
5,597,201
2,476,590
$76,276,726
$ 9,133,832
(538,499)
759,025
$ 9,354,358
$85,631,084
$ 2,541,611
$ 612,575
(12,710)
$ 599,865
$ 1,941,746
$
2,817,000
(1,807,000)
$ 1,010,000
$ 931,746
131,409
$ 1,063,155
1957
$71,873,125
1,636,218
2,230,512
1,015,947
1,211,428
628,773
$78,596,003
$22,320,217
16,097,824
11,317,159
8,947,958
4,807,688
2,291,213
$65,782,059
$ 6,650,293
(560,620)
639,202
$ 6,728,875
$72,510,934
$ 6,085,069
$ 567,534
(11,111)
$ 556,423
$ 5,528,646
$ 1,569,600
1,420,400
$ 2,990,000
$ 2,538,646
82,939
$ 2,621,585
The accompanying notes are an integral part of these statements.
Statements of Capital Surplus and Retained Earnings
FOR THE YEAR ENDED JUNE 30, 1958
Retained
Capital
Surplus Earnings
$14,638,509
Balance at beginning of year .. . . . ........ .. ............ .. . .
$15,961,424
931,746
Add:
Net income ...... .. . . .. ... . . . . .... . .. . . .. . . .. . ... . .... .
Special item-Profit on disposition of flight equipment, less 131,409
$142,000 applicable income taxes ... . . . . . ....... . . . .. . . .
Excess of proceeds over par value of 101 shares of common
stock issued during year in exchange for scrip .. . . . ..... . .
286
$15,961,710 $15,701,664
1,009,791
Deduct:
Cash dividends on common stock-$.90 per share .......... .
Balance at end of year ($10,672,155 of retained earnings is
restricted as indicated on balance sheet) . . .... .. ......... . .
$i5,961,710 $14,691,873
The accompanying notes are an integral part of these statements.
Auditors' Certificate
ARTHUR ANDERSEN & C
ACCOUNTANTS AND AUDITORS 0.
To the Board of Directors
Delta Air Lines, Inc. : ,
THE WILLIAM-OLIVER BUILDING
ATLANTA 3
We have examined the balance
co . sheet of Delta Air L.
rporation) as of June 30 1958 mes, Inc. ( a Louisiana
capital surplus and retain:d ea . and f the related statements of income
ation was made in accordance r~thmgs or the year then ended. Our ex;min-
a din wi generally ac t d
cc?~ gly included such tests of the . cep e auditing standards, and
auditing procedures as we consid d accounting records and such other
made . 1 ere necessary in th .
a simi ar _
examination for th e circumstances. We had
In ou . . e year ended June 30, 1957
r opinion, the accompan in . b
capital surplus and retained ear!in g alance she_
et and statements of income
o_f Delta Air Lines, Inc. as of Jun: 3resent fa,rly the financial position
tions for the year then ended d , 1958, and the results of its opera-
ally accepted accounting prin~ip~s
:e\:
:repared i~ conformity with gener-
a the preceding year. pp e on a basis consistent with that
Atlanta, Georgia,
August 12, 1958
ARTHUR ANDERSEN & CO.
16
Notes to Financial Statements JUNE 30, 1958
0
FLEET
EXPANSION
PROGRAM:
e
CONTINGENT
LIABILITIES:
The Company has outstanding commitments for the purchase of flight equipment listed below,
which, together with related spare parts and accessories, will require the outlay of approxi-
mately $62,278,100. Two Douglas DC-8 aircraft formerly scheduled for 1961 delivery are being
placed on an option which may be exercised at a later date. Present commitments are:
Number and
Type of Aircraft
6 Douglas DC-8 (jet) .. . .. .... . . . . ...... . . . . .. . . .
10 Convair Model 880 (jet) . . . . . . . . . . . . . . . . . . ... .. .
Advance payments on above flight equipment .. ... .. .
Approximate
Cost
$34,000,000
40,000,000
$74,000,000
11,721,900
$62,278,100
Date of
Delivery
1959
1960
In connection with its program of acquiring jet aircraft, the Company has incurred sub-
stantial interest charges on funds borrowed for deposit with manufacturers of flight equipment.
In 1958 the Company adopted the policy of capitalizing in the cost of its jet flight equipment
the interest on these advance payments from borrowed funds. Capitalization of this interest
will continue until the flight equipment is placed in service, after which the amounts will be
amortized through depreciation charges. Had interest not been capitalized, net income in 1958,
after the provision for related deferred Federal income taxes of $205,000, would have been
approximately $200,000 lower.
Negotiations are being conducted with a group of insurance companies for a $25,000,000
long-term loan requiring minimum annual repayments of $2,500,000 beginning in 1968.
The Supreme Court of the United States by decision dated February 1, 1954, sustained the
Post Office Department's objection .to a Chicago and Southern Air Lines, Inc. (C&S) inter-
national mail rate order issued by the Civil Aeronautics Board (CAB) in October, 1951 (the
so-called "offset" case). The Supreme Court decision requires the CAB to review its original
order and redetermine the mail pay requirements for the C&S international operations for the
period involved in accordance with the principles therein established. By order dated Septem-
ber 6, 1956, the CAB ordered that the record in this matter be reopened for further hearing on
the question of the proper rate level of the international operations of C&S for the period
December 16, 1950, through July 31, 1952. The Company believes that the reopening is in-
correct, and the amount of mail pay refund, if any, that Delta may be required to pay as
successor of C&S cannot now be determined.
The Company has provided a $500,000 reserve in connection with the f~regoing contingent
liability and with proposed deficiencies in income taxes of C&S prior to its merger into Delta.
Delta's Story to the Public
Two of Delta's
newspaper ads,
featuring Delta's
friendly service and
the radar-smooth
"Velvet Ride."
Die.I Delta for G.W.. Crew OC7's-tl,e ,_,
rewarding HptfOltl<t la air travel
r !t::i~ l
I
~JC!L !
!!~JAS --
~"-.A~OT'!(,_ I
~~~;
-----
DllTI AIR llNES
:::._-:._ c,D
I
~ .
..41,.. I
I
......... I
,.,,
L
I
-~
I f
I
~ i
,,.~
-l'tll/llfll""
-
ML
'49 '50 '51 '52 '53 '54 '55 '56 '57 '58
REVENUE PASSENGER MILES
One of a series of three full-page ads
appearing in Northern cities served by
Delta, reporting on the high activity level
of Southern commerce and industry.
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
LIONS
REVENUE PASSENGERS CARRIED
- - - - - - -..... - - ; - - . . - - - - - , . - - - - 320
l----+----+---+---11----+----t---+- - +-- 300
- --+-- --t---+--+-- -+---+-- ---t--+---, 280
- -- -- - - -~-- 260
ll--- -+----t---+--t-----t><---+-- ---t- ---+---f"24Q
REVENUE TON MI LES -+------+- -......,..,__--+-- ---- 220
(CAPACITY USED IN MILLIONS)
200
'.fl
1---- +----+.....--.--+--f--- ,.E:--+----+- -+-- -i 160
1411
!20
l--+----+--+->,--1#--+--::.---='---+- -+----,---i 100
'49 '50 '51 '52 '53 '55 '56
TON MILES AND PLANE MILES
'57 '58
80
80
40
20'
Years ended June 30 1958
Total assets ....... . .... . ........... . . . ... $82,872,048
Current assets .... ..... ... ................ 17,384,341
Current liabilities . . . . .. . ... .. . . .. . .. ... . .. 11,632,578
Net working capital . . . ... ... .. .. $ 5,751,763
Stockholder equity .. ....... _ . .. .. . . .. ..... $34,019,718
Stockholder equity per share* . ... . ... .. ..... $30.32
Shares of common stock outstanding* . . . . . ... 1,122,045
Operating revenues
Passenger ..... . . . .... . ... . .... . .. . ... .. $80,217,086
Mail . . .. . ........ .... .. ..... . . .. .. . .. . . 1,795,885
Express ... ..... . . . ..... ... .... . . .. .. .. . 952,510
Freight ... .. .. . .... . .. . . . . . ......... . . . 2,954,896
All other .. . .... . ................ . ... . . . 2,252,318
Total revenues .... .... . . .... . . . . $88,172,695
Operating expenses (excluding depreciation) ... $76,276,726
Depreciation ........ .. ... .. ...... . . . . . .... 9,354,358
Total expenses .... . ... . . . ....... $85,631,084
Operating ratio ....... . ... . ........ .. .. . . 97.12%
Net non-operating revenue or (expense) ..... . $ (599,865)
Net income before taxes . . . .... . . . .. . .... . .. $ 1,941,746
T .
axes on income .... . . .. .... . . . . . .. .... ... 1,010,000
Net income .. . ......... ......... $ 931,746
Net income as % of revenues ... . 1.06%
Special item-profits from major flight
equipment sales (after taxes) ...... . ....... $ 131,409
Total income and special item ............ . . $ 1,063,155
Per share of stock outstanding* ... . . ...... $.95
Revenue plane miles (000) ..... . . . .......... 44,972
Available seat miles (000) ..... .. . . . . . ... . .. 2,479,428
Revenue passenger miles (000) .. ......... .. . 1,408,857
Passenger load factor ... . . .... .. .. . .. .... 56.82%
Available ton miles (000) . . . . .............. . 301,i05
Revenue ton miles (000) ... . .. ... ... . .. . ... 156,332
Overall load factor . . . . . . . . . ........ . . .. . 51.92%
18 Percent of scheduled miles flown ............ 97.40%
* Adjusted to reflect 25 % stnck dividend paid June 29, 1956.
In the fall of 1948,
Delta's modern post-war
fleet began with the
delivery of the first DC-6,
christened "The Flying D"
by Movie Star Linda Darnell.
President Woolman,
Vice-President of Operations
Dolson and Donald Douglas, Jr.
look on.
Ten years later,
in the spring of 1958,
the first Douglas
DC-8 Jetliner is
rolled out of its hangar
and stewardesses
representing all the airlines
which have ordered
this model
grace the loading steps.
A DECADE OF GROWTH
1957 1956 1955 1954 1953 1952
$66,931,027 $54,638,388 $54,049,882 $48,089,997 $37,966,469 $16,836,905
16,773,180 15,140,819 18,762,696 15,888,546 14,706,498 7,186,793
11,092,231 11,654,690 12,686,444 8,861,111 9,192,041 6,618,627
$ 5',680,949 $ 3,486,129 $ 6,076,252 $ 7,027,435 $ 5,514,457 $ 568,166
$33,965,765 $28,357,864 $19,845,898 $16,233,227 $15,647,278 $ 9,808,493
$30.27 $28.47 $23.99 $21.64 $20.86 $15.69
1,121,944 996,219 827,391 750,000 750,000 625,000
$71,873,125 $60,557,924 $53,966,525 $45,144,949 $28,946,479 $23,995,938
1,636,218 1,468,247 1,462,684 1,723,703 1,131,578 1,035,599
1,015,947 1,045,567 917,609 844,483 550,305 431,240
2,230,512 2,020,061 1,844,168 1,766,266 1,044,338 827,927
1,840,201 1,712,827 996,975 854,481 665,102 727,417
$78,596,003 $66,804,626 $59,187,961 $50,333,882 $32,337,802 $27,018,121
$65,782,059 $53,168,806 $47,047,051 $43,021~
159 $26,641,944 $21,155,513
6,728,875 5,661,358 6,444,981 5,275,152 2,259,784 1,485,556
$72,510,934 $58,830,164 $53,492,032 $48,296,311 $28,901,728 $22,641,069
92.26% 88.06% 90.38% 95.95% 89.37% 83.80%
$ (556,423) $ (536,266) $ (1,376,754) $ (1,359,987) $ (1,345,957) $ 12,398
$ 5,528,646 $ 7,438,196 $ 4,319,175 $ 677,584 $ 2,090,117 $ 4,389,450
2,990,000 4,069,000 2,412,000 394,000 688,000 2,739,000
$ 2,538,646 $ 3,369,196 $ 1,907,175 $ 283,584 $ 1,402,117 $ 1,650,450
3.23% 5.04% 3.22% .56% 4.34% 6.11 %
$ 82,939 $ 1,308,770 $ 258,850 $ 1,022,365 $ 2,756,561 $
$ 2,621,585 $ 4,677,966 $ 2,166,025 $ 1,305,949 $ 4,158,678 $ 1,650,450
$2.34 $4.70 $2.62 $1.74 $5.54 $2.64
41,671 33,962 31,579 31,916 20,672 17,531
2,206,408 1,726,941 1,517,891 1,344,069 776,157 653,121
1,299,482 1,080,267 952,426 769,653 507,713 427,534
58.90% 62.55% 62.75% 57.26% 65.41 % 65.46%
260,431 207,416 182,997 162,345 94,045 80,089
141,861 118,544 104,927 87,251 57,565 48,093
54.47% 57.15% 57.34% 53.74 % 61.21 % 60.05%
97.62% 98.39% 98.79% 98.29 % 98.83% 98.98%
1951 1950 1949
$14,402,050 $12,371,851 $12,629,268
6,093,494 4,262,201 4,379,289
4,541,282 2,950,443 2,751,859
$ 1,552,212 $ 1,311,758 $ 1,627,430
$ 8,658,043 $ 7,401,245 $ 6,710,494
$13.85 $11.84 $10.74
625,000 625,000 625,000
$19,006,936 $13,761,453 $11,987,246
1,306,752 2,373,213 2,434,888
374,480 238,441 244,859
720,719 478,537 358,503
812,112 333,651 202,349
$22,220,999 $17,185,295 $15,227,845
$17,499,480 $14,568,386 $13,096,091
1,389,721 1,206,755 1,185,865
$18,889,201 $15,775,141 $14,281,956
85.01 % 91.79% 93.79%
$ (75,000) $ (5,403) $ (52,603)
$ 3,256,798 $ 1,404,751 $ 893,286
1,625,000 589,000 336,000
$ 1,631,798 $ 815,751 $ 557,286
7.34 % 4.75% 3.66%
$ $ $ 82,154
$ 1,631,798 $ 815,751 $ 639,440
$2.61 $1.31 $1.02
15,698 13,804 12,921
541,038 437,209 361,199
345,246 238,335 201,711
63.81 % 54.51 % 55.84 %
71,987 59,532 49,544
40,480 27,259 22,805
56.23 % 45.79% 46.03%
98.91 % 97.90 % 97.69 %
These data reflect operations of Delta Air Lines, Inc., and do not include the C&S system prior to May 1, 1953.
~
19
20
Delta Ticket Offices
TICKET OFFICES
RESERVATIONS
TELEPHONE
ALEXANDRIA Bentley Hotel . . . . . . . . . . . . . . 44 71
AsHEVILLE Battery Park Hotel. ........ . . ALpine 2-7601
ATLANTA Fulton National Bank Bldg.
Piedmont and Biltmore Hotels ......... JAckson 4-3242
AUGUSTA Richmond Hotel . . . . . . . . . . . . . . . PArk 2-8811
BALTIMORE Lord Baltimore Hotel. . . . . . . . . SOuthfield 6-2100
BATON RouGE Capitol House Hotel. . . . . . . ELgin 5-4491
BEAUMONT Jefferson County Airport. . . . . . RAndolph 2-34 71
BIRMINGHAM 2002 Fifth Ave., N .. ........ LYric 2-9601
BRUNSWICK Malcolm-McKinnon Airport . . .. MEirose 8-2531
CARACAS, VENEZ. Edificio Paris
Plaza Candelaria. . . . . . . . . . . . . . . . . . . . . 55-8488
CHARLESTON Francis Marion Hotel . . . . . . . SHerwood 4-2567
CHARLOTTE Selwyn Hotel. . . . . . . . . . . . . . . . EX press 9-0481
CHATTANOOGA Hotel Patten. . . . . . . . . . . . . . MAdison 2-8336
CHICAGO 67 East Monroe,
Conrad Hilton Hotel,
1649 Orrington, Evanston, Illinois. . . . . . Financial 6-5300
CINCINNATI Sheraton-Gibson Hotel and
Netherland Hilton. . . . . . . . . . . . . . . . . . . DUnbar 1-3232
CIUDAD TRUJILLO Arz. Nouel esq. Sanchez . 5350
COLUMBIA Hotel Wade Hampton . .. . ... . . ALpine 4-3186
COLUMBUS, GA. Ralston Hotel. . .......... FAirfax 7-7458
DALLAS 212 S. Akard St. (Baker Hotel) .. . Riverside 1-9401
DETROIT 1235 Washington Blvd. and
Lobby, General Motors Bldg. . . . . . . . . WOodward 5-3000
EVANSVILLE Mccurdy Hotel . . . . . . . . . . . . . HArrison 5-9023
FORT LAUDERDALE 10 S. Federal Hwy . . . .. JAckson 4-5595
FORT WAYNE Baer Field Airport ...... . . .. H-3352
FORT WORTH Hotel Texas . . . . . . . . . . . . . . . EDison 5-5425
GREENVILLE Municipal Airport . . . ... ..... CEdar 2-8213
HATTIESBURG Municipal Airport . .. ....... JUniper 2-1643
HAVANA, CUBA Prado 301 . .. ........ .. .. 6-8224
HENDERSONVILLE Hendersonville Airport ..
HoT SPRINGS Memorial Airport .... .... . . .
HousTON Rice Hotel ...... . .. . ...... . .. .
INDIANAPOLIS Claypool Hotel . .. . .. . .. .. .
JACKSON Heidelberg Hotel . .. . . .. . ..... . .
JACKSONVILLE 226 W est Forsyth St . ..... .
KANSAS CITY Muehlebach Hotel. . . . .. . . . .
KNOXVILLE Farragut Hotel .. . ... ..... .. .
LEXINGTON Blue Grass Airport ...... .
LITTLE RocK Marion Hotel ... . .... . .... .
MACON Hotel D empsey ... .. .. ... ....... .
MEMPHIS Peabody Hotel ... . . . ......... .
MERIDIAN Key Field . . ...... .. ..... .
OXford 3-7211
NAtional 3-1671
CApitol 5-1361
MEirose 7-1554
2-0861
ELgin 3-3171
GRand 1-7733
7-6611
4-5569
FRanklin 5-9111
3-6731
WHitehall 8-2641
2-3141
TICKET OFFICES
RESERVATIONS
TELEPHONE
MIAMI 300 N. E. First (Columbus Hotel) . . FRanklin 3-0441
MIAMI BEACH 1636 Collins Avenue ...... . FRanklin 3-0441
MONROE Frances Hotel. . . . . . . . . . . . . . F Airfax 3-5116
MONTEGO BAY, JAMAICA
Montego Bay Airport . . . . . . . . . . . 2811
MONTGOMERY Jefferson Davis Hotel . . . . . . AMherst 4-7313
NEW ORLEANS 708 Common St. (St.
Charles Hotel) and Roosevelt Hotel . . . . TUiane 8592
NEW YORK Rockefeller Center,
5 West 49th St .. . .. . . ..... . .. .... .. .
Airlines Building, 80 East 42nd St .. .. .
100 Broadway . .... . . .. ... . . .
Lobby, Statler Hotel, 7th Ave.
and 33rd St ... . . ... . .... .. . . ... . .. .
East Side Terminal, First Ave., PLaza 1-6600
37-38 Sts . . . ... .. ........ . ........ . .
West Side Terminal, 42nd St. and
10th Ave .. . .. . . . ............... . . . .
200 Livingston Street, Brooklyn . . . .. .
35 Mamaroneck Ave., White Plains . . .
635 Madison Avenue 15th Floor . .... .
NEW ARK 13 Commerce Street ....... .. . . .
PADUCAH Barkley Field . . .. . ...... . . . . .. .
PHILADELPHIA Bellevue-Stratford Hotel . . .
PORT ARTHUR Jefferson County Airport . . .
PORT-Au-PRINCE, HAITI c/o Nadal and Co.
SAN JUAN, PUERTO RICO Caribe Hilton . . . .
SAVANNAH Manger Hotel .... ..... .. ... . .
SELMA Selfield Airport ... . .. . . . ..... .. .. .
SHREVEPORT Captain Shreve Hotel ... . .. . .
SPARTANBURG Memorial Airport .. .. ... . . .
SPRINGFIELD Municipal Airport ..... . . . .. .
ST. Lams Statler Hotel. .. . . ......... . . .
MI tchell 2-2228
3-1732
SAratoga 7-9900
YUkon 2-4321
3313
9-0045
ADams 3-0267
TRinity 4-7581
5-3232
7131
UNiversity 4-7353
GArfield 1-5511
TOLEDO Commodore Perry Arcade .. . ..... UNiversity 5-2366
WASHINGTON 1605 K St., N. W., and
Washington Hotel. .... ............... District 7-9600
DELTA'S
"SPECTACULAR"
SIGNS
TOP: An impressive
1958 addition to
the electric sky-
line of Havana's
Malecon Drive.
LEFT: A 100-foot
"spectacular" faces
city-bound traffic
on Atlanta's
new Expressway.
RIGHT: One of the
few "spectaculars"
on Chicago's
Michigan Boulevard,
as it shows from
the Tribune Plaza
and Wrigley Tower.
DIRECTORS
OFFICERS
TRANSFER
AGENTS
REGISTRARS
COMMON STOCK
AUDITORS
ANNUAL MEETING
Tonn G. COLE
Atlanta, Georgia
R. W. COURTS
Atlanta, Georgia
C.H. DOLSON
Atlanta, Georgia
EDWARD H. GERRY
New York, New York
C.H. DOLSON
Vice President-Operations
R. W. FREEMAN, CHAIRMAN
New Orleans, Louisiana
JOHN R. LONGMIRE
St. Louis, Missouri
R. s. MAURER
Atlanta, Georgia
C. H. McHENRY
Monroe, Louisiana
WINSHIP NUNNALLY
Atlanta, Georgia
LAIGH C. PARKER
Atlanta, Georgia
C. E. WOOLMAN
President and General Manager
LAIGH C. PARKER
Vice President-Traffic
and Sales
w. T. BEEBE ERLE COCKE, JR.
Vice President-Personnel Vice President-Civic Affairs
R. H. WHARTON C. H. McHENRY
Asst. Vice President-Personnel Secretary-Treasurer
CATHERINE FITZGERALD J. R. HOWELL
Assistant Treasurer Assistant Treasurer
The Citizens and Southern National Bank, Atlanta, Georgia
CARLETON PUTNAM
Washington, D. C.
R. J. REYNOLDS
Winston-Salem, N. C.
J. WoonALLRonGERS
Dallas, Texas
C. E. WOOLMAN
Atlanta, Georgia
Tonn G. COLE
Vice President-Admin-
istration and Finance and
Assistant Secretary
R. s. MAURER
Vice President-Legal
T. M. MILLER
Asst. Vice President-
Traffic and Sales
HUGH H. SAXON
Assistant Treasurer
I .
The First National City Bank of New York, New York, New York
Trust Company of Georgia, Atlanta, Georgia
J.P. Morgan & Co., Incorporated, New York, New York
Listed on the New York Stock Exchange
Arthur Andersen & Co.
October 21, 1958, Monroe, Louisiana
,.,,.. S.ual
' DAT AND PLACE OF ORIGIN"'L ISSUE
ACCI DEPl USE ONLY
GENERAL OFFICES ATLANTA AIRPORT ATLANTA , GEORGIA
Receipt AIR EXPRESS
LLECT
EGOTIABLE
----~ '-- >
'Y/JIYJSS
r EXPRESS AGENCY, INC.
(
AES 17)
S-56
Printed in U.S.A.
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Reprinted by Delta Air Lin e s , Inc. for the 1958 Annual Report to Stockholders
The President
The White House
Washington, D. C.
Dear Mr. President:
THE WHITE HOUSE
WASHINGTON
July 28, 195 8
I have the honor to transmit a report concerning the status and
economic significance of the current i~vestment program of our major
air carriers. The report was prepared at rny request by Dr. Paul W.
Cherington, Professor of Business Administration, Graduate School
of Business Administration, Harvard University, who is a nationally
recognized authority in the field of transportation. The report is
designed to set forth an objective analysis of the impact of the airline
investment program on the over-all national economy.
The report does not recommend any program of financial assist-
ance to the carriers. It does point out, however, certain steps which
might well be taken by various Government agencies, within the frame-
work of existing authority, to facilitate the success of the equipment
program. This program represents a major transition of our domestic
trunklines and international carriers from piston to jet aircraft.
Relative to the national economy, this program is significant.
It calls for a gross investment by the airlines of approximately $4
billion and a net investment of $2. 6 billion by 1962 in aircraft and
airline-owned facilities. This substantial investment of private capital
is a dynamic element of our national economy which should not be
permitted to falter.
The report purposefully avoids considering the implications of a
modern air transportation system as related to our military posture,
international prestige and improved public service. In confin~ng itself
to the status and economic significance of this private investment
program, the report concludes:
1. That the equipment program is not unreasonably large or
unnecessarily accelerated, provided the carriers vigorously
develop new travel markets.
2. That several of the carriers have not completed the necessary
financing arrangements to buy needed equipment. Of $1.4
billion which the carriers must raise from private sources,
arrangements for $650 million are still to be made.
3. That inability of the carriers to succeed in financing any major
portion of the equipment program will pose serious problems:
(1) to the airlines and the preservation of a sound competitive
domestic and international air route system;
(2) to the aircraft and engine manufacturers and their
5, 000 vendors who have invested heavily in the jet
transport program;
(3) to the national economy
(a) through loss of some portion of the 120, 000 jobs
estimated to be directly involved in the program
at its peak. In addition, there is a potential loss
of indirect employment estimated to be at least a
multiple of the direct;
(b) through the loss of economic stimulus which this large
private investment program would provide;
( 4) to the Government
(a) through a possible return of some airlines to subsidy;
(b) through pressure on Government. (on the military and
to be resisted) to purchase jet transports not delivered
to airlines and thereby recover development costs.
The report also points out that, if the carriers are to have an
opportunity to finance their equipment program at reasonable cost,
the industry must be able to show private lenders and investors a
favorable level of earnings. From 1950-1956, airline earnings were
relatively good. In 1957, earnings were depressed and in 1958 to
date have been still lower. These reduced earnings (losses for
certain of the carriers) unfortunately occur at the most crucial stage
of the financing for the equipment program. The only apparent way
in which a reasonable earnings level can be achieved in time to attract
adequate financing appears to be:
1. Through elimination or reduction of certain fare discounts
now in effect.
2. Through increased promotion and reduced fares of air travel
during off-peak periods.
3. Through increased fares for certain classes of air service.
4. Through continued aggressive action on the part of
management to improve their operating efficiency.
The report suggests that, while the initiative for developing
specific fare changes should be left to the carriers, the Civil
Aeronautics Board must examine the carriers proposals promptly,
with full realization of the broad implications of the present equipment
program. In this connection, the report points out that, since 1949,
the carriers have had two small fare increases, the most recent
one being in February 1958. Despite these increases, the real cost
of domestic air travel (adjusted for changes in the value of the dollar)
has declined by 9 percent. A pending CAB proceeding relating to
domestic passenger fare levels is not due for decision until March
1959. By that time, the success or failure of major segments of
the equipment program may well have been determined.
Although the report does not recommend any broad program
of financial assistance to the carri~rs by the Government, it does
set forth various measures that, if taken by the appropriate agencies
of the Government within their existing authorities, would further
the equipment program. The thrust of Dr. Cherington1s analysis
is to the effect that the carriers, at this time, should be given
reasonable latitude to work out their own solution to the problem
of equipment financing. With this conclusion I agree.
The report discusses the question of the proper size and
composition of MA TS and the allocation of MA TS traffic between
military-operated aircraft and those of commercial airlines.
Your recent discussions with the Secretary of Defense called
for an analysis and review of the military role performed by MATS
in peace and war, and a report as soon as practicable.
The report also suggests a review of those Government policies
affecting the disposition by the airlines of piston aircraft which will
be replaced by jet and turbo-prop aircraft. As Chairman of the Air
Coordinating Committee, I have initiated this review.
I recommend that this report be transmitted to the Congress
as information to the appropriate committees and also to the
appropriate agencies of the Government, for their information and
such action as they may deem appropriate within the framework of
existing authority. As the airline equipment program appears to
possess relatively wide public interest, I also recommend that the
report be made public.
Respectfully,
t!tf! ~a-d.L-
E. R. Quesada
Special Ass,istant to the President