North Central Airlines Annual Report 1957

1957
annual
report
H. N.
CARR
K. B.
WILLETT
GENERAL OFFICES: 6201 Thirty-Fourth Avenue South, Wold-Chamberlain
Field, Minneapolis 50, Minnesota
WERNER L.
CHRISTENSEN
FRANK N.
BUTTOMER
DIRECTORS :
H. N. CARR*
G. F.
DECOURSIN
R.H.
BENDIO, SR
ROBERT F.
GROVER
ALVIN D.
NIEMEYER
WERNER L. CHRISTENSEN
G. F. DECOURSIN*
ROBERT F. GROVER
ARTHUR E. A. MUELLER*
ARTHUR E. A.
MUELLER
ARTHUR E.
SCHWANDT
A. L. WHEELER
K. B. WILLET!'
* 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
A. L. WHEELER .................................. Vice President and Counsel
BERNARD SWEET ........................................ Secretary-Treasurer
REGISTRAR AND STOCK TRANSFER AGENT
NORTHWESTERN NATIONAL BANK OF MINNEAPOLIS
MINNEAPOLIS, MINNESOTA
A. L.
WHEELER
BERNARD
SWEET
ta
,_,-i_.'"'-----O-U_R_1_0_1_h_V_E_A_R_O_F_S_E_R_V_1_c_E ___________ _
NORTH CENTRAL A/RUNES, INC.
6201-34th AVENUE SOUTH
Wold-Chamberlain Field
MINNEA.POlfs 50, MINNESOTA.
To Our Stockholders,
Employees and Friends:
Throughout the fol!ow;ng pages, You w;JJ read <he chron;de of North Central
AirJ;ne, _ <he story of a decade of Public service,
The Year 1957 was the greatest ;n IO Years of scheduled operatfons. It was a year
w&;ch saw our service to the north central states ;ncreased by 20% over 1956.
Your company again established new Passenger, air express and air mail records
and maintained its top position among <he nation's 13 local service airlines.
Twenty.four per cen, more passengers llew the "Route of the Northliners" th;,
Year than during 1956. Norr& Central also set new records in plane miles,
passenger miles and commercial revenues.
March 14, 1958
In 1957, the company inaugurated new service on one imPortant segment and
daily nonstop service on another. Flight schedules were intensified and operational
efficiency improved. Northliners llew 9,500,ooo miles during the Year, offering
more serv;ce to <he traveling Public than ever before.
Applications now on Die With the Civil Aeronautics Board would, if approved,
increase North Central's Present 'Ystem by oVer 11,000 route miles, and would
result in an even stronger company and ;mproved service to air travelers.
The remarkable development of North Central to first place in the local airline
industry has been achieved through <he loyalty and efforts of its 1,300 employees,
the Patronage and confidence of <he traveling public, and the enthusiastic support
of our stockholders and business and civic leaders over our system.
Even though North Central', record during its Urst 10 Years of service has been
one of outstanding Progress, a look at the future Promises even greater achfove.
ments for the company ;n the next decade. With your ass;stance and support,
North Central w;IJ continue to grow and w;JJ maintain its position as America's
leading local airline.
Sincerely,
~~~~
.ARTHUR E . .A. MUELLER
Chairman of the Board
l-I. N. C.ARR
President
NORTH CENTRAL AIRLINES in 1957 main-
tained its position of leadership among the
nation's 13 local airlines and again established
new records in all categories of traffic.
Gross revenues for the year increased to
$10,801,995. Traffic generated resulted in rec-
ord commercial revenues of $7,876,350, an
increase of 22% over 1956. Net earnings for
the year, after tax credits, were $80,791, com-
pared to $34,176 in 1956.
Operating profit in 195 7 was $81,678 after
depreciation charges of $452,993. The income
tax credit of $60,103 results from an adjust-
ment in depreciation rates agreed upon by the
Internal Revenue Service.
The company has, however, been operating un-
der a temporary mail rate since November 23,
1956, and, as a result, the amount of air mail
revenue reported is somewhat less than the com-
pany's claim with the United States Govern-
ment. The permanent rate set by the Civil Aero-
nautics Board in 1954 did not adequately antici-
pate the vast expansion of the company's system,
and a petition for a new permanent rate was
necessary. When the final rate is established, it
will be retroactive to November 23, 1956.
The Civil Aeronautics Board, at the request
of the local service airline industry, has insti-
tuted an investigation to determine the adequacy
5,500
Ten Years of Route Growth 3,471
Certified Mileage
2,659
2,573 2,399
1,080
iii I

1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958
of the rate of return allowed these carriers in
mail rate proceedings. The industry is seeking
adequate compensation for its steadily expand-
ing service and a more realistic return on invest-
ment. A decision is expected in 1958.
At a special meeting November 1, North
Central shareholders voted overwhelming ap-
proval of a five-for-one stock split plan, increas-
ing authorized common stock shares in the
corporation from 750,000 to 3,750,000. As a
result, four additional shares were issued for
each share outstanding to all holders of record
as of November 7, 1957.
AGGRESSIVE
ROUTE DEVELOPMENT
An extensive program of route development,
begun in 1954, is being actively conducted by
North Central Airlines. Current applications
pending before the Civil Aeronautics Board
totaling 11,386 miles would, if all approved,
make North Central the nation's largest sched-
uled air carrier in terms of route miles. The
present system of 5 3 cities in nine midwest
states would be expanded to include 178 cities
in 16 states and three Canadian provinces.
These applications would increase the com-
pany's system fourfold as shown on the system
map included in this report. One hundred twen-
ty-five new cities would be served on an en-
larged Route of the Northliners. Included in
these figures are North Central's applications
for 1,072 miles of helicopter routes to 3 7 points
in the metropolitan areas of the system.
The company is devoting considerable time
and effort and investing substantial amounts
toward the successful development of its sys-
tem. Within the next two years, the results of
this program will be seen as the Civil Aero-
nautics Board renders final decisions on some of
the major applications before it.
The most recent award in North Central's
route development program came in September
when the Board certificated the company to
offer direct, nonstop service between Duluth-
Superior and Chicago. Northliners began flying
the 404-mile segment December 1.
As part of the same decision, the Board
granted North Central authority to operate
from Duluth-Superior to Sault Ste. Marie, Mich-
igan, via Ironwood, Hancock-Houghton and
Marquette, Michigan. The company will in-
augurate this segment in April of 1958.
Service was inaugurated in June on the route
from Grand Forks, North Dakota, to Omaha,
Nebraska, which the Civil Aeronautics Board
awarded North Central in March, 1957. In-
termediate cities on this segment include Fargo,
North Dakota; Watertown, Brookings and
Sioux Falls, South Dakota; Sioux City, Iowa;
and Norfolk, Nebraska. Service to Yankton,
South Dakota, was begun February 1, 1958,
when airport facilities were completed.
Civil Aeronautics Board action on several
other route cases is pending, and the status of
North Central's applications in those cases fol-
lows.
Seven States Area Investigation
Civil Aeronautics Board Examiner Curtis C.
Henderson recommended in December that
North Central's system be expanded to include
2,026 more route miles and 14 more cities in
Minnesota, Wisconsin, North Dakota and South
Dakota. The recommendation would extend the
company's present route between Minneapolis-
St. Paul and Grand Forks west to Minot, North
Dakota, and add a stop at Devils Lake, North
Dakota.
Additional service was also recommended be-
tween the Dakotas and Minneapolis-St. Paul -
from Minot, North Dakota, to the Twin Cities
via Bismarck-Mandan, North Dakota, and Aber-
deen, Huron, Brookings, South Dakota, and
from Bismarck-Mandan to the Twin Cities via
Jamestown, Fargo-Moorhead, Fergus Falls and
Alexandria.
Examiner Henderson's recommendation also
included two routes between Sioux Falls, South
Dakota, and the Twin Cities, one via Mitchell,
Huron and Watertown, South Dakota, and
another via Worthington and Mankato, Min-
nesota.
Service was recommended to several cities in
Wisconsin. Ashland would be added as an in-
termediate point on the present route between
Duluth-Superior and Ironwood, Michigan, and
Marshfield and Appleton would be served on
a segment from Minneapolis-St. Paul to Mil-
waukee via Eau Claire.
This recommendation is a preliminary de-
cision and requires further procedural steps by
the Board before becoming final. A Board
ruling is expected by the middle of 1958.
Great Lakes Area Investigation
Hearings in the Great Lakes case were held
early in 1957 and were followed in December
by a recommendation from Counsel James A.
Thomlinson of the Civil Aeronautics Board's Bu-
reau of Air Operations. This was the first step of
a lengthy investigation into the need for addition-
al airline service in the five Great Lakes states.
The recommendation urged that North Cen-
tral be certificated to extend its system 1,067
miles to 10 additional cities in Michigan. This
includes a route connecting Sault Ste. Marie,
Michigan, with Chicago via Cheboygan, Traverse
City, Manistee, Grand Rapids and Benton Har-
bor, Michigan. Another segment would be add-
ed between . Sault Ste. Marie and Detroit by
way of Cheboygan, Traverse City, Saginaw,
Flint and Pontiac.
North Central would also be authorized to
operate between Sault Ste. Marie . and Detroit
via Cheboygan, Alpena, Saginaw and Port
Huron. It was further recommended that the
air line be certificated for a route between De-
troit and Milwaukee with stops at Lansing,
Grand Rapids and Muskegon, Michigan.
It is anticipated that the final decision in this
case will be issued early in 1959.
% OF
GAIN 1948
105 1949
26 1950
-4 1951
45 1952
so 1953
22 1954
22 1955
23 1956
20 1957
798,014
1,633,936
REVENUE MILES FLOWN
2,050,946
1,977,815
2,868,727
4,290,409
Chicago-Milwaukee-Twin Cities
Case
The company's application to operate nonstop
flights between Minneapolis-St. Paul and Chi-
cago, Twin Cities and Madison, Twin Cities and
Milwaukee, and between Madison and Chicago
was filed with the Civil Aeronautics Board in
19 5 5. The case was heard by the Civil Aero-
nautics Board Examiner in September, 1957,
but his recommendation has not yet been issued.
This nonstop authority is now held exclusively
by a trunk airline. Four other trun* lines also
have applied for certification to operate between
Chicago and the Twin Cities.
Canadian Applications
Steps are being taken to re-open the Bilateral
Treaty between the United States and Canada
which is required for action on an application
to extend North Central's service to Port Arthur-
Fort William, Ontario, from Duluth-Superior
and Hancock-Houghton, Michigan, and to link
International Falls, Minnesota, with Winnipeg,
Manitoba. These three segments would total
463 miles.
In addition, applications were filed February
19, 1958, with the Civil Aeronautics Board to
allow North Central to serve three more routes
in Canada, totaling 828 miles. North Central
proposes to offer nonstop service between Min-
neapolis-St. Paul and Winnipeg, Manitoba;
5,244,830
6,415,045
7,893,532
9,495,624
Detroit and Toronto, Ontario; and Minot, North
Dakota, and Regina, Saskatchewan.
These applications would add 1,291 route
miles and five Canadian cities to the North
Central system.
Erie-Detroit Service Case
In 1956, North Central applied for this 173-
mile route, but two other local service carriers
were certificated for this mileage by the Civil
Aeronautics Board. However, this route is again
the subject of an investigation by the Board.
To maintain its status as an applicant in the
case, North Central has filed a petition to in-
tervene. A decision is expected sometime in
1958.
Lake Central Acquisition
In Oc(ober, 1952, North Central stockholders
approved a contract for purchase of 96% of
the outstanding stock of Lake Central Airlines,
a local service carrier operating primarily in
Michigan, Indiana, Ohio and western Pennsyl-
vania. Public hearings were concluded in De-
cember, 1955. The following year the U. S.
Circuit Court of Appeals in Chicago upheld
North Central's contract for purchase of the
stock, reversing a District Court judgment
which declared that the contract had been
breached.
In April, however, the Civil Aeronautics
Board denied North Central's application for
the purchase of this stock. Subsequently, the
company has appealed the Board's decision to
the U. S. Circuit Court of Appeals and action
1s pending.
SERVICE INCREASED 20%
In 1957, North Central again led the local air-
lines in service offered to the traveling public.
The fleet of 27 DC-3 Northliners flew a total
of 9,495,624 revene miles - a 20% increase
over 1956. In April, the company carried its
two-millionth passenger.
Service on two new segments was inaugu-
rated in 1957. In June, flights were begun on
the route between Grand Forks, North Dakota,
and Omaha, Nebraska, via intermediate cities.
In December, North Central inaugurated non-
stop service on the 404-mile Duluth-Superior
to Chicago route. Two daily round trips carry
passengers between the Twin Ports and Chicago
in two hours, 30 minutes.
To further improve North Central service,
flight frequency was increased on the follow-
ing high-density segments: Chicago to Detroit,
Twin Cities to Duluth-Superior, and Chicago to
Milwaukee. During peak months; service was al-
so increased to a number of intermediate cities.
\
IMPROVED FACl~ITIES
Several refinements in direct public service
were added to the Route of the Northliners.
In October, the company opened a downtown
ticket office in Minneapolis. In December,
coinciding with inauguration of the Duluth-
Superior to Chicago nonstop flights, a new
city ticket office was opened in the Duluth
Hotel. North Central's ticket counter and pas-
senger lounge in the busy Chicago Midway
terminal took on a new look in December.
Completely enlarged and remodeled, it is now
the most modern and comfortable airline ticket
office at .M;idway Airport.
In January, the company, in an incentive
program to improve service, presented its first
"Station of the Year" awards, honoring the
stations recognized for the best all-around per-
formance records. Specially-prepared bronze
plaques were presented to both Green- Bay and
Chicago Reservations-Control.
A program to enhance the over-all appear-
ance of North Central's stations and offices and
improve efficiency was started in May. "Oper-
ation Sparkle" was a system-wide success and
attracted national attention.
Enforcement by North Central and the en-
tire airline industry of the "No-Show" control
plan for reservations has produced excellent
results. Previously, up to 14 % of the total
confirmed passengers failed to claim reserved
space. An industry-wide survey in December
showed that this figure has been cut in half,
resulting in a more efficient reservations serv-
ice to the traveling public on all commercial
airlines.
Improvements in North Central's facilities
and procedures have resulted in increased oper-
ational reliability and better passenger service.
During the year the company attained a per-
formance factor of over 96 % , with more than
7 2 % of the flights arriving and departing all
cities on schedule. This operations record is
especially significant because the region served
by North Central presents some of the most
difficult flying conditions in the country.
Many airport improvement programs were
completed during 195 7. These included
lengthening runways and building new ones,
constructing additional taxiways, installing in-
strument landing systems, building and im-
proving passenger terminals, and acquiring ad-
ditional land for further expansion.
TRAFFIC LEADERSHIP
As previously mentioned, North Central dur-
ing 195 7 maintained its position of leadership
among the nation's 13 local airlines in all
categories of traffic.
A total of 680,930 passengers were en-
planed on Northliners last year for a 24 %
increase over the 1956 figure of 549,654. This
was 49% above the second-ranking local serv-
ice airline. While the amount of service ( rev-
enue plane miles) increased 20% in 1957,
revenue passenger miles increased 2 5 % to
106,723,000.
The company boarded 4,884,429 pounds of
air express during 195 7, a reduction of only
2 % , despite a three months' Railway Express
Agency strike. This was 8 5 % greater than the
second-place local carrier.
Air mail volume reached a record 2,666,408
pounds, a gain of 2 3 % over last year and 8 5 %
above the second-place local air line. In addition,
672,178 pounds of surface mail were carried on
selected flights throughout the year and over
all routes during the Christmas mail rush.
North Central broke its previous daily traf-
fic record on October 4 when it carried 2,739
revenue passengers, a new record for the na-
tion's local service airlines, and very close to
at least two trunk carriers. Previous single
day's record was 2,626 set by North Central
in August. The company also established a
new monthly traffic record for the local air-
line industry by carrying 70,333 revenue p~s-
sengers in August. This figure was 46%
ahead of the second-ranking local carrier.
EQUIPMENT PLANS
When North Central began scheduled oper-
ations ten years ago at Madison, Wisconsin, the
company operated three nine-passenger Lock-
heed 10-A's. Today, the Northliner fleet consists
of 26 Douglas DC-3's, two more than last year.
Four of these are operated on long-term leases.
Two were purchased during 1957 to meet grow-
ing passenger demands and route expansion
needs. A 27th aircraft was leased during the peak
passenger summer months. It was also used for
training of new flight personnel. Tentative plans
call for adding five more DC-3's in the spring
to meet route expansion needs.
Also under consideration is the purchase of
larger, faster aircraft for use on the company's
long-haul routes and some of its other high-
density segments. After a thorough study by man-
agement of available aircraft, it has been deter-
mined that the type of plane most suited to
North Central's present need for larger equip-
ment is either the Convair-440 or Convair-340.
These are twin engine, 50-passenger aircraft
with cruising speeds of over 280 miles per hour.
Plans for financing the purchase of this
equipment are underway, and an order will
be placed when suitable arrangements have
been completed and necessary hangar and other
facilities are available.
The addition of this new equipment will
allow the company to provide faster and more
comfortable service to the traveling public
over its expanded system.
FORECAST
The outstanding record of progress established
by North Central Airlines during its first ten
years of operation will continue to an even
greater degree in the years to come. The ag-
gressive route development program under-
taken by the company will be pursued thrnugh-
out 1958. A final decision in the Seven States
Area case is expected within a few months;
preliminary decisions on other route appli-
cations will be forthcoming. These, along with
additional limited-stop authorizations, will
bring about a dramatic growth of the North-
liner system during the coming year.
In January and February of 1958 traffic
was 2 3 % ahead of the same period last year.
It is anticipated that this trend will be main-
tained and some 850,000 passengers will fly
North Central in 1958. With this high vol-
ume of traffic and the resultant increase in
commercial revenues, the company will con-
tinue to strengthen its financial position dur-
ing the year.
1947
Wisconsin Central Airlines is certified for scheduled operations
after The Four Wheel Drive Auto Company of Clintonville, Wis-
consin, divests itself of all control. Original sale of stock completed
in four Wisconsin communities and company capitalized at
$100,000. Another selling campaign increases outstanding stock to
$220,000. Underwriting plan by Milwaukee firm results in net
return of $350,000.
1948
Company begins scheduled operations February 24 in Wisconsin,
Minnesota and Illinois with three nine-passenger Lockheed 10-A's.
Original route reaches from Chicago to Hibbing, Minnesota, with
intermediate service to Madison, Rhinelander, Eau Claire, Stevens
Point, Wausau, Clintonville, Oshkosh, Racine and Milwaukee,
Wisconsin; Duluth, St. Cloud and Minneapolis-St. Paul, Minnesota.
1949
Wisconsin Central completes installation of static-free VHF radio
system and private network of navigational aids. Fleet of six Lock-
heeds modified to qualify for instrument authority operation. Com-
pany now operates an extensive system of instrument airways, proba-
bly the longest privately-owned network in the nation. Present
route miles total 1,362 with daily schedule of 5,970 miles.
1950
Passenger load factor increases from 36% to 46%. However, lack
of space and weight restrictions of Lockheed aircraft force Wiscon-
sin Central to turn away many potential passengers and much air
express. Company makes commitment of $450,000 for equipment
conversion program. Purchase of 21-passenger Douglas DC-3 air-
craft and sale of Lockheeds completed the following year.
1951
Mixed fleet of Lockheed Electras and Douglas DC-3's operated until
May when conversion to six of the larger, more modern 21-pas-
senger aircraft is completed. Passenger and express volume more
than double over previous year.
1957
1952
Wisconsin Central changes its name to "North Central Airlines" to
better identify it with growing system which now measures 2,573
miles, largest of existing local service carriers. General offices and
maintenance base moved from Madison to Minneapolis-St. Paul.
Company receives five-year certificate renewal in January and adds
62 % more mileage to system, including transfer of nonstop seg-
ment between Duluth-Superior and Twin Cities.
1953
North Central Airlines offers new service to Grand Rapids, Lansing
and Detroit, linking for the first time upper and lower Michigan.
Service to International Falls, Minnesota, and Manitowoc, Wiscon-
sin, inaugurated. Fleet of DC-3's increases to 19 to match growth
in system route miles.
1954
H. N. Carr, former executive vice president, assumes presidency of
North Central at age 33 to become nation's youngest airline presi-
dent. Carr institutes concentcated cost-cutting campaign, streamlines
flight schedules and inaugurates aggressive route development pro-
gram. Traffic volume exceeds previous year by 42 % . To improve
service to traveling public, stewardesses replace stewards on North-
liner flights.
1955
North Central realizes record net profit and continues to lead local
service airlines in traffic. Inaugurates Chicago-Detroit service re-
placing tru.nkline. Company extends service to Detroit City Airport.
Norchliner fleet of 20 DC-3's converted to 26-seat configuration.
All local service airlines receive permanent certification.
1956
North Central authorized to serve the route between Grand Forks,
North Dakota, and Omaha, Nebraska, via intermediate stops, in-
creasing system 2 2 % to 3,240 route miles and 5 2 cities in nine
states. Company continues to set new traffic records for local service
industry in passengers, air mail and air express volume. Miles flown
increases 22% and commercial revenues total record $6.446,781.
Service on Grand Forks-Omaha segment begins June l. Company
inaugurates nonstop service Duluth-Superior to Chicago December
1. Service authorized Duluth to Sault Ste. Marie, Michigan. Civil
Aeronautics Board Examiner recommends addition of 14 cities in
Minnesota, Wisconsin, North and South Dakota to system as part
of Seven States Area Investigation. CAB Bureau Counsel recom-
mends North Central service for ten more Michigan cities in
Great Lakes Area Case.
* NMth Central observed its 10th anniversary of scheduled operations February 24, 1958.
North Central Airlines is proud to have received the National Safety Council Aviation Safety
Award every year of its operation.Since inaugurating service in 1948, North Central has carried
2,504,380 passengers and flown 391,180,627 miles without a fatality to passenger or crew.
\
NORTH CENTRAL AIRLINES
.
PRESENT ROUTES
OSED ROUTES
/\10N TA NA
MANOAN
SOUTH DAKOTA
WYOM ING
AlllUCf
NEBRASKA
COLORADO KANSAS
MISSOURI
ROUTaE
I
TEN YEARS OF PROGRESS
REVENUE PASSENGERS
48,797
11,398
32,625
- -
1948 1949 1950
AIR MAIL*
503,235
263,696
144,358
-
-
1948 1949 1950
AIR EXPRESS*
201,367
-
1948
294,244
-
1949
638,915
1950
153,047
96,265
1951 1952
761,030
1951 1952
1,762,488
1,612,602
1951 1952
283,556
217,663
1953 1954 1955 1956
1,461 ,090
1953 1954 1955 1956
4,959,925
1,963,886
1953 1954 1955 1956
680,930
1957
2,666,408
1957
4,884,429
1957
*Pounds Operations commenced February 24, 1948.
e -.
OUR 10th YEAR OF SERVICE
AMERICA'S LEADING LOCAL AIRLINE
FIRST IN PASSENGERS
1957
215,113
240,667
247,803
116,987 147,710
164,698
680,930
436,328
418,431
396,168
319,276
254,062
Central Bonanza Lake Southern Trans- Frontier West Southwest Ozark Mohawk Piedmont Allegheny North
Central
Central Texas Coast
FIRST IN AIR MAIL*
1957
1,162,774
646,472
832,276
582,573
451,122 501,360
307,140
Bonanza Central lake West Mohawk Frontier Trans-
Central Coast Texas
FIRST IN AIR EXPRESS*
1957
1,331,525
760,360
886,633
375,597 564,055
323,589
328,334
Central West Bonanza Frontier Southwest Trans- Piedmont
Coast Texas
*Pounds
2,666,408
1,392,308 1,411,731 1,414,824
1,266,141
Southern Allegheny Southwest Piedmont Ozark North
Central
4,884,429
2,603,658 2,634,334
2,238,140
1,762,022
1,411,623
Southern Mohawk lake Ozark Allegheny North
Central Central
ASSETS
CURRENT ASSETS
Cash ................................................
Accounts receivables
Mail (Note 1) ..................................... .
Mail - additional claim ( Note 2) ..................... .
Traffic ............................................ .
Other ............................................. .
Refundable prior years' Federal income taxes (Note 3) ..... .
Inventories - at the lower of cost
( determined by the first-in, first-out method) or market
Pa.res and supplies .................................... .
Gasoline and oil ..................................... .
Prepaid expenses and sundry deposits ...................... .
Total current assets ............................... .
INVESTMENTS - AT COST
OPERATING PROPERTY AND EQUIPMENT
Flight equipment ( Note 4) .. ............................. .
Ground equipment .................................... .
Hangar buildings and improvements to leased property ........ .
Furniture and .fixtures ................................... .
Total- at cost .................................. .
Less depreciation to date ................................ .
DEFERRED CHARGES
Route development expense .............................. .
Other ............................................... .
$1,065,293
258,023
885,560
133,255
28,702
220,538
17,527
3,837,039
458,649
144,662
134,067
4,574,417
2,615,900
228,668
4,837
$ 216,943
2,370,833
238,065
57,909
2,883,750
2,101
1,958,517
233,505
$5,077,873
BALA:NCE SHEET
I
DECEMBER 31, 1957
CURRENT LIABILITIES
Notes payable
LIABILITIES
5 % note to bank, payable on demand (Note 4) .......... .
Current maturities of long-term notes ....... . . . . . ....... .
Accounts payable
Trade ............................................. .
Traffic ....................... . .................... .
Unearned transportation revenue ......................... .
Income taxes withheld and other employee payroll deductions .. .
Accrued liabilities
Salaries and wages .. . ................................ .
Taxes ( other than income taxes ) . . . . . . . . . . . . . . . . . . . . . . . .
Other ........................................... . . .
Total current liabilities .............. . ............. .
NONCURRENT LIABILITIES
5 % note payable to bank, due in monthly installments to
December 10, 1960 (Note 4) ....... . ................. .
Other notes payable, secured by pledge of certain equipment, due
in monthly installments ....................... . ....... .
Less current maturities ............................... .
Deferred rent payable ...... . ........................... .
Total noncurrent liabilities ......................... .
CAPITAL
Common stock- authorized, 3,750,000 shares of $.20 par value;
issued 1,998,070 smres (Note 5) ....................... .
Paid-in in excess of par value of stock issued ................ .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less 13,250 shares of common stock reacquired and held in the
treasury - at cost ..................... . ............. .
The accompanying notes are an integral part of the financial statements.
$ 100,000
241,946
1,213,590
936,062
303,103
27,163
350,711
715,000
23,628
738,628
241,946
399,614
817,518
1,217,132
34,610
1,251,742
7,225
$ 341,946
2,149,652
63,763
74,736
680,977
3,311,074
496,682
25,600
522,282
1,244,517
$5,077,873
STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1957
TRANSPORTATION REVENUE
Passenger .... . ................................ . ................... . $7,372,333
2,925,645
146,287
54,986
273,077
29,667
Mail ............ . ................ . ............................... .
Express ......................... . ................... . ............. .
Excess baggage .................................................... .
Non-scheduled transport service ..... . .... . ........................... .
$10,801,995
Other ...................... . ............................ . ........ .
OPERATING EXPENSES
Flying operations ................................. . ................ . 3,455,867
1,384,841
644,693
560,934
Flight equipment maintenance ....................................... .
Other maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............. .
Passenger service .............. . .................................... .
Aircraft and traffic servicing ......................................... . 3,095,105
621,829
504,055
452,993
Promotion and sales ................................................ .
General and administrative .......................................... .
Depreciation ........... . .......................................... . 10,720,317
81,678
Operating profit ............................................... .
OTHER DEDUCTIONS
Interest ... . . . . . . . . . . . . . . . . . . . . . . . . . . . ....................... . 47,199
6,281
7,510
Extension and development ......................................... .
Sundry .......................................................... . 60,990
Earnings (before income tax credits) ......................... . 20,688
INCOME TAX CREDITS
Refund and credit of prior years' Federal income taxes resulting from
net operating loss carryback (Note 3) ......... . .................. . . . . 41,503
18,600
Unrequired provision for deferred income taxes (Note 3) ................ . 60,103
NET EARNINGS ............................................. . $ 80,791
The accompanying notes are an integral part of the financial statements.
STATEMENT OF RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1957
Retained earnings (deficit)*-January 1, 1957 ............................ . $ 46,181 *
80,791
Net earnings for the year ended December 31, 1957 ....................... .
RETAINED EARNINGS-DECEMBER 31, 1957 .. . .............. . $ 34,610
*denotes red figure
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS-December 31, 1957
1. Mail revenues for the period from November~3, 1956 are based on temporary
rates established by the Civil Aeronautics Board. On February 28, 1958 the
Board retroactively increased the past temporary rate and also provided for a
higher future rate. This increase has provided the company with additional mail
pay of $858,483 for the year 1957 and $34,400 for the period from November
23, 1956 to December 31 , 1956, or a total of $892,883. Accordingly, the amount
of $892,883 is shown as an account receivable at December 31, 1957 and the
amount of $858,483 is included as 1957 mail revenue. The $34,400 amount was
included as mail revenue in 1956.
2. It is the policy of the Civil Aeronautics Board to provide a scheduled airline
with sufficient mail pay to meet its break-even need and also to provide for a
reasonable return on recognized investment. In accordance with this policy the
company has determined that for 1957 an amount of $258,023 of additional mail
pay (in excess of that described in Note 1) will be applicable under these two
categories. The amount of $258,023 is shown as an account receivable at
December 31, 1957 and a like amount has been included as 1957 mail revenue.
If this anticipated additional mail pay was not included as 1957 income the
company would have sustained a net loss of $177,232.
3. The Internal Revenue Service has concluded its examination of the company's
Federal income tax returns for the years 1953-1956. It was agreed to extend
the useful lives of aircraft and engines from three years to four years how-
ever tax deficiencies did not result because of net operating loss carryovers and
carry backs.
The retroactive temporary mail pay adjustment of $892,883 is reportable as
1958 taxable income, Therefore, for tax purposes, 1957 operations resulted in a
loss which when carried back provide for a refund of 1955 and 1956 Federal
income taxes paid of $28,702. The unpaid portion of 1956 Federal income taxes
of $12,801 was credited to 1957 earnings resulting in total prior years' tax re-
funds or credits of $41,503.
The amount of depreciation included in the accompanying statement of ear11ings
is less than the related amount allowable for tax purposes because the change
in useful lives of aircraft and en9ines was made on the company's books of
account at a date later than a similar change was made by the Internal Revenue
Service. As a result more depreciation hod been provided for book purposes
than was allowable for tax purposes.
The additional depreciation allowable for tax purposes eliminates the necessity
for a 1957 income tax provision and also eliminates the need for deferred in-
come taxes of $18,600 which hod been provided at December 31, 1956. Ac-
cordingly, this amount hos been credited to 1957 earnings.
4. As collateral security for a loan from the Northwe:.ern National Bonk the
company has pledged twenty-two DC-3 aircraft. In accordance with the loon
agreement, the company should maintain current assets that are at least equal
to current liabilities excluding any liability to the bank under the loan agree-
ment. The bank is aware of the present working capital deficiency and has
agreed to waive this provision of the agreement until December 31, 1958.
5. On November 1, 1957 the stockholders approved on increase in authorized com-
mon stock from 750,000 shores to 3,750,000 shores; reduced the par value of
such stock from $1 . per shore to $.20 per share; and authorized the exchange of
each previous one shore of $1. par value for five new shares of $.20 par value.
6. In January, 1957 an officer was granted an option to acquire 6,000 shares of
company common stock at a price of $2.8125 per share. During the year 3,000
shares were acquired under the option agreement for a total consideration of
$8,438. As a result of the five for one stock split the officer, under the existing
ogreement, may, prior to January 19, 1959, acquire 15,000 shares of common
stock at a price of $.5625 per share.
7. The Civil Aeronautics Board has determined that the company should not be
allowed to acquire 80,054 shares (96%) of the outstanding capital stock of
Lake Central Airlines, Inc. The company hos petitioned for a hearing in an
appropriate Circuit Court of Appeals in an effort to set aside the Board's
adverse decision.
OUR 10th YEAR OF SERVICE
COMPARATIVE OPERATING
Operating Revenues 1957
Passenger ..... . $ 7,372,333
Mail .. 2,925,645
Express . 146,287
Excess Baggage .. 54,986
Non-scheduled Transport Service .. 273,077
Other Revenue .
TOTAL .....
Operating Expenses
Flying Operations . . .....
Flight Equipment Maintenance ..
Indirect Maintenance
Passenger Service ...
Aircraft and Traffic Servicing.
Promotion and Sales .
General and Administrative ...
Depreciation . . . . . . .
TOTAL ...
Net Operating Profit (or Loss) .
Amortization of Route Development
Expense ...
Non-operating Income and
Expenses, Net ..
Net Profit (or Loss) Before Taxes .
Income Taxes .........
Net Profit (or Loss) ....
ROUTE
OF THE
NORTH LINERS
29,667
. $10,801,995
$ 3,455,867
1,384,841
644,693
560,934
3,095,105
621,829
504,055
452,993
. . $10,720,317
81,678
(6,281)
(54,709)
20,688
(60,103)
'. $ 80,791
1956
$6,137,216
1,522,211
149,640
40,506
119,419
15,345
$7,984,337
$2,578,253
960,021
287,978
443,243
2,400,946
456,537
431,671
301,161
$7,859,810
124,527
(8,566)
(36,085)
79,876
45,700
$ 34,176
STATISTICS
1955 1954
$4,933,487 $3,351,782
1,689,890 2,328,921
126,476 75,630
30,477 20,975
28,711 46,734
8,964 5,283
$6,818,005 $5,829,325
$2,007,381 $1,695,384
845,753 724,209
342,276 373,222
325,669 256,872
1,866,574 1,485,796
369,452 270,129
367,236 316,092
470,169 535,557
$6,594,510 $5,657,261
223,495 172,064
(26,995) (5,227)
(50,051) (55,130)
146,449 111,707
18,000 -0-
$ 128,449 $ 111,707
1953 1952 1951 1950 1949 1948
$2,303,738 $1,470,536 $ 860,599 $ 427,278 $ 271,576 $ 113,648
2,468,685 1,681,542 1,181,596 1,355,145 1,036,243 580,968
68,117 55,861 45,173 18,637 8,364 5,963
15,739 12,783 5,643 2,419 1,519 1,012
25,436 -0- -0- -0- -0- -0-
5,682 2,982 5,781 2,953 8,301 2,133
$4,887,397 $3,223,704 $2,098,792 $1,806,432 $1,326,003 $ 703,724
$1,413,489 $ 939,931 $ 612,060 $ 476,572 $ 361,254 $ 200,030
690,589 483,292 275,469 267,105 229,946 127,966
368,406 293,682 157,014 136,205 111,736 51,164
211,520 140,983 82,967 16,096 6,791 3,294
1,320,671 898,372 575,368 458,618 347,628 218,162
228,028 122,724 101,881 37,697 25,696 19,033
270,391 223,500 159,580 129,794 120,850 80,919
428,308 205,192 143,722 120,329 99,599 54,645
$4,931,402 $3,307,676 $2,108,061 $1,642,416 $1,303,500 $ 755,213
(44,005) (83,972) (9,269) 164,016 22,503 (51,489)
(10,618) -0- -0- (65,015) (86,292) (73,525)
(59,965) (39,421) 15,536 (6,888) (12,094) (3,030)
(114,588) (123,393) 6,267 92,113 (75,883) (128,044)
-0- -0- -0- -0- -0- -0-
$ (114,588) $ (123,393) $ 6,267 $ 92,113 $ (75,883) $ (128,044)
1957
NOTHER
VEAR OF
PROGRESS
NEW ROUTES - Governors ioin celebration at inaugural of
Norih Central service from Grand Forks to Omaha
NEW HONORS - Northcentralite named "World's Ideal Airline
Stewardess"
NEW OFFICES - Company opens new, modern city ticket of-
fices in Minneapolis and Duluth
NEW FACILITIES- lobby and operations area are expanded and redecorated at Chicago Midway, the world's busiest airport.
A decade of public service
0 NOB 'B CBN7'BA JIIB.INBB
AMERICA'S LEADING LOCAL AIRLINE
~-- ~
NORTH CENTRAL AIRLINES, INC.