Northeast Airlines Annual Report 1953

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NORTHEAST
INC.
AIRLINES
Board of Directors
PAUL F. COLLINS, Chairman
Winchester, Mass.
JACQUELINE COCHRAN
New York, N. Y.
JAMES F. FITZGERALD
Boston, Mass.
GEORGE E. GARDNER
Boston, Mass.
GEORGE E. GARDNER
A. A. LANE .
ROBERT L. TURNER
D. w. H. MACKINNON
HAMIL TON HEARD .
HENRY E. FOLEY
FOLEY, HOAG AND ELIOT
LYBRAND, Ross BRos. & MoNTGOMER Y
OLD COLONY TRUST COMPANY
THE FIRST NATION AL BANK OF BosToN
GRENVILLE L. HANCOCK
Boston, Mass.
RADU IRIMESCU
New York, N. Y.
ALBERT C. McMENIMEN
Boston, Mass.
EUGENE L. VIDAL
Darien, Conn.
Officers
President
Vice President-Operations
Vice President-Sales
Vice President-Engineering & Maintenance
. Treasurer and Ass't to the President
Clerk of Corporation
General Legal Counsel
Auditors
Transfer Agent
Registrar
General Offices, LOGAN AIRPORT, BosTON 28, MAss.
* NORTHEAST AIRLINES, INC.
The President's Report to
The Stockholders and Employees
I. GENERAL
*
There is submitted herewith Northeast Airlines' Balance Sheet as of December 31, 19 5 3, and
Profit and Loss Statement for the year 1953, certified by the Company's auditors, Lybrand, Ross
Bros. & Montgomery. Comparisons with the previous year and a table of comparative statistics
are also submitted.
These statements reflect the results of the Company's twentieth year of service to the New
England community-the anniversary was celebrated on August 11, 1953, with appropriate
ceremonies at the airports served.
On this anniversary a great many previous records were broken. The operating profit of
$427,481 was the highest on record. This operating profit compares with $93,711 in 1952 after
restatement to reflect retroactive increase in air mail revenue. In addition, there was a non-
operating income in 1953 of $310,432, most of which resulted from the excess of insurance pro-
ceeds over the net book value of the Convair 240, lost in an accident at La Guardia Airport in
February of 1953.
Consequently, the net profit after taxes for 1953 amounts to $492,913, equivalent to $.54
per share of common stock, after allowance for preferred dividends of $ 1.00 per share, compared with
$219,984 as restated for 1952. Furthermore, book value per share of common stock increased
from $ 3. 61 per share on January 1, to $ 4. 5 6 per share on Dec em her 3 1.
In 1952, the domestic air transport industry showed a healthy growth, but your Company
failed to share in the prosperity. We ar.e happy to report that in 19 5 3 Northeast Airlines kept
pace with the rest of the industry which during this year achieved an all-time record for any
nation in the number of passengers and the number of passenger miles flown.
As may be seen from the table of ((Comparative Statistics", Northeast Airlines flew 5,689,854
revenue miles, an increase of 2 0 % over the previous peak established in 19 51. Furthermore, the
463,712 revenue passengers carried in 1953 were more than we ever carried before, so that passen-
ger revenue during the year was at an all-time high of $6,227,406.
At the beginning of the year, your Company was operating four Convair 240 and nine
DC-3 type aircraft. This fleet was reduced early in February by the loss of the Convair in New
York, but shortly thereafter was augmented by the purchase of three DC-3 type aircraft. In
order to accommodate the summer demand, negotiations were completed with Pan American World
Airways, Inc., for the lease of three Convair 240's during the New England vacation period.
Consequently, the summer vacation travel on our routes reached an all-time high during
the third quarter of 1953, with more passengers being carried in July, August 'and September
than ever before in the comparable months of previous years. In the month of August, 66,949
passengers were transported by Northeast Airlines-a new high for any one month. The highest
passenger revenue for any quarter in the Company's history was received, and amounted to
$2,490,018.
One of the most important considerations during 195 3 for Northeast Airlines was the final
order of the Civil Aeronautics Board, dated June 5, 19 5 3, determining the fin~l air mail rate for
* NORTHEAST AIRLINES, INC. *
the period May 1, 1947 through September 30, 1952, and the permanent air mail rate commencing
October 1, 19 5 2, under which the Company is now operating. Details of this order are discussed
later in the report.
II. REVIEW OF 19 5 3
Financial and Sales
As forecast in last year's annual report, the Company made financial progress during 19 5 3,
showing a profit of $.54 per common share; net working capital increased almost one million dol-
lars, from $1,561,514 to $2,543,389.
During the year your directors declared dividends totaling $2.00 per share on the Preferred
Stock, which cleared up all arrears and again placed this stock on a regular dividend basis begin-
ning with the July 1, 19 5 3 payment.
As a result of a policy decision to concentrate on developing more business in our exclusive
territory, passenger revenue per passenger carried increased from $13. 0 2 in 19 5 2 to $13 .4 3 in 19 5 3.
The increase comes from a higher percentage of passengers traveling longer distances and on routes
where the rate of return per passenger mile is higher.
In early 19 5 3 a very thorough study of our airfreight rate structure was made, and as a result
it was decided to substantially increase the rates effective August 1, 19 5 3. It was expected that
the volume would drop substantially, but that the revenue would remain fairly constant. An
analysis of the freight carried since the new rates went into effect shows that during the last five
months of the year, freight ton miles dropped from 117,110 in 1952 to 108,091 in 1953, but that
freight revenues for this period increased from $51,759 in 1952 to $71,970 in 1953, and the cents
per ton mile return increased from 44.2 cents to 66.6 cents.
Federal and State taxes uf over $471,000 were charged against earnings in 19 5 3. These taxes
included approximately $112,000 in fuel taxes, $112,000 in payroll taxes, and an estimate of
$245,000 for Federal income tax. In addition, the Company collected Federal transportation taxes of
$993,000, which were turned over to the Federal Government.
Operations
During 19 5 3 in addition to a continuance of the maintenance agreement with Trans World
Airlines, Inc., your Company signed an agreement with British Overseas Airways Corporation to
perform all maintenance and fleet service work on their aircraft in Boston; also, a contract to per-
form turn-around maintenance at Boston for Mohawk Airlines, Inc. The increased utilization of
our major maintenance facilities at Logan International Airport helps to spread the overhead and
reduces the costs of maintaining our own fleet of aircraft.
In February of 19 5 3, the Company suffered a complete loss of a Convair 240 aircraft while
landing at La Guardia Airport in New York, fortunately without serious injury to either passengers
or crew members. This aircraft was completely covered by insurance.
In the past, certain difficulties have arisen in the handling of passenger reservations, particu-
larly during the summer months when requests from connecting carriers have been extremely heavy.
In an attempt to improve on this situation, we have entered into an agreement with all other air-
lines operating in the New York Area to use a new inter-airline communications system for off-
airline requests. This will provide written copy of requests from Northeast to the other airline and
written copy of confirmations from the other airline directly to Northeast, and will expedite the
handling of inter-airline reservations, with increased accuracy.
The development of high intensity approach lights at Nantucket is being continued. This
approach facility is intended to develop a means whereby improvement in operating performance
can be realized during the periods of adverse weather conditions.
* N. 0 R T H E A S T A I R L I N E S , I N C . *
Flight Equipment
In 19 5 3 your Company completed the sale to Airfleets, Inc. of the five Convair Model 340
aircraft which the Company had agreed in 1951 and 1952 to purchase from Consolidated Vultee
Aircraft Corporation. These aircraft were originally ordered with the realization that the Com-
pany's fleet had to be augmented. Certain economic and operating considerations later convinced
the Company's management that Northeast should not try to absorb this type of aircraft into its
operation, although the need for additional equipment still existed. Accordingly, the Company
took various steps in order to be relieved of its purchase commitments and it subsequently made
arrangements for Airfleets to purchase all of these aircraft, and the spare parts and equipment
which the Company had ordered, at the Company's purchase prices, with further reimbursement
for certain of the Company's expenses in connection with the transactions.
As mentioned before, the Company increased its passenger aircraft fleet by purchasing 3
DC-3's and also by leasing 3 Convair Model 240's which were placed in service during the sum-
mer months.
In the Fall of 19 5 3 an enforcement proc.eeding was instituted before the Civil Aeronautics
Board to determine whether any violations of provisions of the Civil Aeronautics Act of 193 8
were committed in connection with the Company's sale of the 340's. An Enforcement Attorney
of the Board has alleged that certain provisions of the Act have been violated by reason of the
sale to Airfleets and the resale of 3 of the aircraft to a foreign carrier. The Company and the other
parties to the proceeding have filed answers denying that any provision of the Act or of the
Board's orders have been violated and setting forth in detail the history of, and the justification
for, the transaction.
In January 19 5 4 negotiations were successfully completed with Pan American World Air-
ways for the purchase of four Convair 240 type aircraft. This provides Northeast with its needed
capacity and with a standardized fleet of only two types of passenger aircraft.
Personnel Changes
On December 9 the directors of the Company elected Mr. D. W. H. MacKinnon to the new
position of Vice President-Engineering and Maintenance. Mr. MacKinnon has been with North-
east Airlines in charge of Engineering and Maintenance since 1947. Previous to that time he held
similar positions with National and Northwest Airlines.
Routes and S erYices
As a result of a Civil Aeronautics Board decision of July 3, 1953, in the Wiggins Renewal
Investigation, Northeast Airlines' certificate for Route No. 27 was amended: ( 1) to add Woon -
socket-Pawtucket, Rhode Island, and Pittsfield and Fitchburg, Massachusetts; (2) to add Rutland,
Vermont for a one-year trial period; and (3) to authorize experimental year-round service to Ber-
lin and Laconia, New Hampshire. These new services were inaugurated October 1. On the other
hand, service to Millinocket, Maine was temporarily suspended on Nove!Ilber 20. ,
Safety
For the second consecutive calendar year, United States domestic scheduled airlines in 19 5 3
operated at a passenger fatality rate of less than one per one hundred million passenger miles flown.
while achieving record traffic levels. This industry passenger fatality rate in 19 5 3 was the second
lowest in history.
* NORTHEAST. AIRLINES, INC. *
Ski Development Program
Recognizing the rapid increase in the number of ski enthusiasts during recent years and the
large investment in ski facilities by many New England communities, Northeast Airlines during
19 5 3 inaugurated a carefully prepared ski promotion program. The ttski desk" was set up in
New York which, in coordination with the major ski centers of New England, supervised a radio
program which provided ski enthusiasts with accurate up-to-date information on snow condi-
tions, and worked out travel arrangements over Northeast's routes to the desired locations.
Although such week-end travel in winter may never balance the volume of summer travel to
New England resorts, it should prove to be of considerable benefit to the New England economy
in the future. It might be well to point out that, in line with the program of developing a closer
relationship with the New England communities, Northeast in 1953 was the only New England
company to take a full page four-color advertisement in a National magazine for the purpose of
promoting New England.
Northeast Airlines Retirement Plan
At the annual meeting of stockholders held in Boston on June 19, 19 5 3, the action of the di-
rectors in establishing a Northeast Airlines Retirement Plan was ratified. This is a non-contribu-
tory trustee type of plan and became effective January 1, 19 5 3. One of our employees who had
been with the Company for over ten years retired January 1, 1954. He thus became the first em-
ployee to retire under the Plan and to receive the benefits which will continue monthly the rest of
his life. The cost of the Retirement Plan was approximately $135,000 in 1953.
Mail Pay
On June 5, 19 5 3, the Civil Aeronautics Board issued a final order establishing the final mail
pay due the Company from May 1, 1947 to October 1, 1952, during which period the Company
had been operating under temporary rates. The order also established the final rate of pay for
Northeast Airlines for the period subsequent to October 1, 1952, under which we are now operat-
ing. The order was issued after an exhaustive examination by the Board's staff of the Company's
revenues and detailed expenses for the past period of five and one-half years.
The amount of additional back mail pay which the Board finally granted your Company to
October 1, 1952 amounted to approximately $363,305 before deducting related taxes. After analyz-
ing our estimates of future revenues and costs, the Board placed us on a final future mail rate,
which in 1953 produced $1,981,163, compared with $1,568,066 as restated for 1952. This new
mail rate is based upon a sliding scale formula, whereby the mail revenue declines as the miles flown
increase and the passenger load factor rises above approximately 47 % .
Personnel
For the first time since the early part of 1947, there were more than 1,000 employees on
our payroll. This occurred in July and August of 1953. The total payroll for 1953 amounted to
$4,032,735.
In 19 5 3 claims paid under our group insurance plan totaled over $40,000. Of this, approxi-
mately $12,000 was paid to employees and approximately $16,000 for their dependents under
the hospital, surgical, and weekly indemnity provisions of the plan and $12,000 in life insurance
was paid to the families of three deceased employees.
Disbursements from the Workmen's Compensation fund amounted to approximately $14,000
and benefited 71 employees.
* NORTHEAST AIRLINES, INC. *
III. OUTLOOK FOR 19 5 4
As a result of the encouraging trend in airfreight revenue during the latter part of 19 5 3,
your Company has decided to expand this operation. Consequently, a lease was negotiated on
February 24, 1954, for a C-46F airfreighter. It is expected to inaugurate this all-freight service on
April I into those communities which may be expected to develop a substantial volume of business.
Another promising factor in the outlook for 19 5 4 is the purchase of four Pan American Air-
ways' Convair 240's mentioned previously. The first of these aircraft was delivered January 16
and the other three will be delivered by May.
Efforts to bring our application for extension to Washington and Florida to hearing before
the Civil Aeronautics Board are being renewed and intensified, and the early assignment of a pre-
hearing conference date is the immediate hoped-for objective.
By the simple expedient of extending Northeast, the CAB could achieve several highly note-
worthy objectives. The Board could, first, solve Northeast's basic economic problems, which stem
from its ultra short-haul operation and the highly seasonal traffic demand in New England. Solu-
tion of these problems should mean freedom from subsidy. The Board could, in addition and just
as importantly, relieve the pressing need for additional service between New York and Florida.
The advantage to Northeast of having long-haul segments; such as, New York-Miami, Wash-
ington-Miami, New York-Tampa, Washington-Tampa, New York-Jacksonville, to offset its ultra
short-haul New England segments would be of tremendous economic value, for experience has
shown that in every form of transportation the per mile cost of short-haul operation is markedly
higher than that of long-haul operation. Just as significant from an economic standpoint would
be the seasonal balance of traffic and operations which Northeast would achieve from a Florida
extension.
That there is abundant ((room" for Northeast in the New York-Miami market is evident. The
New York-Miami segment, ((the richest route in the world", is at the top of the list of all route
segments in the United States in terms of traffic density, both as to number of passengers and total
passenger miles. In addition, the principal cities which Northeast would serve between New York
and Miami (Washington, Jacksonville, and Tampa) are all important traffic generating points.
The New York-Miami segment, one of the routes which Northeast seeks is served now by only
two certificated carriers. Many route segments having much less traffic strength are served by and
support three, and in some case as many as four, certificated carriers.
Northeast's extension would, of course, link all New England with Washington and Florida,
and it is, therefore, a matter of public interest and concern to everyone in New England.
We hope that this has been an encouraging report to our stockholders, to whom I again extend
a warm sense of gratitude for their patience in permitting us to build up their equity. However,
we must never forget that the airlines are faced with a rising trend of uncontrollable material and
labor costs which can only be offset by increased productivity and efficiency.
I should like to express my appreciation to all of those in our organization who contributed
during the past year to maintain the financial strength of the Company; hold our costs in line,
better our passenger relations, and build the reputation of Northeast Airlines in the eyes of the
traveling public.
For the Board of Directors,
G EORGE E. GARDNER, President
CURRENT ASSETS:
Cash in banks
U. S. Treasury bonds, at cost
Receivables:
Traffic balances
Air mail
Other
Total receivables .
Prepaid insurance and other expenses
Miscellaneous supplies ( at average cost)
ASSETS
Advance payments and costs on purchase of flight equipment
Total current assets
PROPERTY AND EQUIPMENT, AT CosT:
Flight equipment and related spare parts (note B)
Hangar and service building on leased land .
Ground and shop equipment
Improvements to rented properties
Warehouse and land .
Construction in progress and nonoperating property
Less allowances for depreciation and amortization
Property and equipment, less allowances
Receivable under stock purchase contract (note C) .
Deferred charges
NORTHEAST AIRLINES, INC.
Balance Sheet
As AT DECEMBER 3 1, 19 5 3 AND 19 5 2
1953 1952
$1,812,227 $1,122,410
1,003,438
343,483 309,999
223,040 90,276
77,891 87,977
644,414 488,252
77,567 87,544
111,913 109,819
472,089
3,649,559 2,280,114
4,033,788 4,131,218
664,599 664,599
591,852 563,659
204,895 197,375
83,657 65,200
115,275 91,547
5,694,066 5,713,598
3,498,875 3,310,418
2,195,191 2,403,180
26,875 26,875
43,621 35,358
$5,915,246 $4,745,527
1
i
LIABILITIES
CURRENT LIABILITIES:
Accounts payable-vendors and others
Accrued salaries and wages .
Accrued federal income tax
Taxes withheld and other payroll deductions
Accrued social security and ocher taxes
Unearned transportation revenue
Dividend payable January 1, 1954
Total current liabilities
Reserve against uninsured portion of possible future claims (workmen's
compensation)
Reserve for aircraft overhaul (note D)
Stock purchase contract ( see contra)
CAPITAL
CONVERTIBLE PREFERRED STOCK of no par value (note E):
Authorized 85,000 shares
Issued and outstanding:
1953 1952
$380,402 $383,333
205,242 97,042
251,346
70,889 55,219
47,317 47,330
140,111 135,676
10,863
1,106,170 718,600
45,785 40,386
93,579 58,939
26,875 26,875
1953, 43,451 shares; 1952, 43,567 shares. 869,020 871,340
COMMON STOCK, par value $1.00 per share:
Authorized 2,000,000 shares (note C)
Issued and outstanding-fully paid:
1953, 827,993 shares; 1952, 827,510 shares 827,993 827,510
Issued under stock purchase contract-part paid:
10,000 shares at 50 cents per share paid thereon (unpaid balance
under contract, $26,875 shown above) 5,000 5,000
CAPITAL SURPLUS, per accompanying statement 2,258,953 2,257,115
EARNED SURPLUS (deficit) since July 1, 1940, per accompanying state-
ment. . 681,871 (60,238)
Total capital 4,642,837 3,900,727
$5,915,246 $4,745,527
The accompanying notes are an integral part of the above balance heet.
* NORTHEAST AIRLINES, INC. *
Statement of Profit and Loss
FoR THE YEAR ENDED DECEMBER 31, 19 5 3
FoR THE YEAR ENDED DECEMBER 31, 1952 RESTATED AS EXPLAINED IN NoTE A
1952
OPERA TING REVENUES: 1953 Restated
Passengers . $6,227,406 $5,570,124
Air mail
Express, freight and excess baggage
Other, net .
Total opera ting revenues .
OPERA TING EXPENSES:
Conducting transportation .
Maintenance and repairs (note D)
Provision for depreciation and amortization ( note F)
T raflic and advertising
General and administrative .
Taxes other than income taxes
Total operating expenses
Operating profit .
NoNoPERATING INCOME:
Insurance settlements received in excess of net book amounts of aircraft
Other
Profit before federal income tax
Provision for federal income tax
Net profit for year (note A)
1,981,163
277,168
71,571
8,557,308
4,004,656
1,603,466
447,960
1,168,396
677,563
227,786
8,129,827
427,481
292,284
18,148
737,913
245,000
$492,913
The accompanying notes are an integral part of the above statement of profit and loss.
1,568,066
246,687
105,378
7,490,255
3,497,454
1,436,970
586,688
1,137,803
498,410
239,219
7,396,544
93,711
262,987
1,995
358,693
138,709
$219,984
* NORTHEAST AIRLINES, INC.
Statement of Earned Surplus Since July 1, 1940
FoR THE YEAR ENDED DECEMBER 3 1, 19 5 3
DEFICIT at beginning of year as previously reported .
RETROACTIVE INCREASES in air mail revenue under order of the Civil Aeronautics Board
June 5, 1953 fixing final compensation for the period May 1, 1947 to December 31,
1952, allocated by the Board as follows:
1949, 19 5 0 and 19 5 1, after deducting related taxes
19 5 2, after deducting $ 138,709 federal mcome tax and
$4,189 state excise tax .
NET PROFIT for the year .
$88,195
247,903
$336,098
492,913
CASH DIVIDENDS declared on convertible preferred stock-$2.00 per share (including
$ 1.00 per share to pay accumulated arrears)
EARNED SURPLUS at end of year
Statement of Capital Surplus
FoR THE YEAR ENDED DECEMBER 31 , 1953
BALANCE at beginning of year .
ExcEss of amount paid in on 116 shares of convertible preferred stock surre~dered for
conversion over par value of 482 shares of common stock issued m exchange
therefor
BALANCE at end of year

$60,238
829,011
768,773
86,902
$681,871
$2,257,115
1,838
$2,258,953
* NORTHEAST AIRLINES, INC. *
Notes to Financial Statements
A-EFFECT OF RETROACTIVE INCREASES IN AIR MAIL REVENUE:
During 19 5 3 the company received retroactive increases in air mail revenue, under order of the Civil
Aeronautics Board dated June 5, 19 5 3 fixing final compensation for the period May 1, 1947 to
December 31, 1952, aggregating $336,098 after related taxes as set forth in the accompanying state-
ment of earned surplus. For purposes of comparison, air mail revenue and taxes in the accompanying
19 5 2 statement of profit and loss have been restated to include the portion of this additional revenue
and related taxes applicable to that year according to the Board's allocation.
B-PURCHASE OF FLIGHT EQUIPMENT:
In January, 19 5 4, the company agreed to purchase four Convair Model 240 aircraft for delivery early
in 1954 at a cost of approximately $1,200,000.
C-COMMON STOCK RESERVED FOR SALE TO EMPLOYEES AND OFFICERS:
On November 24, 1947 stockholders voted to reserve 100,000 shares of authorized and unissued com-
mon stock for sale to full-time employees, including officers, at a price, payable in instalments, not
less than the market value thereof on the date of purchase contract. As at December 31, 1953, no
such sales had been made other than the 10,000 shares sold to the president of the company under
contract dated November 24, 1947 at the then market price of $31,875, of which $5,000 was paid
in 1949. On March 12, 1951, the company agreed that the unpaid balance of $26,875 receivable
on this contract shall not become due until ( 1) expiration of six months following termination
of the president's employment as general manager of the company; or (2) the thirty-fifth day prior
to date of consummation of any merger of the company with or into another company; or ( 3) May
24, 1954, whichever shall be earlier.
D-RESERVE FOR AIRCRAFT OVERHAUL:
The company charges certain major periodic overhaul costs against a reserve provided for by charges
to maintenance expense. Provisions for aircraft overhaul reserve charged to maintenance expense
amounted to $57,976 in 1953 and 42,497 in 1952. The costs of aircraft overhaul charged against
the reserve were $23,336 in 1953 and 32,693 in 1952.
--CONVERTIBLE PREFERRED STOCK:
Under the provisions of the convertible preferred stock, the company shall not declare any dividend
or redeem or retire any shares of stock or make any distribution to stockholders if immediately there-
after the net worth of the company would be less than $20.00 for each share of convertible preferred
stock immediately thereafter outstanding.
As at December 31, 195 3, the adjusted conversion rate of the convertible preferred stock is 3 7 / 8
shares of common stock for each share of convertible preferred stock surrendered for conversion.
All or any part of the convertible preferred stock may be called for redemption at any time at $22.00
per share plus dividends accrued thereon to the redemption date. In case of any liquidation, whether
voluntary or involuntary, the convertible preferred stock shall be entitled to receive $20.00 per share
plus dividends accrued thereon to the day of payment.
F-DEPRECIATION OF FLIGHT EQUIPMENT AND RELATED SPARE PARTS:
Effective January 1, 1953 the company revised depreciation rates on certain flight equipment and in-
creased the estimated residual values of certain flight equipment spare parts. As a result depreciation
expense for 1953 was approximately $175,000 less than depreciation would have been if rate and
residual values in effect during 19 5 2 had been continued.
* NORTHEAST AIRLINES, INC. *
Notes to Financial Statements (Continued)
G-RETIREMENT PLAN:
During 19 5 3 the company established a noncontributory retirement plan for employees, effective
January 1, 1953. Payments to the trustee under the plan in 1953 aggregating $135,408 (including
$45,468 on account of past service) have been charged to general and administrative expense. If the
unfunded past service cost of the plan had been paid in lump sum as of December 31, 19 5 3, approxi-
mately $420,000 additional would have been required.
H-CONTINGENCIES:
On October 17, 1950 the company entered into an agreement of merger with and into Delta Air Lines,
Inc. The merger is conditioned, among other things, upon the approval thereof by the Civil Aero-
nautics Board (with the approval of the President of the United States to the extent required by
law) and upon the authorization of Delta as the surviving company to engage in air transportation
of persons, property and mail between New York City on the company's present system and points
on Delta's present system south of New York City. At the request of both airlines no hearing has
been held by the Board. The agreement is now subject to termination at any time upon at least 3 O
days notice by either party.
The company has joined with nine other airlines in an agreement with Triborough Bridge & Tunnel
Authority. Under this agreement the company guarantees its proportional share in case of any
default under a long-term lease of a Manhattan terminal building by the Authority to a corporation
organized by the several airlines. The company also has entered into a long-term sublease for a
portion of the space in the building.
NoRTHEAST AIRLINES, lNc.,
Boston, Massachusetts.
~~
AUDITORS' REPORT
We have examined the balance sheet of Northeast Airlines, Inc. as at December 31, 1953 and
the related statements of profit and loss, of earned surplus and of capital surplus for the year then
ended. Our examination was made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other auditing procedures as we
considered necessary in the circumstances.
In our opinion, the accompanying statements present fairly the financial position of Northeast
Airlines, Inc. at December 31, 19 5 3, and the results of its operations for the year then ended, in
conformity with generally accepted accounting principles applied on a basis consistent with that
of the preceding year, except as to the reduction in depreciation expense described in note F which
we approve.
Boston, Massachusetts
February 25, 1954
LYBRAND, Ross BRos. & MoNTGOMERY
PASSENGER REVENUE GROWTH
$5,535,763
$6,227,406
Millions 2 3 4 5 6 7
CARGO REVENUE GROWTH
1943 $8,080
$189,638
$204,991
$239,422
Thousands 100 200 300
COMPARATIVE STATISTICS
1945 1946 1947 1948 1949 1950 1951 1952 1.9 5 3
Revenue Miles Flown 2,287,366 4,177,375 3,947,030 3,386,881 4,021,226 4,235,126 4,743,281 4,729,487 5,689,854
Completion of Sched-
uled Miles 83.61 % 82.46 % 83.81 % 87.86 % 93.54 % 92.58 % 92.94 % 91.46 % 90.28 %
Paenger Revenue $1,945,444 $4,256,115 $3,468,913 $3,241,912 $3,992,450 $4,440,034 $5,535,763 $5,570,124 $6,227,406
Revenue Passengers
Carried 175,608 417,095 325,172 272,292 324,963 372,497 454,738 427,685 463,712
Revenue Passenger
Miles 38,939,107 83,848,737 62,143,281 52,091,160 61,957,458 70,468,046 87,507,199 83,675,411 91,398,933
System Load Factor 74.47 % 65.76 % 51.24 % 48.02 % 48.36 % 51.82 % 60.91 % 58.04 % 55.32 %
Passenger Revenue Per
Revenue Mile Flown $.8 5 0 5 $1.0189 $.8789 $.9572 $.9928 $1.0484 $1.1671 $1.1777 $ 1.0945
Revenue Per Passenger
Mile $.0500 $.0507 $.0 5 5 8 $.0622 $.0644 $.0630 $.0633 $.0666 $.0681
FIRST IN NEW ENGLAND sKIES
Norfheast Airlit1es
GENERAL OFFICES: LOGAN AIRPORT, BOSTO 28, MASSACHUSETTS