North Central Airlines Annual Report 1956

1956
annual
report
NORTH CENTRAL AIRLINES, INC
GENERAL OFFICES: 6201 Thirty-Fourth Avenue South, Wold-Chamberlain
Field, Minneapolis 50, Minnesota
DIRECTORS
H. N. CARR* GARNET F. DECOURSIN* A. L. WHEELER
WERNER L. CHRISTENSEN ROBERT F. GROVER K. B. WILLETT
ARTHUR E. A. MUELLER*
^Executive Committee
OFFICERS
ARTHUR E. A. MUELLER. Chairman of the Board
H. N. CARR President and General Manager
FRANK N. BUTTOMER . . . . Vice-President, Traffic and Sales
R. H. BENDIO, SR Vice-President, Maintenance and Engineering
ALVIN D. NIEMEYER ; Vice-President, Operations
ARTHUR E. SCHWANDT. . . Vice-President, Industrial Relations
BERNARD SWEET Secretary-Treasurer
REGISTRAR AND STOCK TRANSFER AGENT
NORTHWESTERN NATIONAL BANK OF MINNEAPOLIS
MINNEAPOLIS, MINNESOTA
i A'RLINES
'"'ENUE SOUTH '
'nber/>'n Field
s 5
E ^INNESOL
M'NNEAP,
*/,nes in 1956 M Is and a/f
dership dury
' ^rth Central
ir-miles ^ Lh:jc
]l^y se,
lents were made in
^viceto the t
rZrOUte ^
aiieco^reduce7,?PUb^>
attained. Su^stantialiv
- --nt improvi
<H6m7'td:r
ne O/ the m
,r--P
r
3
iar^r, stronger
,S PPortunh
s throughout
"Pany dU
ring
,to tile stocA
e,r enthusjast
year iS>56 W;
histoi
Aeronautics
tesent system
ain to result
lntensive
<y- North
which, if
Jnvestm,
eotnpany
express its
le system for ,
DW ear' " t,,e
,d
`:n
and orl,
suPport.
Periods of j
Central has or
approved s
,ent in route
tn the yei
'?!e dev'lp-
'
TMe "''ll the
`'Id nxpan
j
dereiopnten,
lrs ahead.
As sve e
J,'shed o
aviation.
77eareP
rou
fd^lopmen
,
"nprecedented
records (
future of
u to have e:
ln commei
growth.
A
*THUR
Cho'"nan of toUELLEl
Board
NORTH CENTRAL AIRLINES in 1956 again established
new records in passenger, air express and air mail
traffic and commercial revenues for the nation's local
airline industry.
Commercial revenues totaled a record $6,446,781
in 1956, an increase of 26% over 1955. Operating
costs were reduced from 102.8^ per plane-mile in
1955 to 99.6^ in 1956, one of the lowest in the
industry.
Despite this sharp increase in revenues and sub
stantial reduction in costs, North Central realized a
net profit after taxes of $34,176 compared to $128,449
in 1955. Operating profit in 1956 was $109,182 after
depreciation charges amounting to $301,161. Income
taxes were $45,700 compared to $18,000 in 1955.
Taxes were minimized in 1955 because of losses in
curred in previous years.
The 1956 net profit also reflects a $171,133 reduc
tion in Federal air mail subsidy, despite a 22% in
crease in flight service to the traveling public. This
profit, based on a permanent mail rate through No
vember 22, 1956, and a temporary rate after that date,
is subject to upward adjustment when a new perma
nent rate is established by the Civil Aeronautics Board.
The former permanent rate, set in 1954, did not ade
quately anticipate the company's rapid expansion or
provide for income tax requirements. When the final
rate is determined, it will be retroactive to November
23, 1956.
In hearings before the Civil Aeronautics Board, the
local airline industry has petitioned for a review of
the Board's mail-rate policy. The industry is seeking
adequate compensation for its steadily expanding
service and a more realistic return on investment.
Hill'll--P'l li '
Declining Per Cent of Air Mail Revenue
22% f Total Revenue
19%
1948 1949 1950 1951 1952 1953 1954 1955 1956
In June, North Central announced its intention to
redeem its 10-year, 6% convertible debentures on
July 31, 1956 --eight years in advance of the due
date. All debentures were converted into common
stock of the company by the redemption date.
AGGRESSIVE
ROUTE DEVELOP MENT
North Central Airlines is executing one of the most
aggressive route development programs in the local
service industry. In terms of route miles, North Cen
tral would become the nation's largest scheduled car
rier if the Civil Aeronautics Board approves the
majority of the new routes for which the company
has applied. The present system of 51 cities in nine
states would be expanded to 145 cities in 17 states
and one Canadian province. It would reach east to
Buffalo, New York, south to Kansas City, Missouri,
west to Denver, Colorado, and north to Port Arthur-
Fort William, Ontario.
The company's applications pending before the
Board propose the addition of some 12,000 miles and
94 cities to the present 3,240-mile system. This would
make North Central five times larger, as shown on the
accompanying map. In addition, North Central has
on file with the Board long-range plans for 1,072
miles of helicopter routes serving 53 points in the
metropolitan areas of the system.
A major portion of the company's effort, as well as
substantial expendimres, has been directed toward the
successful conclusion of these applications and the
building of a larger, stronger airline. In addition to
filing for several new routes in 1956, North Central
participated in six major route cases before the Civil
Aeronautics Board during the year. The results of this
tremendous investment in route development will be
realized within the next two years, with a Board deci
sion affecting North Central occurring on an average
of every 90 days.
The most recent award in this intensive expansion
program occurred in January of this year when the
Board selected North Central to extend service from
Grand Forks, North Dakota, to Omaha, Nebraska, via
Fargo, North Dakota; Watertown, Brookings, Sioux
Falls and Yankton, South Dakota; Sioux City, Iowa;
and Norfolk, Nebraska. This 579-mile segment in
creased the system 22% to 3,240 route miles and 51
cities in nine states, making the airline precisely three
times larger than it was at the start of service nine
years ago. The new route will be inaugurated on
June 1.
Meanwhile, Civil Aeronautics Board action on sev
eral other route cases is imminent. Following is the
status of North Central's applications in those cases:
Lake Central Acquisition
The U. S. Circuit Court of Appeals in Chicago on
March 5, 1957, upheld North Central's contract for
the purchase of 96% of the stock of Lake Central Air
lines. This reverses a District Court judgment declar
ing that the contract had been breached. The judg
ment was sought by a minority employee group of
Lake Central Airlines who had entered into a second
ary agreement to purchase the stock, subject to the
prior rights of North Central. The Civil Aeronautics
Board Examiner last fall recommended the purchase,
and the acquisition now awaits approval by the Board,
which had deferred decision pending outcome of the
appeal.
The merger would extend North Central's system
east to Buffalo, New York, and add 1,986 route miles
and 28 cities to the Northliner system.
Seven States Area Investigation
A Bureau Counsel of the Civil Aeronautics Board
recommended in February, 1957, that North Central
Airlines extend service to a number of cities in the
vast Seven States Area. The investigation is being con
ducted by the Board to determine the need for im
proved and additional airline service in the states
south and west of North Central's present system.
North Central's applications in this case propose
over 6,000 route miles reaching as far west as Denver
and south to Kansas City, with service to 47 additional
cities. This is a complicated case involving a number
of airline applicants, and the Examiner's recommen
dation is not expected until the end of this year, fol
lowed by a final decision sometime in 1958.
Great Lakes Area Investigation
Public hearings in the Great Lakes Area Investigation
will be conducted next month. Like the Seven States
case, the Great Lakes Investigation will determine the
need for improved air service in the region embracing
the five Great Lakes. Here North Central proposes a
network of routes which would ( 1 ) link 15 Michigan
cities with their major metropolitan markets of De
troit, Michigan; Chicago, Illinois; and Milwaukee,
Wisconsin; (2) provide local service between Chi
cago and Cleveland, Ohio, and ( 3 ) improve nonstop
service between Detroit and Cleveland; Detroit and
Toledo, Ohio; Detroit and Lima, Ohio; and between
Toledo and Columbus, Ohio. These routes involve
some 1,500 additional miles.
Duluth Air Service Case
The Examiner's recommendation is expected momen
tarily on an application to provide nonstop service
between the Twin Ports (Duluth, Minnesota-Superior,
Wisconsin) and Chicago, Milwaukee, Madison and
Green Bay. Also being considered with this applica
tion is a route between the Twin Ports and Sault Ste.
Marie, Michigan, via Ironwood, Hancock-Houghton
and Marquette, Michigan.
The Bureau Counsel in the case recommended in
December that North Central be awarded the nonstop
authority, that service be extended to Sault Ste. Marie
and that Northwest Airlines' authority to serve the
Twin Ports be permanently suspended.
This case marks the first time a metropolitan area
has strongly urged the permanent suspension of a
trunkline in favor of a local service carrier. At the
public hearing in Duluth last August, a host of civic
witnesses testified unanimously in favor of nonstop
authority for North Central and permanent suspension
of Northwest at the Twin Ports (Northwest was tem
porarily suspended there in 1952 when North Cen
tral inaugurated service between the Twin Ports and
the Twin Cities).
North Central is now required to make a minimum
of four stops on all flights between Duluth-Superior
and Chicago. Nonstop authority would improve the
Twin Ports' airline service considerably, increase use
of North Central's service, and materially strengthen
route structure. The nonstop flights would be operated
in addition to the present service. A final decision by
the Board is expected this summer.
Chicago-Milwaukee-Twin Cities Case
Early last year the company filed application for
authority to operate nonstop flights between the Twin
Cities (Minneapolis-St. Paul, Minnesota) and Chi
cago, Twin Cities and Madison, Twin Cities and Mil
waukee and between Madison and Chicago. This non
stop authority is held exclusively by Northwest Air
lines. Four trunklines have also applied to operate
between Chicago and the Twin Cities. All applica
tions have been consolidated into a single proceeding,
and public hearings will be held in May.
% OF
GAIN 1948
105 1949
26 1950
-4 1951
45 1952
49 1953
21 1954
23 1955
22 1956
798,014
SCHEDULED MILES FLOWN
1,633,936
2,050,946
1,977,815
2,859,158
4,261,743
5,174,209
6,374,354
7,754,836
Port Arthur-Fort William
Steps are being taken to re-open the bi-lateral treaty
between the United States and Canada which is re
quired for action on an application to extend service
to Port Arthur-Fort William, Ontario, from Duluth-
Superior and from Hancock-Houghton.
Chicago-Detroit Route
The U. S. Court of Appeals in Washington, D. C, in
November upheld the Civil Aeronautics Board deci
sion in which the Board in February, 1955, awarded
North Central Airlines the local service route between
Chicago and Detroit. The Board's decision was chal
lenged by an unsuccessful applicant for the route. This
route is now a part of North Central's permanent
system.
SERVICE INCREASED 22%
North Central Airlines offered more service to the
traveling public in 1956 than in any previous year.
The DC-3 Northliner fleet flew 7,754,836 miles, an
increase of 22% over 1955. Since no new routes were
inaugurated in 1956, this increase reflects the strides
made during the year in the development of the pres
ent system, by improvements in route patterns and
intensification of flight schedules.
Service to Chicago's second airport, new O'Hare
Field, was inaugurated on April 29, 1956. The num
ber of daily flights between the two Chicago airports
and Milwaukee now stands at 51, one of the world's
most frequent flight schedules.
Another round-trip flight between Chicago and the
Twin Cities was inaugurated during the year, along
with additional service between the Twin Cities and
Duluth-Superior, between Chicago and Detroit and
between Chicago-Milwaukee and a number of inter
mediate Wisconsin cities. New early morning service
to the metropolitan cities was.instituted by overnight
ing aircraft at selected intermediate points for morn
ing flight origination, and new limited-stop flights
have substantially improved service over a number of
important routes.
In terms of flight operations, North Central Air
lines attained "trunkline" proportions in 1956. The
airline currently operates nearly 100 daily flights --
about 650 take-offs and landings for an average of
one operation every 90 seconds.
Major improvements in facilities and procedures
during the year have resulted in increased operational
reliability and better passenger service. Airport ex
pansion and additional radio navigational aids have
enabled North Central to provide better service at
several smaller cities during marginal weather condi
tions. More than half the cities on the system have
begun major airport improvement programs which
will be completed in 1957 and 1958. These include
lengthening runways and constructing new runways,
laying additional taxiways, installing instrument land
ing systems, building modern passenger terminals, and
purchasing additional acreage to protect approaches
for future expansion.
To expedite operations and reservations communi
cations, new automatic "selective" teletype circuits
were installed system-wide, and a private line tele
phone between the Twin Cities and Chicago via key
cities was placed in operation. To better handle the
rapidly growing passenger reservations traffic, the
Chicago Reservations and System Space Control offices
were transferred to more suitable quarters where
equipment and procedures are designed for greater
efficiency and speed.
The Confirmed Ticket Pick-up policy (proof of
ticket purchase before confirming a passenger's reser
vation) is helping to reduce the "no-show" and late-
cancellation problem. This procedure was put into
effect by the entire scheduled airline industry in Sep
tember.
North Central has plans to increase flights to the
Wisconsin cities now threatened with loss of service
by the Chicago and Northwestern railroad. The rail
road has petitioned to discontinue 21 trains, including
several between Chicago and Madison, Chicago and
the Twin Cities, Chicago and Milwaukee, Madison
and Milwaukee, and Milwaukee and Green Bay -- all
routes currently served by North Central.
TRAFFIC LEADERSHIP
North Central again established new traffic records
for the nation's 13 local airlines in 1956 and further
strengthened its position of industry leadership.
A total of 549,654 revenue passengers flew the
Route of the Northliners in 1956, representing an in
crease of 28% over the 1955 total of 430,445 passen
gers and a lead of 36% over the second-place local
carrier. North Central's passenger business would have
been even greater if the weather conditions had not
been unusually severe during the four winter months
of the year. In addition to scheduled service, North
Central carried 2,121 passengers on 113 charter trips,
10 of which involved more than one aircraft.
Air express shipments rose to 4,959,925 pounds, a
gain of 15% over 1955 and 66% more than the
second local airline.
Air mail volume reached a record 2,174,801 pounds,
an 18% increase. This exceeds the second-place car
rier by 29%. In addition to air mail, North Central
advanced 581,062 pounds of regular mail which is
ordinarily carried via surface transportation. This type
of mail is carried on selected flights over the inter
peninsular Michigan route and between the Twin
Cities .and Duluth-Superior, and over all routes dur
ing the Christmas postal rush.
While the amount of scheduled service (plane-
miles) increased 22% in 1956, revenue passenger-
miles increased 24% to 83,052,834. Load factor (per
centage of seats occupied) rose from 50 to 52%..
In July more persons boarded North Central flights
at Milwaukee than those of any other airline, marking
the first time a local carrier has surpassed the trunk
lines at a major terminal. A new single-day system
passenger record was set on October 13 when 2,315
passengers enplaned.
Monthly system traffic records were 56,467 revenue
passengers in August and 39,422 ton-miles of air ex
press and 20,665 ton-miles of air mail in October.
EQUIPMENT PLANS
The company today operates 24 aircraft, all Douglas
DC-3's, four more than a year ago at this time. Three
of the additional aircraft, operated on long-term lease,
were obtained last summer to meet the constantly
growing passenger traffic demands. The other was
purchased this year in preparation for route expansion.
Average daily aircraft utilization rose sharply from
six hours and 46 minutes in 1955 to a record seven
hours and 40 minutes in 1956, reflecting near maxi
mum equipment efficiency and the high frequency of
service North Central is providing its cities.
For over a year, management has conducted an in
tensive equipment-replacement study. Decision on the
purchase of new aircraft is dependent primarily upon
developments in the company's route program. Should
the Civil Aeronautics Board award the nonstop routes
for which North Central has applied, the company
would negotiate immediately for purchase of several
new aircraft, not only to operate the nonstop routes
but also to augment service on present routes. Addi
tional DC-3's would be purchased from time to time
in accordance with traffic growth. The DC-3's and
new aircraft would serve as an "interim" fleet until a
suitable replacement is available.
FORECAST
As a result of the company's aggressive route develop
ment program, North Central Airlines will experience
unprecedented growth in 1957 and 1958. In addition
to system expansion, the company anticipates dramatic
improvements in present route certification, for ex
ample, the nonstop rights for which it has applied.
These developments will enable the company to im
prove and expand service, operate more efficiently and
at the same time, increase commercial revenues con
siderably.
North Central will establish new industry records
in commercial revenues again in 1957. The company's
two-millionth passenger will be carried in May, and
passenger traffic over the system as now constituted
is expected to approach the 700,000 mark for 1957.
With this high volume of traffic, continued efficiency
of operations and important route improvements, the
company will be in a position to strengthen its finan
cial condition substantially during 1957.
549,654
1948 1949 1950 J 951 1952 1953 1954 1955 1956
2,174,801
1948 1949 1950 1951 1952 1953 1954 1955 1956
4,959,925
1948 1949 1950 1951 1952 1953 1954 1955 1956
Operations commenced February 24, 1948.
AMERICA'S LEADING LOCAL AIRLINE
551,775
Central Bonanza Lake Southern Frontier
Central
West Trans- Southwest Ozark Mohawk Allegheny Piedmont North
Coast Texas Central
POUNDS OF AIR MAIL
Pounds of Air Mail in 1956*
696,900
383,200
403,600
503,100
293,900
Bonanza Lake Central West Mohawk
Central Coast
Southern Trans- Ozark Allegheny
Texas Central
4,959,925
POUNDS OF AIR EXPRESS
Pounds of Air Express in 1956*
2,846,700
2,985,000
2,239,200 ili
1,489,400
1,586,500 1,623,900
339,800 341,200 396,500
West
Coast
Central Bonanza
763,500
996,900
IB
MBHH
Texas Central
Ozark Allegheny North
Central
`Totals for airlines other than North Central are based upon actual figures for the first nine months of 1956 and estimates for the last
quarter of the year. North Central's are actual figures for the entire year.
NORTH CENTRAL. AIRLINES
A*TM#*
MONTANA
ROUTES
ROUTES
KANSAS CITY
ROUTE OF THE NORTHLINERS
EVERY DAY
Flights
w
,,h 189 Trv-k Airl.. f'9- " Cr ' 9 |
NORTH CENTRAI AIRLINES
f
Connecting
S!!"*" '
ls::s:as:ss::
sis 1
One of the world's most intensive schedules
NORTH
* * *
7,754,836 miles in 1956-- 10 million miles this year Symbolizing North Central's nine years
First among local airlines in passengers, mail and express
Seventy flight operations daily at Chicago Midway Airport
NORTH CENTRAL AIRLINES, INC.
ASSETS
CURRENT ASSETS
Cash $ 196,932
Accounts receivable
United States Government $318,937
Traffic 690,376
Other 102,074 1,111,387
Inventories -- at the lower of cost
(determined by the first-in, first-out method) or market
Parts and supplies 188,938
Gasoline and oil 15,729 204,667
Prepaid expenses and sundry deposits 127,761 $1,640,747
INVESTMENTS - AT COST
Capital stock of Aeronautical Radio, Inc.
and Airlines Clearing House, Inc 1,101
Revenue bonds of City of Minneapolis,
Metropolitan Sports Area 1,000 2,101
OPERATING PROPERTY AND EQUIPMENT
Flight equipment (equipment costing approximately
$2,760,000 pledged as security for note payable) 3,185,074
Ground equipment 445,426
Hangar building and improvements to leased property 129,724
Furniture and fixtures 103,457
Total -- at cost 3,863,681
Less depreciation to date 2,130,159 1,733,522
DEFERRED CHARGES
Route development expense 153,768
Other 26,230 179,998
$3,556,368
BALANCE SHEET DECEMBER 31, 19S6
LIABILITIES
CURRENT LIABILITIES
Notes payable
Payments due within twelve months
434% note payable
Other notes payable
Accounts payable
Trade
Traffic
Taxes on income for the year ended December 31, 1956
Unearned transportation revenue
Income taxes withheld from employees
Accrued liabilities
Salaries and wages
Taxes (other than income taxes)
Other
NONCURRENT LIABILITIES
4^4% note payable, secured by pledge of flight equipment,
due in monthly installments to March 10, 1959
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
Deferred income taxes
CAPITAL
Common stock -- authorized, 750,000 shares of $1 par
value; issued and outstanding, 396,614 shares
Paid-in in excess of par value of stock issued
Earned surplus (deficit) *
`denotes red figure.
The accompanying notes to financial statements are an integral part of this balance sheet.
$225,000
11,060 $ 236,060
512,955
725,116 1,238,071
27,100
63,136
49,331
230,916
19,010
221,370 471,296 $2,084,994
500,000
225,000 275,000
26,321
11,060 15,261
18,600 308,861
396,614
812,080 1,208,694
46,181* 1,162,513
$3,556,368
STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1956
TRANSPORTATION REVENUE
Passenger
Mail
Express
Excess baggage
Non-scheduled transport service
OPERATING 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 and obsolescence
Operating profit
OTHER INCOME
Incidental revenue and cash discounts earned
OTHER DEDUCTIONS
Interest
Extension and development expenses
Sundry
Earnings (before taxes on income)
TAXES ON INCOME
Federal normal tax and surtax
State income taxes
NET EARNINGS
The accompanying notes to financial statements are an integral part of this
statement of earnings.
$6,137,216
1,522,211
149,640
40,506
119,419 $7,968,992
2,521,949
960,021
1,346,628
277,790
436,808
1,262,569
216,648
536,236
301,161 7,859,810
109,182
15,345
124,527
30,522
8,566
5,563 44,651
79,876
43,650
2,050 45,700
$ 34,176
STATEMENT OF EARNED SURPLUS (DEFICIT)*
' YEAR ENDED DECEMBER 31, 1956
Earned surplus (deficit)*--January 1, 1956 $ 80,357*
Net earnings for the year ended December 31, 1956 34,176
EARNED SURPLUS (DEFICIT)*--DECEMBER 31, 1956 .$ 46,181*
The accompanying notes to financial statements are an integral part of this
statement of earned surplus.
NOTES TO FINANCIAL STATEMENTS - December 31, 1956
1. Mail revenues through November 22, 1956, were based on permanent rates estab
lished by the Civil Aeronautics Board with revenues subsequent to that date based
on temporary rates which were approved retroactively by the Board in March,
1957. Accordingly, there is included in income the amount of $34,400 representing
estimated additional air mail revenue allocable to 1956 as a result of the new
rates being in effect from November 23. Income taxes of $18,600 were provided
for this additional revenue and included as a deduction in determining net earn
ings. However, since these taxes are not payable until 1958, they have been
shown as a non-current liability on the balance sheet.
2. Effective January 1, 1956, the company revised depreciation rates on aircraft,
engines and radio equipment to reflect extended estimates of useful lives from
three years to four years. As a result depreciation expense for 1956 was approxi
mately $88,600 less than it would have been, if the rates in effect during prior
years had been continued. The revisions will have the effect of increasing depre
ciation provisions after 1956. This change is in conformity with industry practice
as other airlines have, from time to time, changed their depreciation rates to more
accurately reflect the anticipated future life of equipment.
3. As collateral security for the loan from Northwestern National Bank the company
has pledged twenty DC-3 aircraft. Pursuant to the loan agreement, the company
should maintain current assets that are at least equal to current liabilities. How
ever, for the purposes of this computation, liabilities will not include any indebted
ness to the bank under the loan agreement.
4. During 1956 the company proposed to redeem its 6% debentures. However, all of
the holders of such securities exercised their right to convert to one share of
capital stock of the company for each $3 principal amount of debenture. Accord
ingly, 65,054 shares of capital stock were issued with an increase of $65,054 in
the capital stock account and $117,616 in the paid-in-surplus account after reduc
tions in the latter account of $502 representing cash payments in lieu of fractional
shares and the write-off of prepaid debenture expense of $12,128.
5. The company's stock option plan provides that 60,000 shares of common stock be
made available for purchases by employees with options to be granted from
time to time by the Board of Directors. During 1956, six officers exercised options
previously granted and purchased 15,000 shares of capital stock. This resulted in
an increase of $15,000 in the capital stock account and $27,188 in the paid-in
surplus account.
6. The Internal Revenue Service has examined the company's Federal income tax
returns for the years 1953-1955. The only issue is the estimated useful lives for
computing the depreciation provisions for aircraft and engines. The company con
sidered three years as the useful life of such assets while the Service contends
that the useful life should be five years. A deficiency of $204,260 has been pro
posed which is being contested by the company and settlement is anticipated at
a lesser amount. It is important to note that any deficiency paid will be recovered
in future years through lowered income taxes as a result of larger depreciation
deductions than originally anticipated.
7. The company has an agreement to purchase 80,054 shares or approximately 96%
of the capital stock of Lake Central Airlines, Inc., for approximately $80,000. The
sellers claimed breach of contract on the part of the company and sold the stock
to third parties. These third parties sued the company to have the original contract
set aside, but, in a decision rendered by the Seventh Circuit Court of Appeals, the
contract was determined to be binding and the company's position upheld.
An examiner for the Civil Aeronautics Board has recommended that the com
pany be allowed to acquire the Lake Central capital stock. However, a decision
in this matter has not yet been rendered by the Board.
8. In February, 1957, the company purchased one DC-3 aircraft for $87,500. This
purchase was financed by a bank loan of $125,000 to cover acquisition, standard
ization and modification costs.
COMPARATIVE OPERATING STATISTICS
Operating Revenues
Passenger
Mail
Express
Excess Baggage
Non-scheduled Transport Service ..
TOTAL
Operating Expenses
Flying Operations
Flight Equipment Maintenance
Ground Operations
Ground and Indirect Maintenance..
Passenger Service
Traffic and Sales
Advertising and Publicity
General and Administrative
Depreciation and Obsolescence....
TOTAL
Net Operating Income (or Loss)....
Amortization of Route Development
Expense
Other Income or Expenses, Net ....
Net Income or (Loss) Before Taxes.
Income Taxes
Net Income or (Loss)
1956 1955 1954 1953 1952 1951 1950 1949 1948
$6,137,216 $4,933,487 $3,351,782 $2,303,738 $1,470,536 $ 860,599 $ 427,278 $ 271,576 $ 113,648
1,522,211 1,689,890 2,328,921 2,468,685 1,681,542 1,181,596 1,355,145 1,036,243 580,968
149,640 126,476 75,630 68,117 55,861 45,173 18,637 8,364 5,963
40,506 30,477 20,975 15,739 12,783 5,643 2,419 1,519 1,012
119,419 28,711 46,734 25,436 -0- -0- -0- -0- -0-
$7,968,992 $6,809,041 $5,824,042 $4,881,715 $3,220,722 $2,093,011 $1,803,479 $1,317,702 $ 701,591
$2,521,949 $1,959,481 $1,654,155 $1,378,220 $ 910,779 $ 591,245 $ 459,643 $ 350,180 $ 190,630
960,021 845,753 724,209 690,589 483,292 275,469 267,105 229,946 127,966
1,346,628 1,102,295 941,297 854,545 631,216 417,329 418,594 321,057 201,762
277,790 333,608 365,761 362,024 288,407 153,248 133,142 110,236 50,414
436,808 320,195 252,160 207,489 137,652 80,589 14,161 6,791 3,294
1,262,569 921,705 651,665 557,885 313,470 182,929 38,139 26,964 16,750
216,648 185,111 139,796 116,451 60,030 65,295 30,069 20,303 15,683
536,236 456,193 392,661 335,891 277,638 198,235 161,234 138,424 94,069
301,161 470,169 535,557 428,308 205,192 143,722 120,329 99,599 54,645
$7,859,810 $6,594,510 $5,657,261 $4,931,402 $3,307,676 $2,108,061 $1,642,416 $1,303,500 $ 755,213
109,182 214,531 166,781 (49,687) (86,954) (15,050) 161,063 14,202 (53,622)
(8,566) (26,995) (5,227) (10,618) -0- -0- (65,015) (86,292) (73,525)
(20,740) (41,087) (49,847) (54,283) (36,439) 21,317 (3,935) (3,793) (897)
79,876 146,449 111,707 (114,588) (123,393) 6,267 92,113 (75,883) (128,044)
45,700 18,000 -0- -0- -0- -0- -0- -0- -0-
$ 34,176 $ 128,449 $ 111,707 $ (114,588) $ (123,393) $ 6,267 $ 92,113 $ (75,883) $ (128,044)
SYSTEM EXPANDS THREEFOLD IN NINE YEARS
1948 1951
1,080 Route Miles Serving
19 Cities in Three States
1,526 Route Miles Serving
28 Cities in Four States
1954 1957
2,399 Route Miles Serving
39 Cities in Five States
3,240 Route Miles Serving
51 Cities in Nine States
CENTRAL Al