Special Commemorative Edition Hughes Air Corp. April, 1975 The Sundance Airline Half A Decade Later . . . A CORPORATE PROFILE The following is an overview of where Hughes Airwest stands in the world today and the milestones the airline has attained in the five years under Hughes management. Geographic Scope Hughes Airwest flies to eight states (Arizona, California, Idaho, Montana, Nevada, Oregon, Utah and Washington), Mexico and Canada. It is the only three-nation route struc- ture operated by a U.S. regional airline. Fifty-six cities are served in this territory that extends along the entire west coast of the U.S. to inland areas as far east as Great Falls, Mont.; Salt Lake City; and Phoenix. Hughes Airwest provides the only U.S. flag carrier service to five cities in Mexico, or more Mexican destinations than are served by any other U.S. airlineregional or trunk. The north-south span of its systembetween Edmonton, Canada and Guadalajara, Mexicois about 2,800 miles. If extended in an east-west direction, it would connect San Francisco and New York. This service region contains most of the countrys pleas- ure destinationsnational parks, monuments and recrea- tional areas; winter ski centers; summer sun destinations; and nearly every Pacific Coast beach resort. The major population centers served within this region comprise some of the countrys largest and fastest growing megalopoli. System Growth Forty-seven cities now get Hughes Airwest jet service. This is a 56 per cent increase from the airlines 30 jet cities in 1970. (The nine other citiesall smallare served by the few remaining F-27 propjets in the fleet.) On the other hand, the number of all-jet cities has jumped 250 per cent to 28 from only 8 five years ago. Three cities have been added to the system since 1970. They are Guadalajara and Guaymas in Mexico and Edmon- ton in western Canada. Since 1970, Hughes Airwest has inaugurated nonstop service linking many growing cities and major population hubs. This ability to offer improved service is the result of the airlines initiative in seeking and obtaining a realignment of its routes, which integrated the separate systems of its three predecessor companies into one operating certificate. The resulting, and less restrictive, route structure per- mitted the airline for the first time to overfly previous mandatory stops and capture a larger share of the more competitive markets throughout the West. About 800 aircraft arrivals and departures are operated daily throughout the system. Current Sundance Destinations Future Expansion Sundance Fleet The following cities are served by Hughes Airwests Sundance fleet (with the year flights were inaugurated in parentheses): ARIZONA Grand Canyon (1972) Kingman (1949) Page (1959) Phoenix (1949) Tucson (1968) Yuma (1952) CALIFORNIA Bakersfield (1956) Blythe (1952) Burbank (1956) Chico (1946) Crescent City (1948) El Centro (1952) Eureka (1946) Fresno (1962) Los Angeles (1946) Monterey (1946) Oakland (1946) Ontario (1955) Palm Springs (1957) Redding (1946) Sacramento (1946) San Diego (1953) San Francisco (1946) San Jose (1946) Santa Ana (1952) Santa Barbara (1946) Santa Maria (1946) Stockton (1955) IDAHO Boise (1944) Idaho Falls (1944) Lewiston (1944) Pocatello (1946) Twin Falls (1948) MONTANA Great Falls (1959) Kalispell (1959) NEVADA Las Vegas (1966) Reno (1966) OREGON Eugene (1947) Klamath Falls (1953) Medford (1946) North Bend (1947) Portland (1946) Redmond (1959) UTAH Cedar City (1958) Salt Lake City (1959) WASHINGTON Pasco (1949) Seattle (1946) Spokane (1946) Yakima (1952) MEXICO Guadalajara (1971) Guaymas (1973) La Paz (1968) Mazatlan (1968) Puerto Vallarte (1968) CANADA Calgary (1960) Edmonton (1974) Several route applications, if approved, would lead to future expansion. They include: Service to the Texas cities of El Paso, San Antonio and Houston through a route swap agreement with American Airlines. This application is pending before the Civil Aeronautics Board. Service to Vancouver in British Columbia and to the Mexican resort cities of Acapulco, Mexico City, Zihua- tenejo and Manzanillo. A total of 35 aircraft are in scheduled operation*: Sixteen Super DC-9-30 jets (103 passengers) Twelve DC-9-10 and DC-9-15 jets (75 passengers) Seven F-27 Fairchild propjets (40 passengers) These numbers reflect the active fleet status as of Dec. 31, 1974. They are changing due to aircraft sales, deliveries or leasing. Hughes Airwests DC-9 fleet, which has increased 85 per cent since 1970, is the fourth largest in the U.S. and the eighth largest in the world. Increased International Traffic Revenues from the airlines international traffic in and out of Mexico and Canada have increased 1,650 per cent since 1969from $1.2 million, or 2 per cent of total system- wide passenger revenues, to $22 million, or 13 per cent of the total. The number of passengers carried in and out of Mexico alone has increased 815 per cent since 1970from 13,700 to 125,400. Likewise, the airlines Canadian traffic has gained 410 per cent during the same periodfrom 19,800 passengers to 90,800. And the forecast is for continued growth in these im- portant international marketplaces. The People Who Make It Work A work force of more than 3,800 is employed throughout the system, including more than 400 pilots and nearly 600 flight attendants. Reservations personnel are based at telephone sales centers in Phoenix, Seattle, San Mateo and Los Angeles. These employes handle more than 7,000,000 telephone calls a year, or about 95 per cent of the systemwide res- ervations, through IRMA (for Instant Reservations Made Accurately), a high-speed reservations computer in Los Angeles. The systemwide employe payroll was nearly $59,000,000 in 1974. HUGHES Published by the Public Relations Department International Airport, San Francisco, California 94128 (415) 573-4747 (San Mateo) Dramatic when the Hughes management took over in April, 1970, . I it inherited a 1969 year-end net loss of nearly $21 million, rinanciai management achieved its first net profit of $1.9 Turnaround million in 1972 . in 1973 and 1974 it earned net profits of $4.7 million and $7.9 million, respectively. By deleting small uneconomic cities and improving over- all productivity, federal subsidy need has decreased at an average annual rate of 26 per cent. The objective is to get off subsidy altogether. (Add 000) 1974 1973 1972* 1971* 1970 Total revenues $159,900 $130,107 $96,701 $96,231 $85,261 Operating expenses 147,500 123,823 94,176 98,001 91,941 Operating profit (loss) Non-operating income 12,400 6,284 2,525 (1,770) (6,680) (expenses) (2,324) (1,437) (615) (1,548) (5,168) Income taxes 2,100 180 Net profit (loss) 7,945 4,667 1,910 (3,318) (8,171) Results affected by a four-month labor dispute that started Dec. 15, 1971 and ended in mid-April, 1972. The companys net earnings have gained by more than $28 million since 1969 as follows: Year ended Net profit (loss) Earnings swing 1969 ($20.7 million) 1970 (8.2 million) -|-$12.5 million 1971 (3.3 million) + 5.2 million 1972 1.9 million + 4.9 million 1973 4.7 million -f 2.8 million 1974 7.9 million + 3.2 million $28.6 million Improved Performance 1974 1973 1972 1971 1970 Passengers boarded (add 000) 3,662* 3,366 2,558 2,731 2,898 (Passenger boardings have increased 26 per cent since 1970.) Passenger miles flown (add 000) 1,443,428* 1,260,000 891,373 881,890 892,611 (Passenger miles have increased 62 per cent since 1970.) Load factor (percentage of seats filled) 55.5%* 51.3% 47.5% 45.9% 45% (The average load factor has increased 23 per cent since 1970.) Passenger density (number of Passengers flying per mile) 41.7* 41.2 38.8 34.3 31.6 (Passenger density has increased 50 per cent since 1970.) Average miles flown per passenger 394* 374 348 323 307 (The average passenger trip length has increased 28 per cent since 1970.) On-time performance*** 77.1% 83.7% 84.7% 85.4%* 85.2% All-time annual record. Includes severely restricted service during the four-month labor dispute. ***The airline industry considers 70 per cent on-time performance very good for selected cities designated by the Civil Aeronautics Board. Hughes Airwests systemwide on-time average (departure within 15 minutes of schedule) has exceeded that minimum standard in each of the last five years. This system- wide reporting format exceeds requirements set by the CAB for only the desig- nated cities. Hughes Airwest reports on-time performance for its entire system of airport stations instead of only for the CAB-designated cities, as many other airlines do. Major Facilities San Francisco International Airport (mailing address) San Francisco, Calif. 94128 (Area code 415) 573-4000; TELEX: 34-9431 INTERNATIONAL HEADQUARTERS International Heaquarters is at 3125 Clearview Way at Hillsdale Boulevard in San Mateo, Calif.midway between San Francisco and San Jose. This is the $6.2-million home and operational nerve cen- ter for the only scheduled airline based in the San Fran- cisco Bay Area. Around-the-clock daily international operations in the western portion of the North American continent are di- rected from this facility. The headquarters complex features the industrys most modern reservations center, which has been studied by most of the worlds major air carriers. Other space in the San Francisco Bay Area includes hanger, cargo and terminal facilities at San Francisco Inter- national Airport and industrial space in South San Fran- cisco. Hughes Airwest also is the only airline with a flight at- tendant training school in the Bay Area. MAINTENANCE CENTER Under the new Hughes management, the airline reached beyond the confines of its daily operations and signed many outside contracts that have produced additional reve- nues. Most of this outside work has been done at the airlines maintenance and engineering base at Sky Harbor Interna- tional Airport in Phoenixthe only such facility in Arizona. There, Hughes Airwest has performed work on small executive aircraft and on DC-9 jets for McDonnell Douglas Corp., Air Canada, the U.S. Air Force and Turkish Airlines. The Phoenix facility also is certificated by the Federal Aviation Administration to perform repair and service on DC-9 jets and F-27 aircraft of other airlines. Billings in 1974 amounted to more than $5,000,000 for this work and other outside contractual ventures. Work on the airlines own fleet, as well as on these out- side contracts, is done by a work force of about 500 skilled mechanics, supervisors, engineers, avionics and instrument specialists, supply clerks and support staff. Some 1,600,000 man-hours at a cost of about $18,500,000 are spent annually to maintain high standards of safety and performance for the airlines Sundance fleet. High Training Standards Hughes Airwest maintains high standards for all its em- ployes. Pilots receive periodic flight and ground instruction in Phoenix and the other three domiciles in Seattle, San Fran- cisco and Las Vegas. Mechanics are trained in Phoenix. Flight attendants and dispatchers, along with pilots, re- ceive annual recurrent training to ensure continued compe- tency. Foreign and Domestic Sales Offices When the Hughes management took over, the airline had only three foreign sales offices under contract. Since then, it has established its own full-time sales of- fices in Tokyo, Sydney, Athens, Mexico City and Honolulu. An off-line sales office also was created in New York City. To further bolster this global sales force and better accommodate its large number of annual foreign travelers, the airline acquired sales representatives in Brussels, Paris, Rome, London and Frankfurt. The airline also maintains full-staff sales and city ticket offices in 19 major cities it serves in the U.S., Mexico and Canada. Overseas Business Programs Since 1970, Hughes Airwest has become the only re- gional, and one of only a few airlines at all, involved in technical and management assistance agreements with air carriers in foreign countries. Contracts currently are maintained with the following overseas airlines: Union of Burma Airways and Royal Nepal Airlines in southern Asia; Toa Domestic Airlines (TDA) in Tokyo; Air Liberia and Air Mauritanie (Mauritania) in west Africa; and Saudi Arabian Airlines (Saudia). These nations are using Hughes Airwests operating and managerial skills to help them develop air transportation systems tailored to their particularand variedneeds. Fair Share Paid in 74 Hughes Airwest contributed its fair share to the economy of the West by paying nearly $5,200,000 in property, pay- roll and other taxes and licenses during 1974. Landing fees, which were paid to all its airports for the privilege of providing passenger service, totaled nearly $3,800,000. The cost of other services, including the rental of facili- ties, totaled more than $4,000,000. All these dollars are paid to various government agencies in the eight Western states, Canada and Mexico. A Brief Look Back The assets of Air West, Inc. were purchased in April, 1970 by Hughes Air Corp., which operates the airline as Hughes Airwest. The predecessor carrier was formed in 1968 by the merger of three pioneer airlines in the West: Pacific Air Lines (based in San Francisco), Bonanza Air Lines (Phoe- nix) and West Coast Airlines (Seattle). Pacific began scheduled passenger service as South- west Airways in 1946 and became Pacific Air Lines 10 years later. Bonanza started as a flight school and charter service at Las Vegas in June, 1945 and operated its first scheduled flights in August, 1946. West Coast was founded in March, 1941; in August, 1952, it purchased Empire Air Lines, a feeder carrier that was established in April, 1944 under the name Zimmerly Air Transport.