Boeing Advanced 727-200 CORPORATE PROFILE Hughes Air Corp. 1977 Geographic Scope A Review of 1976 Hughes Airwest serves 56 cities in the western U.S., Mexico and Canada. This is the only three-nation route structure oper- ated by a U.S. regional airline. It flies to 49 cities in nine western states (Arizona, California, Colorado, Idaho, Mon- tana, Nevada, Oregon, Utah and Washing- ton), or more cities within this territory than are served by all other airlines combined. In Mexico, it provides the only U.S. flag carrier service to five cities more than any other U.S. airline. In Canada, it was the first U.S. flag carrier to serve Edmonton and the first U.S. re- gional airline to fly across the border. Ser- vice was to Calgary. The north-south span of its system be- tween Edmonton and Guadalajara, Mexico is about 2,500 miles. If extended in an east-west direction, it would connect San Francisco and New York.The airline flies to inland areas as far east as Great Falls, Mont.; Denver, Colo.; and Phoenix, Ariz. The airlines U.S. service region contains most of the countrys pleasure destinations national parks, monuments and recrea- tional areas; winter ski centers; summer sun destinations; and nearly every Pacific Coast beach resort. Hughes Airwest also flies to most of the largest and fastest growing metropolitan centers within this area. Published by the Public Relations Department Hughes Airwest, International Airport San Francisco, California 94128 It was highlighted by record-setting traffic, new nonstop routes, delivery of three new flagships, improved reservations and ticketing and a profit for the fifth consecutive year. Passengers exceeded four million for the first time and they flew a record number of miles. Cargo also set records. Nonstop service was introduced along eight routes: Seattle-Reno, Portland- Reno, Salt Lake City-Southern California (Los Angeles and Orange County), Burbank-Phoenix, Las Vegas-Canada (Calgary and Edmonton), and Oakland- Las Vegas. All this helped boost the airlines competitive service to almost 52 per cent of its total operationsthe highest in history. In addition, Oakland-Phoenix authority was obtained in 1976 and flights were inaugurated in January, 1977. Also in early 1977, Los Angeles-Spokane authority was received with flights beginning in July. The regional airline industrys first route interchange agreement was ini- tiated by joining with Frontier Airlines to provide single-plane air service linking airports in Orange County and Burbank with Denver. Flights were inaugurated in early 1977. Three new Boeing Advanced 727-200 trijets were added to its fleet. Two are now operating between Calgary and Las Vegasthe airlines longest non- stop segment. These flights also serve Edmonton and Los Angeles. The third 727 is being used for charters. Reservations and ticketing-handling capabilities were vastly expanded when the airline switched its communications to a Miami-based computer. Further improvements were made with the installation of high-speed ticket printers, instant display computer terminals (CRTs) and flight information display systems in San Francisco, Salt Lake City and Phoenix. Year-end net profit was $3.6 million, compared with $1.7 million in 1975. Operating revenues totaled $202.2 million, versus $169.5 million the previous year. Other 1976 highlights: Completed 30 years of scheduled service at 18 airports and 25 years at two others. Processed a record 7.3 million reservation telephone calls. Flew more than 88,000 passengers on charter flights spanning more than 540,000 miles. Major Facilities The People Who Make It Work Sundance Fleet San Francisco International Airport (mailing address) San Francisco, California 94128 (Area Code 415) 573-4000; TELEX 34-9431 Hughes Airwest industry code: RW INTERNATIONAL HEADQUARTERS International headquarters 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 center for the only scheduled airline based in the San Francisco Bay Area. Around-the-clock flight operations in the western portion of the North American continent are directed from this facility. It also houses one of the industrys most modern reservation centers. Hughes Airwest also is the only airline with a flight attendant train- ing school in the Bay Area. MAINTENANCE CENTER The maintenance and engineering base is at Sky Harbor Interna- tional Airport in Phoenix the only such facility in Arizona. Here, work on the airlines fleet, as well as on outside contracts, is done by a personnel force of about 500 skilled supervisors, mechanics, engineers, avionics and instrument specialists, supply clerks and support staff. Some 1.6 million man-hours at a cost of about $18.5 million are spent annually to exceed high FAA-required standards of safety and performance for its fleet. The airline has reached beyond the confines of its daily operation and signed many outside contracts that have included work on small executive aircraft and on DC-9 jets for McDonnell Douglas Corp., Air Canada, the U.S. Air Force and Turkish Airlines, to name a few. 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 for this outside work in 1976 exceeded $1.2 million. A work force of nearly 4,100 is employed throughout the system. It is led by a management team comprised of a board of directors, officers and 450 management personnel. More than 525 pilots and nearly 650 flight attendants are based in San Francisco, Las Vegas, Seattle and Phoenix. Five labor unions represent segments of the work force. They are: Air Line Pilots Association (ALPA), pilots and flight attendants; Air Line Employees Association (ALEA), stations, reservations and cleri- cal personnel: Aircraft Mechanics Fraternal Association (AMFA), mechanics and cleaners; International Association of Machinists and Aerospace Workers (lAMAW), supply clerks; and Transport Workers Union (TWU), flight dispatchers. Nearly 400 telephone sales agents are based in Phoenix, Los An- geles, Seattle and at the airlines International Headquarters. A total of 42 aircraft perform more than 800 arrivals and departures a day. The fleet consists of*: Three Boeing Advanced 727-200 trijets (155 passengers) Twenty-one DC-9-30 jets (103 passengers) Thirteen DC-9-10 and DC-9-15 jets (75 passengers) Five F-27 Fairchild propjets (40 passengers) These numbers reflect the active fleet status as of Dec. 31, 1976. They are changing due to aircraft sales, deliveries or leasing. (As of July 1,1977, one more DC-9-30 had been added to the fleet and nine DC-9-30S and two 727-200s were on order.) Future Many route applications, pending Civil Aero- Exoansion Board approval, could lead to future ex- pension. They include: Nonstop routes within the airlines system linking Calgary and Edmonton with Los Angeles and San Francisco; Los Angeles and San Fran- cisco with resort cities in western Mexico; Seattle and Portland with Fresno and Phoenix; Oakland with Reno; and Reno with Salt Lake City. Routes expanding the existing system in sev- eral route cases to Albuquerque, Milwaukee, Des Moines, Minneapolis/St. Paul, Cincinnati, Dayton, Columbus, Indianapolis, Louisville, Nashville, Kan- sas City, St. Louis, Chicago, Vancouver, New Or- leans and six cities in Texas (Dallas/Ft. Worth, Houston, El Paso, San Antonio, Corpus Christi and Midland/Odessa). The top 10 cities based on passenger boardings in 1976 are: Las Vegas 626,129 Phoenix 419,502 Los Angeles 345,659 San Francisco 300,974 Seattle 280,030 Santa Ana (Orange County) Salt Lake City 186,780 Spokane 155,303 Tucson 139,971 Portland - 116,591 236,052 Full-staff sales offices are located in 18 major cities it flies to in the U.S., Mexico and Canada. They are Boise, Calgary, Edmonton, Guadalajara, Las Vegas, Los Angeles, Oakland, Ontario, Phoenix, Portland, Salt Lake City, San Diego, San Francisco, San Jose, Santa Ana, Seattle, Spokane and Tucson. City ticket offices are located in 12 cities: Anaheim (Disneyland), Edmonton, Las Vegas, Salt Lake City, San Francisco, Seattle, Sun Valley (seasonal), Guadalajara, Guaymas, La Paz, Mazatlan and Puerto Vallarte. Full-time marketing personnel also are in Sydney, Australia; Tokyo, Japan; San Jose, Costa Rica; New York City; Mexico City; and Hono- lulu cities to which the airline does not operate scheduled flights. This multi-nation sales effort is supported by the most advanced computerized communications systems in the transportation indus- try. They are called SITA (for Socit Internationale de Telecommu- nications Aeronautiques) and ARINC (for Aeronautical Radio, Inc.). Through these two organizations, Hughes Airwest can instantly communicate and exchange passenger reservation information with more than 300 airlines around the world. 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 (Phoenix) and West Coast Airlines (Seattle). Pacific began scheduled passenger service as Southwest 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 started service in March, 1946; in August, 1952, it purchased Empire Air Lines, a feeder carrier that was established in April, 1944 under the name Zimmerly Air Transport, later Zimmerly Airlines. Hughes Air Corp. is a privately held company with the majority of its stock owned by Summa Corporation, headquartered in Las Vegas, Nevada. Summa is a diversified firm with interests in hotels, helicopter manufacturing, real estate and other fields. It was wholly owned by Howard Hughes, industrialist and aviation pioneer, who died April 6, 1976. Hughes Airwest is one of only a few airlines in the world that is providing technological, managerial and training assistance as well as consulting services to overseas air transportation companies most in Third World nations. It currently maintains contracts with airlines in Nepal, Mauritania and Saudi Arabia. It has completed contracts with airlines in Burma, Japan, Liberia and Ghana. These countries use Hughes Airwests skills to help them develop air transportation systems tailored to their particular and varied needs. The airline has had as many as 200 of its experienced employes and their families at one time assigned to its programs overseas. Top 10 Cities Sales Offices A Brief Look Back Overseas Business Programs The Major The company contributes its share to the economy Exnenses increasing payroll and other costs required ^ to operate a major air transportation company. The largest expense in 1976 was for salaries $73.7 million, or 13 per cent more than the $65.3 million payroll in 1975. The bulk of the companys payroll burden is in four cities where most management personnel and pilots and flight attendants are based. The total 1976 salaries paid in each city were: Phoenix, $22.7 mil- lion; San Francisco, $16 million; Las Vegas, $10.1 million; and Seattle, $9.9 million. The second highest expense was for aircraft fuel. In 1976 it jumped 48.5 per cent to $34 million from $23 million. Purchased items, including aircraft parts, inven- tory materials and consumable items, rose 8 per cent to more than $16.6 million from $15.4 million. Property and other taxes, plus licenses, increased 21 per cent to more than $8.1 million from $6.7 million. Landing fees, which were paid to all the airlines airports for the privilege of providing passenger air service, rose 9 per cent to $4.7 million from $4.3 million. The cost of facility rentals and other related ser- vices jumped 20 per cent to $4.8 million from $4 million. All these dollars were paid to various municipal, state and federal agencies in the nine western states, Canada and Mexico. Financial Results (Add 000) 1976 1975 1974 1973 1972 1971 1970 Operating revenues $202,162 $169,493 $159,914 $130,107 $96,701 $96,231 $85,204 Operating expenses 195,489 166,729 147,545 123,823 94,176 98,001 92,245 Operating earnings (loss) 6,673 2,764 12,369 6,284 2,525 (1,770) (7,041) Non-operating earnings (loss) (1,629) (336) (2,324) (1,437) (615) (1,548) (5,049) Net earnings (loss) before taxes 5,044 2,428 10,045 4,847 1,910 (3,318) (12,090) Provision for taxes 1,400 725 2,100 180 (13) Net earnings (loss) 3,644 1,703 7,945 4,667 1,910 (3,318) (12,077) Performance 1976 1975 1974 1973 1972 1971 1970 Revenue passenger miles 1,654,730t 1,496,983 1,443,426 1,259,908 891,373 881,890 892,611 Available seat miles 3,108,909t 2,840,686 2,600,620 2,456,863 1,875,100 1,919,294 1,985,701 Load factor (per cent seats filled) 53.2 52.7 55.5t 51.3 47.5 45.9 45.0 Average density (passengers per mile) 47.2t 45.9 47.1 41.2 38.8 34.3 31.5 Passenger boardings 4,038,8111 3,700,519 3,662,179 3,365,910 2,557,975 2,731,127 2,898,258 Yield (revenue per passenger mile in cents) 10.77t 10.17 9.54 8.62 8.64 8.77 7.87 Average passenger trip miles 410t 405 394 374 348 323 308 Average passenger fare 44.12t 41.12 37.58 32.27 30.11 28.31 24.24 Cargo boarded (tons) 18,885 17,941 18,054 17,799 14,750 19,140t 19,014 Cargo ton miles 8,876t 8,464 8,308 7,811 6,012 6,952 6,057 Block hourstotal 121,383 115,162 113,799 123,932t 94,720 109,452 123,725 Aircraft hourstotal 99,990 95,167 93,380 103,2011 79,070 91,109 102,556 Revenue departures performed 139,769 137,574 143,517 157,664 124,348 146,570 163,7711 Revenue block hours 119,185 113,370 .111,630 121,225t 92,222 107,208 121,114 Revenue aircraft hours (airborne) 98,049 93,599 91,699 100,836t 76,850 89,136 100,273 Revenue ton miles 174,334t 158,149 152,675 133,737 95,106 95,125 94,917 Available ton miles 386,756t 352,733 321,681 300,630 229,777 237,625 248,485 Revenue aircraft miles flown 35,046t 32,594 30,624 30,614 22,989 25,695 28,313 Scheduled aircraft miles 35,153t 32,736 30,952 30,864 23,104 25,959 28,739 Scheduled aircraft miles completed 34,749t 32,308 30,307 30,371 22,908 25,602 28,195 Completion percentage 98.9 98.7 97.9 98.4 99.2t 98.6 98.1 On-time % (within 15 minutes of schedule) Add 000. 84.8 84.2 77.1 83.7 84.7 85.4t 85.2 tAII-time annual record. Results affected by severely restricted service during a four-month labor dispute that ended in mid-April, 1972. Printed in U.S.A.