Wisconsin Central Airlines Annual Report 1949

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WISCONSIN CENTRAL AIRLINES
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2
WISCONSIN CENTRAL AIRLINES
General Offices, Madison Municipal Airport, Madison, Wisconsin
Garnet F. DeCoursin
Fred V. Gardner
Francis M. Higgins
DIRECTORS
Howard A. Morey
Arthdr E. A. Mueller
Donald B. Olen
OFFICERS AND OFFICIALS
G. E. Slezak
Milo F. Snyder
A. L. Wheeler
Francis M. Higgins -
H. N. Carr
~ President
Executive Vice President
Secretary-Treasurer
Operations Manager
Arthur E. Schwandt
D. G. Hendrickson
REGISTRAR AND STOCK TRANSFER AGENT
Marshall & Ilsley Bank
Milwaukee, Wisconsin
* * * *
REPORT OF THE PRESIDENT
THE progress of Wisconsin Central Airlines, Inc.,
during the Year 1949 has been encouraging. The
operations of the Company were materially expanded.
In spite of increased expenses of nearly every sort,
the cost per plane mile of operation was substantially
reduced. Passenger, mail and express revenues showed
marked increases over comparable months in the pre-
vious year. The Company completed the year with a
modest profit.
In its ten months of operation in 1948 the Com-
pany transported 11,398 revenue passengers. In 1949
this increased to 32,630 revenue passengers. During
1948 the Company carried 11,520 ton miles of mail
and 13,908 ton miles of express. In 1949 these totals
increased to 20,594 ton miles of mail and 22,303 ton
miles of express.
Operating revenues for the year were $1,378,340.06
plus $17,625.86 of other income. Operating expenses
for this period were $1,339,514.02 which, with other
deductions amounting to $12,094.87 resulted in a net
operating profit after taxes of $44,357.03, after a
provision for depreciation amounting to $135,613.01.
FEEDER AIRLINE OPERATION
Your Company provides a "feeder" airline service
connecting the metropolitan centers with the smaller
communities, as well as a convenient connecting ser-
vice with the trunk airlines at major terminals. Dur-
ing the past year approximately 46% of the 33,000
passengers carried by the Company were interline pas-
sengers connecting to or from the twelve trunk lines
with which the Company makes direct connections at
Chicago, Milwaukee, Madison, Minneapolis/St. Paul
and Duluth.
The need for segregating "short haul" and "long
haul" transportation in the airline industry has been
recognized by. both the Civil Aeronautics Board and
by the willingness of the trunk airline carriers to turn
over to the feeder airlines some of their "short haul"
operations.
FRANCHISE
The Company is presently operating under a three-
year Certificate of Public Convenience and Necessity
which is eligible for renewal on October 3, 1950. The
renewal or extension of the franchise is determined
by the Civil Aeronautics Board after reviewing the
past operations of the Company and its future possi-
bilities of becoming reasonably self-sufficient insofar
as mail payment may be necessary. The steady growth
of non-mail revenues, especially since the completion
of our navigational aids, together with our reduced
cost of operation, are favorable factors for the renewal
of the certificate.
MAIL RATE
The Company now receives a temporary mail rate of
60 per plane mile. The Civil Aeronautics Board com-
TO THE STOCKHOLDERS
pleted an audit of the Company records during the
past year for the purpose of establishing a permanent
mail rate. The CAB' s procedure in setting permanent
mail rates for feeder airlines has generally been to
include the eligible costs of starting the airline, to-
gether with the break-even need, and a fair return on
the Company's investment as a retroactive mail pay-
ment. It is anticipated that the settlement of the Com-
pany's pre-operational claim and the establishment of
a permanent mail rate will be made in the next few
months.
RADIO AND NAVIGATIONAL AIDS
During the past year the Company completed the in-
stallation of its own VHF (static-free) radio commu-
nications system and the installation of a complete
private network of navigational aids. This permits
the instrument operation of the Company's aircraft
to every airport which it serves. With these naviga-
tional aids the Company's flights can now be operated
over its airways with complete safety in weather con-
ditions that would have previously ground'ed the
aircraft. The Company presently operates 1,699
miles of instrument airways; a distance . greater than
from New York to Denver. This is probably the
longest privately-owned and operated airway ( radio
navigation network) in this country. The value of
these instrument aids is vividly demonstrated by com-
paring our performance factor (reliability) of 46%
for November 1948, when we did not have instru-
ment authority, with our performance factor of 94%
for November 1949. The communication and naviga-
tion system represents an investment of approximate-
ly $150,000.
The Company's routes included service to twenty-
six cities through twenty airports, at the close of the
year. Service to five cities in the Upper Peninsula of
Michigan was inaugurated on December 1, 1949. The
Company is presently operating 1,362 miles of route
with a scheduled operation of 5,970 miles per day.
EQUIPMENT
The Company completed the modification of its six
twin-engine Lockheed 10-A aircraft during the year,
qualifying them for instrument authority operation.
These planes carry nine passengers, together with two
pilots. While these aircraft have a comparatively low
direct operating cost, they are no longer adequate to
handle the passenger and cargo traffic that is available
on certain segments of the line. The Company plans,
therefore, to supplement or replace its present equip-
ment with Douglas DC-3 aircraft, as rapidly as finan-
cing can be arranged.
EMPLOYEES
The Company presently employs 207 people of which
168, or 81 %, are veterans of World War II. Special
3
4
aeronautical licenses, required for their work are held
by 162 persons in the organization. The Company
maintains a forty-hour work week although its sta-
tions are open from eight to twenty hours daily and
its maintenance crews are on a twenty-four hour basis,
seven days a week. The Company has union contracts
with its Maintenance, Dispatch and Pilots groups.
The Company enjoys excellent labor relations with all
of its employees who have continuously demonstrated
their sincere interest in its future success.
ROUTE EXTENSIONS
During the past year the Company made application
to the Civil Aeronautics Board for several extensions
to its system. These applications include 1,672 miles
of route previously awarded another airline which was
not activated. The routes extended generally west-
ward from Chicago to Sioux City, Iowa, with inter-
mediate stops, and northwest from Chicago to Minne-
apolis/St. Paul with intermediate stops, including
Beloit, LaCrosse and Rochester. Application was also
made for an extension of our routes from Minneapo-
lis/St. Paul to Fargo, North Dakota with an inter-
mediate stop at Alexandria, Minnesota and to
Bemidji and International Falls, Minnesota, amount-
$2.00
I I I I I I I I I i I
ing to an extension of 435 route miles. A third ap-
plication was made for an extension of our routes
from Green Bay to Detroit with intermediate stops,
and from Marquette, Michigan, to Sault Ste. Marie,
which would provide extensions of 409 miles. It is
believed that these proposed extensions would materi-
ally strengthen the Company's route pattern.
OUTLOOK FOR 1950
The coming year gives every indication of a contin-
uing favorable trend in increasecl revenue generating
ability for the Company. To meet these increased de-
mands, additional financing, either by borrowing or
by an additional security offering, will be required for
larger aircraft. Consideration by your Board of Direc-
tors is being given to listing the Company stock on
the Midwest Stock Exchange to provide a more ready
market.
Madison, Wisconsin
March 20, 1950
I I I I
Respectfully submitted,
FRANCIS M. HIGGINS
President
_FEEDER AIRLINE COST PER MILE OF OPERATION
1.60
1.20
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.80
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.40
0
MAI MAY JULY SEPT NOY JAN MAR MAY JULY SEPT NOY
APRIL JUNE AUG OCT DEC FEB APRIL JUNE AU~ OCT DEC
1948 1949
Wisconsin Central Airlines
Average of other feeder airlines
Since the start of the Company's scheduled operations on February 24, 1948, the cost per mile of operation of Wisconsin Central Air-
lines has compared favorably with the feeder airline industry. During the year 1948 Wisconsin Central's average cost was 82 per plane
mile of operation as compared to an average cost of 92 per plane mile of operation for the feeder airline industry. While a portion
of this lower cost is attributable to the low direct operating expense of the Lockheed 10-A, other maior economies have been achieved
in the Company's indirect costs of operation.
During the Year 1949 the Com-
pany carried 32,625- revenue
passengers fora total of 4,991,339
revenue passenger miles, with an
average load factor of 37%. Dur-
ing the ten months of operation
in 1948 (scheduled operations
were started February 24, 1948)
the Company carried 11,398 rev-
enue passengers for a total of
1,952,591 revenue passenger
miles, with an average load fac-
tor of 28%.
Air mail and air parcel post orig-
inated on Wisconsin Central's
system during the Year 1949
amounted to 263,609 p~unds.
During the ten months of opera-
tion in 1948 (scheduled opera-
tions were started on February
24, 1948) originating air mail
and air parcel post was 144,358
pounds.
THOUSANDS
I I I I I I I I II I l I l I
800
_ REVENUE PASSENGER MILES FLQWN
700 I \
600
500
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400 ,~ ~' ' '
300
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200
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0
MAI MAY JULY SEPT NOY JAN MAI MAY JULY SEPT NOY .
APRIL JUNE AUG OCT DEC FEB APRIL JUNE AUG OCT DEC
------1949------ --------1949--------.,
POUNDS
I I I I I I I I II I I I
30,000
_ORIGINATING MAIL POUNDAGE J
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25,000.
---
20,000
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15,000 j
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10,000 I
5,000
MAR MAY JULY SEPT NOY JAN MAR MAY JULY SEPT NOY
APRIL JUNE AUG OCT DEC F68 APRIL JUNE AUG OCT DEC
------1948------- --------1949----------'
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ASSETS
CURRENT ASSETS
Cash ..... ----------
Accounts receivable
U. S. Governmen---------
Traffi,.____ ______ ............................................................................... .
Other ............... ------- ----
Inventories - at cost
Parts and supplies-------
Gasoline and oi~----------
Prepaid insurance, interest and other expenses ................................ .
OPERATING PROPERTY AND EQUIPMENT
Flight equipment-at cost (Equipment costing $243,545.00
WISCONSIN
$109,273.26
31,754.40
$ 77,784.72
12,902.80 153,930.46
37,657.30
7,218.34 44,875.64
CENTRAl
BALANCE SHEET
8,123.45 $284,714.27
pledged as security for notes payable - contra)..................... 339,804.40
Ground equipment
- at cos .......... __________ _
Hangar and office building - at cos.__ _____ _
Furniture and fixtures - at cos..____ ____ . ____ _
Less reserves for depreciatio,.,--------
Radio equipment installation in progress - at cos..._ __
DEFERRED CHARGES
Route development expense ( note 1 )--------
Organization and capital stock - expens ________ _
Other _________________ _
106,889.02
42,620.18
15,276.07 504,589.67
180,748.47
323,841.20
559.97
224,831.49
65,378.39 -
324,401.17
735.16 290,945.04
$900,060.48
AIRLINES, INC.
DECEMBER 31, 1949
LIABILITIES
CURRENT LIABILITIES
Notes payable - unsecured .................. ----
Notes payable
- installments due within one year ( secured
contra) ......................................................................................................................... .
Notes payable-
- bank (secured- contra) ......................................... .
Accounts payable ........................................................................................................ .
Accrued liabilities
Salaries and wages............................................................................................. $20,323.91
Taxes ( other than income taxes) ........................................................... .
Other ............................................................................................................................. .
DEFERRED INCOME
Unearned transportation revenue ................................................................. .
Prepaid hangar rent. .............................................................................................. .
CAPITAL STOCK AND SURPLUS
Capital stock - common; authorized 300,000 shares of
$1.00 par value; issued, 155,000 shares ......................................... .
Paid-in surplus
- excess of issue price over par value of
common stock. .................................................. ----
Earned surplus ........................................... ---
6,770.71
15,447.93
$ 7,640.96
65,006.15
4,400.00
149,680.44
42,542.55 $269,270.10
2,979.60
875.00
155,000.00
465,000.00
3,854.60
6,935.78 626,935.78
$900,060.48
NOTE: The accompanying notes to financial statements are an integral part of this balance sheet.
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STATEMENT OF INCOME
YEAR ENDED DECEMBER 31 , 1949
TRANSPORTATION REVENUE
Mail (note 2) ................................................................................................................................................... $1,096,881.21
Passenger .................................................................................... ........................................................................... , 271,575.86
Express..................................................................................................................................................................... 8,36.3.95
Excess baggage.................................................................................................................................................. 1,519.04 $1,378,340.06
OPERA TING EXPENSES
Flying operations ............................................................................................................................................ .
Flight equipment maintenance ........................................................................................................... .
Ground operations ........................................................................................................................................ .
Ground and indirect maintenance .................................................................................................. .
Passenger service ............................................................................................................................................ .
Traffic and sales ............................................................................................................................................ .
Advertising and publicity ....................................................................................................................... .
General and administrative .................................................................................................................... .
Provision for depreciation .................................................................................................................... .
Operating profit... .............................................................................................................. .
OTHER INCOME
Incidental revenue and cash discounts earned ....................................................................... .
Adjustments to income of previous year - net... ................................................................. .
OTHER DEDUCTIONS
Interest. ................................................................................................................................................................... .
Amortization of debt expense .............................................................................................................. .
Miscellaneous ..................................................................................................................................................... .
NET INCOME (Note 3) ......................................................................................... .
350,180.45
229,945.55
321,057.28
110,236.03
6,791.19
26,964.07
20,302.56
138,423.88
135,613.01
8,301.26
9,324.60
8,729.04
1,640.84
1,724.99
NOTE: The accompanying notes to financial statements are an integral part of this statement.
$
1,339,514.02
38,826.04
17,625.86
56,451.90
12,094.87
44,357.03
STATEMENT OF SURPLUS ACCOUNTS
YEAR ENDED DECEMBER 31, 1949
PAID-IN SURPLUS
(Excess of issue price of common stock over par value)
Paid-in surplus - January 1, 1949 ............................................................................................................................................. $465,000.00
Changes during the year ended December 31, 1949................................................................................................... None
PAID-IN SURPLUS -DECEMBER 31, 1949 ........................................................................... $465,000.00
EARNED SURPLUS
Earned surplus - January 1, 1949 ............................................................................................................................................. $ 37,421.25*
Net income for the year ended December 31, 1949................................................................................................... 44,357.03
EARNED SURPLUS -
- DECEMBER 31, 1949 ........................................................................... $ 6,935.78
*Red figure
NOTES TO FINANCIAL STATEMENTS
December 31, 1 949
1. Route development expense in the amount of $224,831.49 con-
sists of net costs incurred in securin~ and developing the route
awarded to the company by the Civil Aeronautics Board under
a temporary certificate of convenience and necessity authorizing
engagement in scheduled air transportation for a period of
three years from October 3, 1947. No provision has been
made for amortization of this deferred charge because, in the
opinion of the Board of Directors, based upon past rulings of
the Civil Aeronautics Board, the current temporary mail rate
will be changed to a permanent mail rate by the Civil Aero-
nautics Board which will include an amount sufficient to pro
vide for amortization of the allowable expense plus a return on
the investment.
2. Mail revenue is based upon a temporary mail rate order issued
by the Civil Aeronautics Board, which has the right to change
this rate retroactive to February 24, 1948.
3. No income taxes are due for the year ended December 31,
1949 because deferred charges are being amortized on income
tax returns.
NEW YORK
BROOKLYN
PH I LADELPH IA
ALEXANDER GRANT & COMPANY
MEMBERS AMERICAN INSTITUTE OF ACCOUNTANTS
CERTIFIED PUBLIC ACCOUNTANTS
303 BELLIN BUILDING
GREEN BAY, WISCONSIN
Board of Directors
Wisconsin Central Airlines, Inc.
CHICAGO
GREEN BAY
LA CROSSE
We have examined the balance sheet of WISCONSIN CENTRAL AIRLINES,
INC. (a Wisconsin corporation) as of December 31, 1949 and the related statement of
income for the year then ended. With the exception that it was not practical to confirm
the accounts receivable from the U. S. Government, as to which we satisfied ourselves by
other means, our examination was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
Scheduled flight operations commenced February 24, 1948 under a temporary
certificate of public convenience and necessity granted by the Civil Aeronautics Board
for a period of three years from October 3, 1947. Expenses incurred prior to February
24, 1948 have been capitalized as Route Development Expense. No provision has been
made for amortization of this deferred charge because, in the opinion of the Board of
Directors, based upon past rulings of the Civil Aeronautics Board, the current temporary
mail rate will be changed to a permanent mail rate by the Civil Aeronautics Board which
will include an amount sufficient to provide for amortization of the allowable expense
plus a return on the investment.
In our opinion, subject to the explanation contained in the preceding para-
graph, the accompanying balance sheet and related statement of income present fairly the
financial position of Wisconsin Central Airlines, Inc. at December 31, 1949, and the
results of its operations for the year then ended, in conformity with generally accepted
accounting principles applied on a basis consistent with that of the preceding year.
Green Bay, Wisconsin
February 22, 1950
ALEXANDER GRANT AND COMPANY
9
10
WISCONSIN CENTRAL AIRLINES
RADIO NAVIGATION FACILITIES
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--. THESE FACILITIES PROVIDE A CONTINUOUS ~ ' \,-- ___ __ - - - - - - _ - -
:, RADIO PATH FOR WISCONSIN CENTRAL AIRLINERS #' 1.: ,
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RADIO RANGE STATION
DIRECTIONAL RA DIO N AVIGATION BEAM
Owned ond operated 24 hours o day
by the U. S. Government.
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WISCONSIN CENTRAL
RADIO BEACON
I}
"HO MING'' NAVIGATION FACILITY
Owned ond operated by
Wiw:o"'in Centra l Airline,.
Complete instrument operation has been provided to each airport served by the airline by the use of fourteen company
owned and operated radio beacons and a system-wide company VHF radio network. These facilities provide for the safe
operation of the company's aircraft in adverse weather. The regular and alternate airways covered by these navigation
aids totals 1,699 miles, the longest privately owned and operated airway (radio navigation network) in this country.
......
.....

1948
AVIATION
SAFETY AWARD
TO

in recognition of its contribution to Safo ..Air:Iransport,1tion 1
havin9 op<2ratecL from

..%bruary 1948 to 'Dac'2mbQr 31, 1948
2, 2
43, ODO ~ASSENGER MilES
without a passen9er or cr~w fatality in
scheduLzcl pass~n9ar carryin9 flighr operations
The Company will again be eligible for the National Safety Council's 1949 Aviation Safety Award,
having flown 4,991,339 passenger miles during the past year without a passenger or crew fatality.
11
** ****** ****** ****** ****** ************ ****** *****
YOU -YOUR FAMILY AND FRIENDS
ARE INVITED TO TRAVEL "WISCONSIN CENTRAL"
CITY
For flight schedules, reservations, and complete information, phone the Wisconsin Central office
m any of these cities. We make reservations on all scheduled airlines as a courtesy service:
AIRPORT PHONE
Brainerd, Minn ........................................................... BrainerdCrow Wing ................................................. 5531
~g{~::~: ~f i:::::::::::::::::::::::::::::::::::::::::::::::::::::~::::::::::~~trk!to"iE.~~:::::::.-.-.-_-_-_-_-_-_-_-_-_-_-_-_-_-_-.-.~.-.-:.-.-.-_-_-_-_-_-_-_-_-_-:=.-_-_-_-_-_-_-_-._-i~~:~~~t~.io~~00
Chisho~ Minn ......................................................... Hibbing Municipal. ................... -Hibbing 1250-W
Clintonville, Wis ...................................................... ..Municipal ................................................................... 210
Duluth, Minn ......................................... --Williamson-Johnson .................................................. Meltose 3000
Eau Claire, Wis ............................ - ........................... Municipal ................................................................... 4633
Green Bay, Wis ...................... _ ................................. .Austin Straubel. .......................................................... Howard 5450
Hancock, Mich ........................................................... Houghton County ....................................................... Houghton 63
Hibbing, Minn ........................................................... Munici pal. .................................................................. 12 50 W
Houghton, Mich ................................. -Houghton County ....................................................... 63
Iron Mt., Mich ........................................................... .Ford ............................................................................ 2575
Ironw,ood, Mich ......................................................... .Gogebic County ................................................ -741
Madison, Wis ............................................................ Municipal .......................................................... -4-5544
Marinette, Wis .......................................................... Menominee County ............................................ -Menominee 6677
Marquette, Mich ......................................... -K. I. Sawyer ................................................................ Sawyer 2
Menominee, Mich ..................................................... ..Menominee County .................................................... 6677
Milwaukee, Wis ............................... --General Mitchell ........................................................ Humboldt 35100
Minneapolis, Minn ..................................................... Wold.Chamberlain. ................................................... Parker 6691
Oshkosh, Wis ............................................................. Winnebago County .................................................... Stanley 5
Rhinelander, Wis ...................................................... Municipal ................................................................... 98
St. Cloud, Minn .................................................. - ...... Whitney Memorial ....................................... _ ............ 4580
St. Paul, Minn ............................................................ WoldChamberlain. ................................................... Parker 6691
Stevens Point, Wis ............. -MunicipaL. ................................................................ 2510
Superior, Wis ........................... -WilliamsonJohnson ... - ...................... _ ..................... Melrose 3000
Wausau, Wis ............................................................. Alexander ........................................ --4550
Wis. Rapids, Wis ....................................................... Stevens Pt MunicipaL ...... -.Stevens Pt 2510
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