Northeast Airlines Annual Report 1942 [Fiscal Year]

YEAR ENDED JUNE 30, 1942
NORTHEAST AIRLINES
Mission for America
Short months ago, these silver wings,
these roaring motors were yours to
command.
You could speed from city to city,
from state to state, even from nation
to nation. You were a king with a
magic steed; you were an American,
enjoying the best of everything.
Northeast Airlines was privileged to
provide that service for you, eager
always to serve you better.
But now we are on a special mission
- a mission for America. Today
America's military needs come first.
More planes, more pilots, more me-
chanics must be at the beck and call
of our Nation. Naturally, that means
curtailed service for civilians.
It means that our regular flights
from Boston to Portland, Bangor,
Presque Isle and Moncton must be
reduced in number, and flights to
Montreal and Burlington eliminated
completely. It means that there are
fewer seats available for people who
are not directly engaged in war work
which requires them to travel by air.
However, airline service will be con-
tinued and will be available to all in
proportion to their needs - Uncle
Sam coming first and the rest of us
second. The highest standards will be
maintained on all flights. Experienced
pilots and co-pilots will fly every plane.
Experienced and able mechanics will
keep these planes at the peak of operat-
ing ability. Experienced technical men
will be on constant duty, as always,
for greater safety.
W e are all on a mission for America.
NORTHIAIT
AIRLINES
NORTHEAST AIRLINES
We are serving America
fl}~ Annal ~
YEAR ENDED JUNE 30, 1942
NORTHEAST
AIRLINH
HARRY A. CARSON, St. Albans, Vt.
PAUL F. COLLINS, Winchester, Mass.
DANA c. DOUGLASS, Portland, Me.
GEORGE F. GLACY, Boston, Mass.
DAVID H. HOWIE, Boston, Mass.
s. J. SOLOMON, Silver Spring, Md.
ROBERT s. SWAIN, Boston, Mass.
EUGENE L. VID~L, Washington, D. C.
LAURENCE F. WHITTEMORE, Pembroke, N. H.
President, s. J. SOLOMON
Vice President, LAURENCE F. WHITTEMORE
Vice President, DA YID H. HOWIE
Vice President and Treasurer, ROBERT s. SWAIN
Vice President, MIL TON H. ANDERSON
Clerk of Corporation, ARTHUR B. NICHOLS
General Traffic Manager, DONALD A. DUFF
Counsel, WILLIAM A. COLE
General O !fices
Trans/ er Agent
*
. COMMONWEALTH AIRPORT, BOSTON, MASS.
OLD COLONY TRUST COMPANY, BOSTON, MASS.
BOSTON, MASS., NOVEMBER 1, 1942
To the Stockholders
of Northeast Airlines, Inc:
There is submitted herewith the balance sheet of our Company as
at June 30, 1942, together with a statement of profit and loss for the
twelve months ended June 30, 1942. These are as audited by Messrs.
Lybrand, Ross Bros. & Montgomery and their certificate is also
included.
Operations of our Company for the year ending June 30, 1942,
resulted in a loss of $50,986.30. There was a non-recurring
profit of .$114,901.69 arising from the sale of certain aircraft,
engines, equipment, and parts after provision for possible
Federal Income Taxes and a non-recurring refund of gasoline
tax totalling $10,939.69. This non-recurring income totalled
$125,841.38, or $74,855.08 in excess of the operating loss
for the year. This amount when carried to surplus was suffi-
cient to eliminate the deficit of $56,208.42 which existed
at the beginning of the year and to establish a surplus as at
June 30, 1942, of $18,646.66.
Passenger revenues amounted to $401,888.19, an increase of
48.7% over the total of $270,133 for the previous fiscal year.
This was the first year in the history of the Company and
its predecessors in which passenger revenue exceeded mail
revenue. Mail revenue for the past . fiscal year amounted to
$393,403.16 compared with $299,200.66 in the previous
year, an increase of 31.5% . Mail revenue includes the amount
established for air mail compensation as a result of the decision
of the Civil Aeronautics Board dated August 24th, made retro-
active to January 1, 1942.
The balance sheet of the Company as at June 30, 1942, shows
current assets of $1,026,804.43 with current liabilities of
$729,547.68. On June 30, 1941, current assets equalled
$384,276.46; and current liabilities, $290,695.06.
3
~
In fulfilment of plans approved in the Spring of 1941, our Com-
pany expanded its transportation facilities with the inauguration of
new 24-passenger Douglas DC3 plane service on July 1, 1941. These
planes replaced IO-passenger Lockheeds on most schedules, and rep-
resented the finest in standard air transport equipment.
To present the improved service to the public, the Traffic Depart-
ment was enlarged to provide for traffic supervision of station and
reservation personnel. Additional traffic solicitors and stewardesses
were employed. Advertising and sales promotion were increased.
Public response to this improved service was reflected in an
increase of 68 % in the number of passengers carried and an increase
of 73 % in passenger miles, necessitating an increase of 38 % in
revenue plane miles flown over the previous period. Revenue increased
from $8.00 per passenger to the present average of $13.00.
Pearl Harbor marked a turning point in our Company's oper-
ations with a necessary shift in emphasis from commercial to National
Defense objectives. In keeping with the national trends, sales promo-
tion and advertising have been curtailed. The four flights of a year ago
between Boston and Bangor now number two, Bangor-Moncton serv-
ice has been halved, and Boston-Montreal passenger service has been
replaced by a daily mail and express flight with single-engine Stinson
equipment. Due to National Defense developments, the Bangor-
Presque Isle route is now served by two daily schedules. Flights no
longer operate to and from Manchester, Concord, Lewiston-Auburn,
Waterville, and Millinocket.
Our Company was prompt to enlist with the War Department
for effective participation in the National Defense program, filing a
new route application in November, 1941, for service to United States
military and naval bases then under construction in Newfoundland.
Later in that same month, the management offered and the Govern-
ment accepted the services of the Pilot Training School for the train-
ing of special pilots for commercial ferry service overseas.
On December 26, 1941, anticipating the mounting need for mili-
tary air transport service, the management advised the Air Corps
4
Ferrying Command that, within the limits of available facilities and
personnel, our Company stood ready to extend military transport
service to any point designated by the War Department, and to train
such additional personnel as might be required. The War Depart-
ment and our Company consummated a formal contract on J anu-
ary 31, 1942, for services and supplies on a cost-plus-a-fixed-fee
basis, and shortly thereafter regular service was instituted for the
transportation of military personnel and material. This pioneering
venture was complicated by severe winter flight conditions in sub-zero
temperatures ( as low as 55 degrees below zero) and the absence of
organized communication. facilities.
The War Department, late in May, requisitioned a large number
of airline planes, including six from our Company, which curtailed
commercial services. This curtailment of service made it possible for
our Company to divert more pilots to the military contract operations
and to reduce the staff of ground personnel at various stations.
It is the belief of the management that the best means of pre-
serving the present ownership of airlines is in the efficient performance
of military assignments.
Seventeen domestic airlines are working with the Government as
a unit through the agency of the Air Transport Association, which
group is in constant touch with military officials charged with coordi-
nation between the Government and the airlines.
To meet the required expansion of military contract services by
air lines in the face of diminishing personnel, the President has been
selected to head the important training program which the airlines
are undertaking at the request of the War Department.
The Government purchased all of our Company's IO-passenger
Lockheed Electra planes during the past year, taking delivery of four
during November, 1941, and the remaining one in May, 1942.
Passenger service was operated principally with three 24-passenger
Douglas DC3 planes from July 1, 1941, until April, 1942. At that
time, to provide additional units of equipment for better flexibility in
view of curtailments of new equipment, our Company exchanged these
5
three DC3 planes with Transcontinental & Western Air, Inc. for five
14-passenger Douglas DC2 planes and $220,000 cash.
During May, 1942, the Military Director of Civil Aviation directed
our Company to sell its DC2 planes to the Government for National
Defense purposes, and to purchase two 21-passenger Douglas DC3
planes from American Airlines, Inc. for curtailed passenger service
on the eastern routes to Presque Isle and Moncton. These transfers
took place during June, 1942, the DC3 planes being received on
.June 2, and placed in regular service shortly thereafter.
A total of 16 single-engine Stinson planes are presently owned,
three of which are Wright powered and the remainder Lycoming pow-
ered. In the interest of standardization our Company is in the process
of disposing of its Wright Stinsons while purchasing Lycoming Stin-
sons. One Stinson is used in mail and express service between Boston
and Montreal, the remaining planes for the Pilot Training School.
Extensive airport construction and betterments are under way in
our Company's territory as part of the war prosecution effort. This
new construction work has caused interruptions in our regular pas-
senger plane service, and while the loss of passenger revenue from
such interruptions is to be regretted, it is felt that the improvements
to the airport facilities will enable our Company to furnish more
?ependable and complete air transportation service i:v the future.
In order to meet the increasing need for additional hangar space
at the Commonwealth Airport at Boston, our Company leased two
hangars from the Inter-City Aviation Corporation at an annual rental
of $16,000.00. In August, 1942, one hangar was leased to the Massa-
chusetts Institute of Technology at an annual rental of $10,000.00.
There is a new passenger terminal under construction at Presque
Isle, and two small buildings at the Bangor Airport are being remod-
eled for passenger and customs service use. Preliminary work is in
progress for the construction of a hangar at Burlington, Vermont,
to provide additional space for the storage, maintenance, and over-
haul of equipment used by the Pilot Training Division.
6
The Atlantic Division operation, enlargement of the trammg-
school staff, and improvement of our Company's operations have
increased the number of employees to 410 on August 20, 1942. Cer-
tain personnel, pre iously required for sales effort and passenger
handling, have been transferred to other assignmei:its with our Com-
pany. Others have left our employ due to the curtailment in passenger
service resulting from Army directives in May, 1942.
Our Company has lost some experienced personnel to the armed
services and to other employers, and expects that it may lose more.
However, increased wage scales and Selective Service deferments
have kept these losses at a reasonably low level to date.
Our Company has undertaken a training program to provide itself
with additional pilots and instructors, competent graduates of which
are now in our service. A Navigation School is being established to
train navigators for the Atlantic Division. It may become necessary
shortly to train radio operators and me.chanics likewise. The national
shortage of aviation maintenance mechanics has caused the Company
to employ auto mechanics, machinists, and metal workers in certain
instances, and this trend is expected to continue. Proper supervision
and training permit the use of such men without impairment of safety.
Notice has been given to the Air Line Pilots' Association, Inter-
national, of our Company's wish for a clarification of certain por-
tions of the agreement between the Association and our Company.
The Civil Aeronautics Act of 1938 provides that air carriers shall
be entitled to receive compensation for transporting the mail, and sets
forth certain factors to be considered in fixing and determining fair
and reasonable rates of compensation. In accordance with the pro-
visions of this Act, our Company, in 1939, petitioned for an increase
in its rate of 33.33 per plane mile. As a result of this petition,
a rate of 36 was granted as of March 1, 1940, plus a rate of 35,
retroactive to April 7, 1939. The subsequent route extension to
Moncton was at the 36 rate.
By supplemental order, effective November l, 1941, and with the
designation of two additional mail schedules between Boston and
{Continued on Page 10)
7
OUR COMPANY
... in Uniform
Most of our Company's transport planes have changed from sparkling silver
to Uncle Sam's olive drab; and on the sides and on the wing tips, these planes
wear this star that says, "In the service of America's armed forces."
Northeast Airlines' pilots, personnel and equipment are devoted unstintedly
to winning the war. In this work they are pioneering into new areas, gathering
new knowledge and abilities - all of which will contribute in great measure
to the progress of our Company and our Country when the war is won.
Bangor, the rate was amended to 28.69 per plane mile. On December
30, 1941, our Company filed a petition for increased mail pay, and
amended same April 1, 1942. The Civil Aeronautics Board issued a
supplemental rate order, effective May 1, 1942, providing a base
rate of 36 per plane mile, when the average designated mail mile-
ages did not exceed 2,496 miles on the Boston-Montreal and Boston-
Caribou portions of Route 27, and 884 miles for the Bangor-Moncton
portion of same, with an automatic rate adjustment provision to
decrease that rate proportionately to the increases in daily designated
mileages above 2,496 and 884 miles, respectively.
On August 24, 1942, the Board set a rate of 4 7 .30 for the period,
January 1, to June 30, 1942, and thereafter a rate of 43.15 for an
average daily designated mileage of not to exceed 2,506 miles, with
an automatic rate adjustment provision when that mileage is exceeded.
Our Company, for several years past, has been operating an
advanced pilot training school at which tuition was charged, and
early in 1941, the school facilities were enlarged and cross-country
flight instruction established which included courses paid for by the
Government under the Civilian Pilot Training Program.
The school was farther enlarged in December, 1941, to provide
training for a large group of especially selected CPT graduates in
what was known as the Flight Officer Training Course under a new
Civilian Pilot Training Program, the graduates of which are compe-
tent to operate multi-engine aircraft, and are assigned by the Govern-
ment to service overseas or activities connected with National Defense.
Anticipating the July, 1942, order of Lieutenant General Hugh
A. Drum, embodying restrictions on non-scheduled flying along the
Atlantic Coast, our Company moved the school from Boston to Bur-
ling.ton, Vermont, during March, 1942. Burlington, Vermont, is out-
side of the immediate defense zone on the present NEA route, and
has University facilities available to the conduct of the school. Aca-
demic training is given in the excellent new Waterman Memorial
Building of the University of Vermont, while flight training activities
are centered at the Burlington Airport.
The number of new students accepted each week was doubled
recently, including men assigned by the Navy. Multi-engined train-
ing is provided in Lockheed 10-A aircraft supplied by the Government.
Single-engine training is in Company-owned Stinson aircraft.
The operation of this school has constituted a major contribution
to the National Defense and the war effort, and contributes substan-
tial benefits to our Company.
On November 12, 1938, our Company applied for a certificate
authorizing operation between Boston and New York City. On Novem-
ber 29, 1941, this application was amended to include New Bedford,
Worcester ( two of the largest cities in the country without air service),
Lawrence and Hartford, and to name Boston as an intermediate point
on the eastern leg of Route 27 between Caribou and New York City.
Only one air carrier now operates between Boston and New York
though others have filed. The Civil Aeronautics Board suspended
hearings on pending applications except those important to National
Defense. No hearing has been held as yet.
On April 24, 1940, our Company applied for a certificate over
a route between Portland and New York City via Lawrence, Worces-
ter, Hartford and Meriden. No hearing has been set on this appli-
cation. On November 14, 1941, our Company applied for a foreign air
transportation certificate between Bangor and St. John's, Newfound-
land, via Moncton and Stephenville, Newfoundland, Airport and
Argentia, Newfoundland, and amended same December 26, 1941,
to name Northwest River, Labrador, as the terminal in lieu of St.
John's. A hearing was held December 31, 1941. Decision has not
been rendered yet.
For the duration of the war, the accomplishments of Northeast Air-
lines must be measured in terms of our contribution to the war effort.
It is the sincere belief of the management that the work our Company
is doing, and the organization it is developing in aid of the war effort
will prove invaluable in the post-war expansion of air transportation.
s. J. SOLOMON.
11
IN COA.PORATED
~u.n.,M,d, 1912--
'.::::zt J1ational Organi~ation TurotQrt to Socuri115
-:lncrQas~ Safu9' to Jfuman t'1fa'.'
(Urrfifiratt nf jafr ,prration
YEAR 1941
--pr<2-SQ.,ntcul to
Nnnheasr Airlinl'$,)nr.
1n.. recognition, of its hauing op12.ra..ted th..,c, ent1r12- ._Q.,Qr
u,irh...ou .. t a., fa..ta.li..tJZ.._ to pass'2..n_gm- or cr'2..W.
12
BOSTON . MASSACHUSETTS
Northeast Airlines, Inc.,
Boston, Massachusetts.
NORTHEAST AIRLINES, INC.
We have examined the balance sheet of Northeast Airlines, Inc.
as at June 30, 1942 and the statement of profit and loss for the year then
1 ended, have reviewed the system of internal control and the accounting
procedures of the company and, without making a detailed audit of the
transactions, have examined or tested accounting records of the company
and other supporting evidence by methods and to the extent we deemed ap-
propriate. Our examination was ma.de in accordance with generally accepted
auditing standards applicable in the circumstances and included all pro-
cedures which we considered necessary.
In our opinion, the accompanying balance sheet and related
statement of profit and lose present fairly the position of Northeast Air-
lines, Inc. at June 30, 1942 and the results of its operations for the year
in conformity with generally accepted accounting principles maintained by
the company on a baeie consistent with that of the preceding year.
Boston, Massachusetts
October 15, 1942
13
NORTHEAST AIRLINES, INC.
~
Current assets:
Cash in banks .
Receivables, billed or accrued:
Airlines aIJ.d agents . .
United States Post Office Department
From sales of aircraft and equipment
Pilots' training school tuition:
$89,465.90 billed to Civil Aeronautics Authority,
$27,860.68 accrued not yet billed (note A) .
United States Army Air Force-under operational
contract: $231,210.84 less $83,813.60 advances
received (note B)
Other receivables, less $2,540.00 reserve for doubt-
ful accounts .
Inventories ( at average cost or less) :
Aviation fuels and oil .
Replacement parts and supplies . . . . .
Training school flight kits . . . . .
Total current assets . . . . .
Property and equipment, at cost:
.. $
$ 54,605.75
104,994.18
287,419.57
$
117,326.58
147,397.24
31,650.34
BALANCE SHEET
205,550.73
743,393.66
1,368.69
65,312.84
11,178.51 77,860.04
$1,026,804.43
Improvements to real estate not owned . $ 6,201.75
Aircraft, engines, propellors and communication
equipment:
Passenger, mail and express service
Training school .
Shop and miscellaneous equipment . .
Total
Less reserves for depreciation . .
Property and equipment acquisition adjustment - bal-
ance being amortized ratabl y over the period ending
June 30, 1951 . . . . .
Deposit in escrow under lease agreements . . . . .
Prepaid expenses and deferred charges:
246,195.37
59,416.97
60,i40.91
$371,955.00
51,448.23
Prepaid rentals . . . . .
Prepaid insurance . .
. $ 13,305.62
6,138.57
Cost of developing routes, being amortized ratably
over period ending December 31, 1945 .
Costs of developing proposed routes . . . . . .
Shop orders in process for plant improvement . .
Other deferred charges and prepayments
14
3,665.57
13,331.40
2,466.77
4,641.46
320,506.77
59,664.33
50,000.00
43,549.39
$1,500,524.92
]UNE 30, 1942 NORTHEAST AIRLINES, INC.
~
Current liabilities:
Notes payable to banks (note A) . .
Accounts payable:
Equipment and spare parts purchases .
Other purchases
Airlines
Salaries and wages .
Employee war bond deductions .
Accrued taxes .
Provision for federal income taxes
Other current liabilities .
Total current liabilities .
Deferred income and liability
CAPITAL
Common stock, par value $1 per share, authorized
. . . $ 145,495.75
$238,417.86
219,576.07
. 41,811.43
39,866.42
2,803.23 542,475.01
$
7,018.16
32,000.00
2,558.76
729,547.68
4,972.82
500,000 shares, issued and outstanding 300,000 shares $300,000.00
Premium on common stock ( excess over par value of
proceeds of stock issued in 1941, less expenses of
issue) . 447,357.76
Surplus earned since July 1, 1940. 18,646.66 766,004.42
$1,500,524.92
NOTES:
A - Amounts due or to become due from the Civil Aeronautics Authority for tuition at the pilots'
training school have been assigned as security for the notes payable to hanks.
B - The amount receivable and operating revenue under operational contract with the United State~
Army Air Force are subject to adjustments which may result from governmental audit of costs
chargeable under the contract or from possible renegotiation of the contract price under the War
Profits Control Act approved April 28, 1942.
15
NORTHEAST AIRLINES, INC.
foR YEAR ENDED Jl!NE 30, 1942
Operating revenue:
Passengers $401,888.19
Air mail . 393,403.16
Training school tuition . . . . . . . . . 267,390.17
Other (including operations under Air Force con-
tract, see balance sheet note B) . 263,397.78
Total operating revenue .
Operating expenses:
Conducting transportation and flying instruction .
Maintenance and repairs . .
Provisions for depreciation and amortization
Traffic and advertising . . . . . . .
General and administrative . .
Taxes other than income taxes .
Total operating expenses .
Operating loss . . . .
Deductions from income:
$782,760.67
302,859.45
82,302.60
77,337.08
109,257.33
15,857.69
. $ 4,800.09
. $1,326,079.30
1,370,374.82
. $ 44,295.52
Interest . . . . .
Other deductions . 1,890.69 6,690.78
Net loss for period
Direct credits to earned surplus:
Gains on sales of certain aircraft, engines, equipment
and parts, less $32,000 provision for federal in-
come taxes
Federal gasoline tax refunds applicable to years
ended June 30, 1939, 1940 and 1941 . . . .
Deficit in earned surplus at beginning of year .
Earned surplus at end of year .
16
. $ 50,986.30
$114,901.69
10,939.69
. . $
125,841.38
56,208.42
18,646.66
These are the things we do to
make our patrons comfortable
HELLO, NORTHEAST .. l'D LIKE
A RESERVATION!
A telephone call to any Northeast
Airlines ticket office is the begin-
ning of a friendly trip. Northeast
personnel is carefully selected for
friendliness and efficiency.
JUST GIVE YOUR NAME ..
WE'LL DO THE REST!
When a patron gives his name at
the Northeast ticket counter, he can
relax and start enjoying his trip by
Northeast Airlines. Baggage is han-
dled quickly, all helpful informa-
tion is given by Northeast personnel.
WELCOME ABOARD
Any traveler is off to a good start
when a smiling, attractive Northeast
stewardess greets him as he comes
aboard. That's an important part of
Northeast Airlines' hospitality.
YOUR COAT, PLEASE
Every passenger is treated as if he
were a guest in our home. The
Northeast stewardess helps with
wraps, helps our passengers get set-
tled for a pleasant flight.
COMFORTABLE?
Little things help make traveling
pleasant. Northeast stewardesses
are thoughtful-see that passengers
have every little thing to make them
comfortable. They provide pillows,
adjust seats- all with a winning
smile.
BEST AIR IN THE WORLD
The patron has his choice of the
best air in the world when he rides
in a plane. And he, individually,
can have just as much or just as
little of it as he likes, simply by
regulating the vent which is next
to his seat.
SOMETHING TO READ?
Soon after the plane has taken off,
passengers are invited to read their
favorite magazines and newspapers
-all from the Northeast Airlines
"library" on board.
LIGHT UP IF YOU WISH
In keeping with Northeast Airlines'
hospitality, passengers are invited
to smoke en route. Adequate ventila-
tion prevents the smoke from inter-
fering with the comfort of other
passengers.
COFFEE .... AND .... ?
Refreshments are served in flight
to Northeast passengers. Regular
patrons have come to regard this
service as a welcome interlude. New
passengers always smile in surprise
and then lean back in contentment.
WE HOPE THE TRIP
WAS PLEASANT
The flight is over. Standing at the
doorway, the Northeast stewardess
bids each passenger a pleasant good-
bye. Hospitality from start to finish!
NORTHEAST
AIRLINES
MONTREAL
i)
TWIN CITIES
BURLINGTON
BARRE-
MONTPELIER
CONCORD
MANCHESTER
I
BALTIMORE /
WASHINGTO N'
CARIBOU
i)
PRESQUE ISLE
HOULTON
MILLINOCKET
HALI FAX
~
~
MONCTON
BANGOR@)
WATERVILLE
AUGUSTA
LEWISTON-
AUBURN
PORTLAND
STON