GENERAL OFFICES: 6201 Thirty-Fourth Avenue South, Wold-Chamberlain Field, 
Minneapolis 23, Minnesota 
H. N. CARR* 
WERNER L. CHRISTENSEN 
ARTHUR E. A. MUELLER 
H. N. CARR .  .  . 
FRANK N. BOTTOMER 
ARTHUR E. SCHWANDT 
BERNARD SWEET  
ALVIN D. NIEMEYER 
R. H. BENDIO, SR. . 
GARNET F. DECOURSIN* 
ROBERT F. GROVER 
ARTHUR E. A. MUELLER* 
A. L. WHEELER 
K. B. WILLETT 
* Executive Committee 
. . . . . Chairman of the Board 
President and General Manager 
Vice-President, Traffic and Sales 
Vice-President, Industrial Relations 
Secretary-Treasurer 
Operations Manager 
Director of Maintenance and Engineering 
MARSHALL & ILSLEY BANK  MILWAUKEE, WISCONSIN 
 Dramatic achievements in all cat~gories of opera- 
tions, traffic, and finance during 1954 elevated North 
Central Airlines to a new position of leadership in the 
local service airline industry. 
Most Profitable Year 
Substantial increases in schedules, outstanding im- 
provements in flight performance, a high level of 
over-all company efficiency and all-time records in 
passenger, air mail, and air express traffic brought 
North Central the most profitable year in its history 
and a reputation as one of the lowest-cost, highest- 
profit operations in the industry. The profits of 1954 
together with a series of improvements in financing 
during the year have brought your company to the 
position of one of the most financially stable of the 
nation's 13 local airlines. 
In the fall of 1954 North Central attained first place 
among the local airlines in number of passengers 
carried and continued second in air mail volume. The 
company also continued to lead the industry by a wide 
margin in air express tonnage as it has in the past 
three years. 
Revenues and Expenses 
Your company realized a record net profit of $111,707 
in 1954 as compared to a net loss of $114,588 in 1953. 
The 1954 profit was after depreciation charges of 
$535,557 and was achieved despite a reduction of 
$139,764 in mail revenues. This profit reduced the 
company's net deficit from $320,513 at the beginning 
of the year to $208,806. 
Non-mail revenues increased sharply, from $2,413,030 
in 1953 to $3,495,123 in 1954. This is a gain of 45%. 
These revenues were: passenger $3,351,782 (up 45%), 
air express $75,630 (up 11%), charter service $46,734 
(up 84%), and excess baggage $20,975 (up 33%). Mail 
revenues were $2,328,921, and revenue from all these 
sources totaled $5,824,042. 
Operating expenses were $5,657,261, resulting in a 
record operating profit of $166,781. Non-operating 
expenses were $55,074 which,  deducted from the 
operating profit, leaves the net profit of $111,707. 
Earnings per share of stock outstanding amounted to 
$2.16 before depreciation and $.37 per share after 
depreciation. 
The large depreciation charge of $535,557 results 
primarily from the industry practice of depreciating 
aircraft over a period of only three years. By the end 
of 1956 all of your company's 18 DC-3s will be fully 
depreciated. 
New Management 
On April 7, 1954, H. N . Carr, a Director and former 
Executive Vice President, assumed the presidency, 
succeeding Howard A. Morey who resigned as Presi- 
dent and Member of the Board of Directors. This 
Board vacancy and another created by the resignation 
of Harold H . Emch were filled by the elections of 
Robert F. Grover and Kenneth B. Willett at the annual 
stockholders' meeting on April 7. . 
The Board was reduced to seven members in De- 
cember by the resignations of R. B. Stewart and Grove 
Webster of the Purdue Research Foundation in accord- 
ance with terms of the Foundation's agreement with 
the company. The agreement stipulated that when the 
company's loan was liquidated, as it was on December 
10, the Foundation would relinquish membership on 
the Board. 
After becoming president, Mr. Carr instituted a 
series of changes in the company's administrative 
organization. Among these was the promotion of 
Bernard Sweet from Acting Treasurer to Secretary- 
Treasurer. Alvin D . Niemeyer, former Civil Aeronau- 
tics Administration official, was named Operations 
Manager upon the resignation- of Capt. Robert J. 
Ceronsky who returned to flying for the company. 
Arthur E. Schwandt, formerly Vice President-Secretary 
of the company, was appointed Vice President-Indus- 
trial Relations. 
Financial Recovery 
Having concluded the year 1953 with a net loss of 
$114,588 and continuing to operate at losses averaging 
$57,000 monthly in January, February, March, and 
April of 1954, new management developed a program 
to reduce costs drastically, improve over-all efficiency, 
increase passenger business, and strengthen the com- 
pany's financial condition. 
Additional flights were scheduled to increase equip- 
ment and personnel utilization and to meet growing 
demands for more and better service. These additional 
miles were flown with no appreciable increase in over- 
head and lowered plane-mile costs from an average of 
$1.24 in the first four months of the year to an average 
of $1.02 in the remaining eight months. Passenger 
revenues on the new flights more than offset the limit- 
ed cost of the additional mileage. 
A high level of efficiency was achieved through im- 
proved operating techniques and acquisition of new 
maintenance and ground equipment. Consolidation of 
the company's general offices and operations base at a 
single location at Wold-Chamberlain Field, Minne- 
apolis-St. Paul, was also an important step in achieving 
an effective operation. 
Improved Financial Position 
While a profitable operation was the primary factor, 
two major steps in financing contributed substantially 
to North Central's improved financial position. Dur- 
ing the summer the company issued $215,000 of 10- 
year, 6% convertible debentures, due July 31, 1964. 
 These debentures are convertible into shares of com- 
mon stock of the company until maturity unless called 
for previous redemption (see note No. 4 to .financial 
statement). 
In December the $600,000 balance then outstand- 
ing on a $1,000,000 loan from the Purdue Research 
Foundation was re.financed by a loan from the North- 
western National Bank of Minneapolis. This re.financ- 
ing lowered the interest rate to 4%, reduced the 
amount of monthly installments and extended the 
period of the loan to December 10, 1957. This loan is 
secured by a mortgage on the company's flight equip- 
ment (see note No. 5 to .financial statement). 
As a result of the year's pro.fits and favorable .financ- 
ing, your company was able to reduce its 1953 net 
working capital deficit of $627,763 to only $14,735 
which, for practical purposes, is a one-to-one ratio. 
This is the most favorable net working capital position 
ever achieved by the company. 
The reduction in net working capital deficit is re- 
.fleeted primarily in an increase of cash from $74,544 
at the beginning of 1954 to $258,870 at the close of 
the year, and in a reduction of trade accounts payable 
from $606,046 at the beginning of 1954 to $244,966 
at the close of the year. All of the company's accounts 
payable were made completely current by September 
30, 1954 and have been maintained on a current basis 
since that date. 
During the year conferences were held with the 
Mail Rate Section of the Civil Aeronautics Board on 
the company's permanent mail rate case. On Decem- 
ber 10, the Board established a .final rate through June 
30, 1954 and also established a sliding scale formula 
for the period beginning July 1, 1954. The rate on this 
formula varies with the company's passenger load 
factor. It is one of the lowest mail rates in the local 
service industry, evidencing the company's improved 
.financial position. 
Declining Per Cent of Air Mail Revenue 
83% 79 
% to Total Revenue 
75% 
56% 
52% 51% 
40% 
I 
1948 1949 1950 1951 1952 1953 1954 
New Services 
During 1954 North Central Airlines provided 21% 
more service for the traveling public than was offered 
in 1953. Flights were added on nearly every segment 
of the company's system. The most notable increase 
was between Chicago and Milwaukee where fre- 
quency reached 44 flights daily. Scheduled route miles 
.flown during the year totaled '5,174,209 compare<l co 
4,261,743 the previous year. 
Seasonal service through September jO was re- 
inaugurated May 15 at Land O'Lakes, Wisconsin, 
following a three-year suspension for lack of aJequate 
airport facilities. This city will be served again this 
summer. Seasonal service was resumed June 1 at Inter- 
national Falls, Minnesota, and continued last fall when 
the Civil Aeronautics Board granted North Central 
authority to operate there on a year-round basis. 
On February 28, 1955, the Board awarded North 
Central the local service route between Chicago and 
Detroit via intermediate cities South Bend, Indiana, 
and Kalamazoo, Battle Creek, Jackson, and Ann 
Arbor, Michigan, with Ann Arbor to be served through 
Willow Run Airport, Detroit. This is considered one 
of the most lucrative routes awarded a local service 
airline in recent years. Tentative date for inaugurating 
service is May 1, 1955, with an initial schedule pattern 
providing six .flights daily to each city. 
Improved Flight Performance 
Outstanding gains in flight performance were at- 
tained in 1954 as a result of a sharp rise in operations 
and maintenance efficiency. Flights delayed for me- 
chanical reasons were reduced 29% during the year, 
and .flights cancelled for mechanical reasons were 
reduced 66%. Flight completion performance increased 
from 94% in 1953 to 97% in 1954, and on-time per- 
formance rose from 63% to 75% in 1954. This improve- 
ment in performance was an important factor in 
establishing new records in all categories of traffic. 
New Passenger Service 
New management introduced a number of measures 
to provide better service for North Central's customers 
and earn a fuller measure of public goodwill. A con- 
tinuing courtesy campaign was begun among the 
company's reservations, station, and flight personnel. 
Additional in-flight passenger services were provided, 
and new procedures to increase efficiency in reserva- 
tions and baggage-handling were instituted. 
A program to change from flight stewards to stew- 
ardesses was started in May, and thus far 50 attractive 
stewardesses have replaced male cabin attendants. The 
stewards have been promoted in the company or have 
resigned to accept positions elsewhere. Your com- 
pany considers this a major step forward in its contin- 
uing efforts to improve service, and passenger response 
has been excellent. 
Aircraft Modernization 
To further increase service, each of North Central's 
aircraft is being converted from 21 seats to 26, in an 
equipment modernization program started in Septem- 
ber. The new seats are the finest available and offer 
greater passenger comfort because of their foam rub- 
ber construction and scientific design. The program 
also includes remodeling of cabin interiors in an at- 
tractive tan-green color scheme and installation of 
convenient carry-on luggage racks. 
The increase in seating capacity also enables the 
company to realize more passenger revenue per flight 
with little increase in operating costs. Modernization 
of the entire fleet will be completed before the end 
of the year. 
Traffic Gains 
Your airline carried 30% more passengers in 1954 
than in 1953. A total of 283,556 persons flew North 
Central in 1954, compared to 217,663 in the previous 
year. A new daily record was set on June 19 when 
1,212 passengers were carried, and a new monthly 
record was established in August with 31,271 pas- 
sengers. 
While scheduled miles flown increased 21%, pas- 
senger-miles rose 26% to 47,456,757 in 1954. System 
 1948 
1949 
.__..=.;;;__. 1950 
1951 
._...,....__. 1952 
-... ........ __, 1953 
...,;..__,__. 1954 
798,014 
1,633,936 
2,050,946 
1,977,815 
load faG:tor (percentage of occupied seats) for the year 
increased from 41.9% to 43.4%. . 
An increase of 20% was attained in air express ton- 
nage with 194,722 ton-miles in 1954 compared to 
161,963 in 1953. Air mail showed an increase of 12% 
with 121,058 ton-miles compared to 108,418 the pre- 
. vious year. North Central carried 54,081 ton-miles of 
 first-class and other preferential surface mail during 
the year over selected routes in the Post Office De- 
partment's experiment of expediting the movement of 
these classes of mail. The experiment was first con- 
ducted system-wide during the 1953 holiday season 
and resumed on two routes in March, 1954. 
North Central increased its charter business by 84% 
in 1954. Fifty charter trips were flown for a total of 
40,641 miles. This compares to 22 charters flying an 
aggregate of 16,866 miles in the previous year. The 
increase was accomplished through a more vigorous 
charter sales program offering incentives to employees 
 and by adjusting rates to make them competitive with 
the industry. 
Route Development 
North Central Airlines has a number of route exten- 
sion proposals pending before the Civil Aeronautics 
Board. The first of these is an application for approval 
of the company's contract to purchase 96% of the 
outstanding stock of Lake Central Airlines, a local 
carrier whose routes are shown on the accompanying 
system map. Lake Central presently operates over some 
1,600 route miles in the "industrial heart of the na- 
tion". Acquisition of Lake Central would extend your 
company's routes as far east as Pittsburgh and as far 
south as Cincinnati, and would add 24 cities with a 
combined population in excess of 4,000,000 to the 
North Central system. 
A second application seeks continuation of the 
comp~ny's present route between Minneapolis-St. 
Paul and Grand Forks, North Dakota, via Brainerd, 
Bemidji, and Thief River Falls, Minnesota. In a Civil 
Aeronautics Board investigation of this route a:nd 
another operated by North Central between Minne- 
apolis-St. Paul and Fargo via three intermediate stops, 
the Board concluded that public convenience and 
necessity did not require continuation of either route. 
' Service was terminated November 1 on the Fargo seg- 
ment, but North Central continues to operate to 
Grand Forks pending final decision by the Board on 
the .company's application. 
A request for authority to operate into Detroit City 
Airport was filec;l early this year. This operation would 
provide service between Detroit City Airport and 
Willow Run, the airport now used by all scheduled 
airlines serving Detroit. 
Applications have also been filed requesting authority 
to conduct helicopter operations in the metropolitan 
areas of Chicago-Milwaukee, Detroit and Minneapolis- 
2,859,158 
4,261,743 
5,174,209 
~t. Paul._ There are no immediate plans for inaugurat- 
ing service; however, this early planning will place 
your company in a position to receive full considera- 
tion when the Civil Aeronautics Board awards heli- 
copter certificates in these areas. 
Permanent C~rtification 
North Central Airlines has joined the local service 
industry in efforts to achieve permanent certification. 
All l?~al carri_ 
ers. operate under tern porary certificates 
requmng penod1c renewal by the Civil Aeronautics 
Board. North Central's present certificate is due for 
renewal in September, 1955.  
A bill directing the Board to grant permanent status 
to all l_ocal lines was introduced in the 1954 Congress. 
The 6111 passed the House of Representatives unani- 
mously but failed to be considered by the Senate 
because of the press of last-minute legislation. A sim- 
ilar bill has been introduced in this session of Con- 
gress, and favora~le action is anticipated. 
Personnel 
North Central's dramatic improvements in all phases 
of operations and impressive gains in traffic volume 
during 1954 are attributable primarily to the high 
efficiency of the company's 650 employees. Their val- 
uable suggestions and vigorous efforts have been the 
mos~ significant factors ~n cutting costs, improving 
efficiency and strengthening North Central' s financial 
position. 
Management t_ 
akes this opportunity to express its 
sincere appreciation to all employees throughout the 
system for the contributions they have made to the 
progress and development of the company during 
1954. 
Forecast 
In January and February of 1955 the traffic volume 
was 42% ahead of the same period la.st year. It is antici- 
pated that traffic will continue to gain throughout the 
year and that approximately 375,000 passengers will 
fly on North Central in 1955. 
In January the company realized a net profit of 
$5,734, the airline's first January profit in its history. 
Although a modest profit, it becomes impressive when 
compared to the heavy losses incurred in January a 
year ago. North Central's profitable 1954-1955 winter 
in1icates a tre~d towar? a _ 
year-round self-sufficiency. 
With traffic gains continumg and operations remain- 
ing at a profitable level you can look forward to your 
company establishing in 1955 further records for the 
~;:;y~:tw~ 
ARTHUR E. A. MUELLER H. N. CARR 
Chairman of the Board President 
March 18, 1955 
 ~- * 
--------------------------------------;-------,.1 
11,398 
11,520 
13,908 
32,625 
1864"> Gal 
20,594 
794"> Gain 
22,303 
604"> Gain 
48,797 
504"> 
40,555 
97% 
48,095 
1164"> 
*Operations commenced February 24, 1948 
96,265 
97% 
60,292 
49% 
107,408 
1234"> 
153,047 
59'61 
94,696 
57% 
138,341 
29% 
217,663 
42% 
161,963 
17'61 
  N. D. 
S. D. 
ILL. 
LAKE HURON 
MICH. 
"' 
------ --~ 
- ~ 
=-=~~...-...... .... - 
, 
SYSTEM MAP 
show i ng proposed extensions 
 
Certificated routes now served. 
Lake Central Airlines, Inc. The purchase 
of this airline by North Central awaits 
approval by the Civil Aeronautics Board. 
Not shown are helicopter applications 
filed with the Civil Aeronautics Board 
proposing service in the Chicago- . 
Milwaukee, Detroit, and Minneapohs- 
St. Paul areas. 
!!!.!!!!IIP 
 CURRENT ASSETS 
Cash ... . ... ... . . ...... . .... .. . . . . .. . . . . . . .... .. ... . 
Accounts receivable 
United States Government .. . . . . .. . ....... . . . . . . ... . 
Traffic .. . .. . . . . . . . . .. .. . . .. . .. . .. . . .. . . ... . ...... . 
Other . .. ... . .. . . . .... .. . . . .. ... . . .. . ... . ... . . . . . . 
Inventories-at cost 
Parts and supplies .. . . . ... . . . . . . .. . .. .. . .. . . .. . .. . . . 
Gasoline and oil . ..... . . . . . .... .. . . .. . .. . . . . . ... . . . 
Prepaid expenses and sundry deposits ... . .. . .. . . . .. .. . . . 
INVESTMENTS- AT COST 
Aeronautical Radio, Inc .. . . .. . . . . ... ..... .. . . . .. .. .. . . 
Airlines Clearing House, Inc ... ... . .... . . . . .. . .... ... . . 
OPERATING PROPERTY AND EQUIPMENT 
Flight equipment (equipment costing approximately 
$1,960,000 pledged as security for note payable) . . ... . . 
Ground equipment ... . . . . .. . . . . . . .. ...... . . .... . . . .. . 
Hangar building and improvements to leased property . .. . 
Furniture and fixtures . . .... . ... . .. . ............ . .. . .. . 
Total-at cost . . . . . ... . .. .. .. .. ... . . . .. . .. . . . .. . 
Less depreciation to date . . ... . .... . ...... .. . . . .. . . . . . . 
DEFERRED CHARGES 
Route development expense .. .. . . .. ... . . .. ... . .. . . . . . . 
Other ......... .. . . . ... . . . . ... . . . .. .. .. .. .. . . . .. . .. . 
$ 215,276 
471,890 
57,292 
161,526 
6,936 
$ 258,870 
744,458 
168,462 
21,395 
1,000 
101 
2,167,704 
318,577 
74,639 
68,675 
2,629,595 
1,318,478 
27,526 
23,051 
$1,193,185 
1,101 
1,311,117 
50,577 
$2,555,980 
I 
[' 
I 
I 
11 
\I 
I 
CURRENT LIABILITIES 
Notes payable 
Payments due within twelve months 
4-% note payable . .... . . ... . . . . . .. . . . .. . . ... . .. . . 
Other notes payable ........ . .. . .... . .... . . ...... . 
Accounts payable 
Trade .. . .. . .. ... .... ....... . . . . .. .. . . ...      
Traffic . . ..... .. . .. . ...... . . .. .... . ....       
Unearned transportation revenue .. . . . ........... . ... . . . 
Income taxes withheld from employees . . . . . .. .... . .... . 
Accrued liabilities 
Salaries and wages . .. . . . ...... . . . ............ . .... . 
Taxes (other than income taxes) . . . .. ... .. ..... . .... . 
Other ..... .. . . .. . . . .. . . ... .. .. . .... . . . .... . .. .. . . 
NONCURRENT LIABILITIES 
4-% note payable, secured by pledge of flight equipment, 
due in monthly installments to December 10, 1957 .... . 
Less payments due within twelve months . . . ... . ... . .. . . . 
Other notes payable, secured by pledge of certain 
equipment, due in monthly installments . ..... . . . .. . . . . 
Less payments due within twelve months .. . . . ......... . 
6% convertible debentures, due July 31, 1964 . .... . .. . .. . 
CAPITAL 
Common stock-authorized, 750,000 shares of $LOO par 
value; issued and outstanding, 300,000 shares . ... .... . . 
Paid-in in excess of par value of stock issued, less organi- 
zation and capital stock expense written off ... . . . . . . . . . 
Earned surplus (deficit) .. . . . .. . .... . .... . . . ...... . . . . . 
$ 225,000 
9,965 
244,966 
345,921 
133,565 
14,974 
166,248 
600,000 
225,000 
36,780 
-9,965 
300,000 
636,051 
$ 234,965 
590,887 
41,998 
29,283 
314,787 
375,000 
26,815 
215,000 
936,051 
208,806 
The accompanying notes to financial statements are an integral part of this balance sheet. 
$1,211,920 
616,815 
727,245 
$2,555,980 
 YEAR ENDED DECEMBER 31, 1954 
TRANSPORTATION REVENUE 
Mail ... .. ....... ... . . .......... .... .. ....... . . .... .. ....... ..... .. .. . $2,328,921 
Passenger .. ............. . . . . , . ..  . . . ..... ....  ......................... . 3,351,782 
75,630 
20,975 
46,734 
tt;;:sb;ii;i~- 
-- . . 
 . :::::::::::::::.:::::::::::::::::::::::::::::::::: 
Non-scheduled transport service . . . .. .. ... . . . ... ....... .. .. ... .......... . $5,824,042 
OPERA TING EXPENSES 
Flying operations . ..... . . . ..... ... . ... ..... . ...... . . ... ..... . .... . . .. . . 1,654,155 
724,209 
941,297 
365,761 
252,160 
651,665 
139,796 
392,661 
535,557 
Flight equipment maintenance ... . . . . ..... .................. . .. ......... . 
Ground operations ......... .. .. . ... .. ........ . . . . ................ . ... . 
Ground and indirect maintenance . . .. .. .. .... . .... . . . . . . . ...... . .. .... .. . 
Passenger service .... .... .... ........ . .. .... .. . . . ............ . ........ . 
1'raffic and sales ...... . ......... .. .. .. ... . . ... . ...... . ...... . ......... . 
Advertising and publicity . .... ... ... .. . ......... .. . ................. . .. . 
General and administrative ..... . . . .... ... . . . . .. ... . ........ ... ......... . 
Provision for depreciation and obsolescence .. . . .. .. . ..... ................ . 5,657,261 
166,781 
Operating profit . . . ..... .. .. . ..... ... . ..... .. .... .. . . . . . . . . .. . 
OTHER INCOME 
Incidental revenue and cash discounts earned .. . . . . . . ..... . . . ..... .. ...... . 5,283 
172,064 
OTHER DEDUCTIONS 
Interest ... . . . . .. ... . .......... . ... . ... .. . . . . . ...... . ... .. . ....... . . . . 44,470 
7,610 
5,227 
3,050 
I.oss on sale of equipment ... ...... ...... . ...... . ... . .... ..... . . . . . .. .. . 
Amortization of extension and development expense .. . ................... . 
Sundry .. ... .. .................................... . ....... ... .. . .... . . 60,357 
NET EARNINGS ...... . ..... ... ........... . .... .. .. . . . . . . . .... . . . $ 111,707 
The accompanying notes to financial statements are an integral part of this statement of earnings. 
YEAR ENDED DECEMBER 31, 1954 
Earned surplus (deficit)-January 1, 1954 .. ...... .. ............. . . .... . ........ ... .. .. .... . 
Net earnings for the year ended December 31, 1954 . . .. ...... .. .. .. ............ . ...... ..... . 
$320,513 
111,707 
EARNED SURPLUS (DEFICIT)...:_DECEMBER 31, 1954 .............................. . $208,806 
The accompanying notes to financial statements are an integral part of this s_ 
tatement of earned surplus. 
NOTES TO FINANCIAL STATEMENTS- December 31, 1954 
1. The company is operating under a temporary certificate of public conven- 
ience and necessicy granted by the Civil Aeronautics Board for a period of 
five years terminating on September 30, 1955. The company has filed a 
petition with the Board requesting that a permanent c.ertificate be issued. 
2. Mail revenues from the United States Government through June 30, 1954 
are stated in accordance with final rates established by the Civil Aeronautics 
Board. Mail revenues from July 1, 1954 are based on a permanent sliding 
scale rate as fixed by the Board on December 10, 1954. 
3. It was not necessary to provide for Federal or State income taxes on earnings 
of the current year as the carryover of prior years' net losses are sufficient 
to eliminate any tax liability. 
4. During 1.954 the company issued $215,000 of 6% convertible debentures due 
on Julv 31, 1964. The debentu1es may be redeemed by the company in 
whole, or from time to ame in the amount of $1,000 or any multiple thereof, 
by giving at least thirty days notice. A premium will be paid on the redemp- 
tion of any debentures priorto July 31, 1959, as follows : 3% of the principal 
amount of debentures redeemed from July 31, 1954 to and including July 
31, 1956; 2% of the principal amount of debentures redeemed from/uly 31, 
1956 to and including July 30, 1958, 1% of the principal amount o deben- 
tures redeemed from July 31, 1958 to and including July 30, 1959. No 
premium will be paid on debentures redeemed subsequent to July 30, 1959. 
The debentures are convemble to common stock of company, as follows : 
$3.00 principal amount of such debenture for each share of common stock 
converted on or before July 30, 1959; $4.00 principal amount of such 
debenture for each share of common stock converted on or before July 30, 
1961 ; $5.00 principal amount of such debenture for each share of common 
stock converted on or before July 30, 1964. 
5. On December 3, 1954 the company entered into a loan agreement with the 
Northwestern National Bank of Minneapolis under which the company 
borrowed $600,000 at 4% repayable in monthly installments with the last 
payment due on December 10 1957. As security for the loan, the company 
pledged eighteen DC-3 aircraft. Among other things, the company agrees 
that it will maintain current assets that are equal to or in excess of its current 
liabilities; however, for the purpose of this computation current liabilities 
will not include any indebtedness to the bank under this loan agreement. 
The proceeds of the loan were used to pay the indebtedness to the Purdue 
Research Foundation. 
6. On February 19, 1953 the company adopted a stock option plan for emJ?loy- 
ees. The plan calls for the setting aside of 60,000 shares of authorized but 
unissued common stock of $1.00 par value per share of the company. 
Options for the purchase of such stock at $2.8125 per share will be granted 
from time to time by the Board of Directors. This plan will terminate on 
February 19, 1956. On January 21, 1955 the Board of Directors approved 
an option to two officers of the company to purchase 10,000 shares each 
at the price stated above. 
7. The company has an agreement to purchase 80,054 shares or approximately 
96% of the capital stock of Lake Central Airlines, Inc. The contemplated 
acquisition is awaiting approval of the Civil Aeronautics Board. 
 1954 1953 
Operating Revenues 
Passenger .. ..... .. .. . . . . . ..... . $3,351,781.58 $2,303,738.15 
Mail .... ... .. . . ... ... . . . . . .... 2,328,920.66 2,468,685.07 
Express .. ..... . .......... . ..... 75,630.18 68,117.20 
Excess Baggage . . ...... . ....... . 20,975.32 15,738.68 
Non-Scheduled Trans port Service . . 46,734.15 25,436.29 
TOTAL ..... . . . . . . . . . . . . . ..... .. .. $5,824,041.89 $4,881,715.39 
Operating Expenses 
Flying Operations . . ............ . $1,654,154.77 $1,378,219.93 
Flight Equipment Maintenance . . . 724,209.22 690,589.12 
Ground Operations .. .. . .. . . ... . 941,297.10 854,544.61 
Ground and Indirect Maintenance . 365,761.44 362,023.66 
Passenger Service ... ... . . ... . . . . 252,159.61 207,488.94 
Traffic and Sales . .. .. . .. . . . . .. . . 651,664.67 557,884.89 
Advertising and Publicity .. . .... . 139,796.36 116,451.67 
General and Administrative . .. . . . . 392,661.04 335,891.60 
Depreciation and Obsolescence ... 535,557.08 428,307.61 
TOTAL. . . .. . .. .. ..... .. . . .. . . . ... $5,657,261.29 $4,931,402.03 
Net Operating Income (or Loss) . . 166,780.60 (49,686.64) 
Amortization of Route Develop- 
ment Expense . .... .. ....... . . (5,226.58) (10,618.48) 
Other Income or Expenses, Net .. . (49,846.70) (54,283.13) 
Net Profit or (Loss) ..... .. . ..... $ 111,707.32 $ (114,588.25) 
1952 1951 1950 1949 1948 
$1,470,536.00 $ 860,598.47 $ 427,278.43 $ 271,575.86 $113,648.51 
1,681,541.47 1,181,596.40 1,355,145.00 1,036,243.00 580,968.00 
55,861.17 45,172.61 18,636.56 8,363.95 5,962.67 
12,783.22 5,643.14 2,418.65 1,519.04 1,012.27 
-0- -0- -0- -0- -0- 
$3,220,721.86 $2,093,010.62 $1,803,478.64 $1,317,701.85 $701,591.45 
$ 910,778.83 $ 591,244.85 $ 459,643.25 $ 350,180.45 $190,630.20 
483,291.68 275,469.03 267,105.13 229,945.55 127,966.18 
631,215.95 417,329.17 418,593.97 321,057.28 201,761.50 
288,406.96 153,247.64 133,142.06 110,236.03 50,414.32 
137,651.63 80,588.72 14,160.56 6,791.19 3,294.22 
313,469.88 182,929.45 38,138.56 26,964.07 16,749.99 
60,030.18 65,295.07 30,069.09 20,302.56 15,682.92 
277,638.21 198,235.10 161,234.03 138,423.88 94,069.39 
205,192.44 143,722.21 120,329.42 99,598.50 54,645.15 
$3,307,675.76 $2,108,061.24 $1,642,416.07 $1,303,499.51 $755,213.87 
(86,953.90) (15,050.62) 161,062.57 14,202.34 (53,622.42) 
-0- -0- (65,014.65) (86,291.77) (73,525.07) 
(36,438.92) 21,317.61 (3,935.17) (3,793.61) (896.51) 
$ (123,392.82) $ 6,266.99 
Board ofn 
irectors 
North c 
$ 92,112.75 
e11tral A . J' 
It mes, Inc. 
We have 
INc examined the 
. (a "Wiscons. balance sh 
$ (75,883.04) $(128,044.00) 
Illenrs of ear . in corporation) eer of NOR.Tr_, 
nings as of D -:i CENT 
_ 
was made in accord and earned surplus fo ecember 31, 1954 a RAL AIR.LINES 
ingly included Suchance With generally a: the Year then ende;dOthe related state_' 
Procedures tests of th cepted aud . . ur exam. . 
as We considered e accounting r 1t111g standards I1Jat1011 
I necessary . ecords and ' and accord. 
n our Opin. in the circu such Other . 
and ion, the ac mstances auditing 
earned surplus companying b . 
Inc. at Decemb Present fairly the Ii alance sheet and 
ended er 31, 195 nancial . statemen 
' in confo 4 and th Pos1t1011 of ,u ts of earnin 
a rmiry  h e result qotth C gs 
consistent basis thr Wit generally acce" sd of its operation r entral Airlines 
ough ..,re ,or th  
our the Year accountmg " e Year then 
 ,-,r1nc1ples 
applied on 
Milwaukee w 
F: , isconsin 
ebruary 14 
 1955 
 STEWARDESSES JOIN NORTH CENTRAL CREWS 
MODERN PASSENGER LOUNGE IN CHICAGO 
SERVICE INAUGURATED TO RESORT CENTERS 
NEW GENERAL OFFICES 
 DC-3 NORTHLINER IN FLIGHT 
MODERNIZED NORTHLINER INTERIOR 
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LINE MAINTENANCE AT TWIN CITIES BASE NEW GROUND OPERATIONS EQUIPMENT