Northwest Airlines Annual Report 1944

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TAKEN FROM LETTERS TO NORTHWEST AIRLINES
TO
SHAREHOLDERS
Year ended June 30,1944
DIRECTORS
S. M. ARCHER, Chairman
CROIL HUNTER
T. E. IRVINE
K. R. FERGUSON
A. E. FLOAN
R. M. HARDY
JOSEPH T. JOHNSON
L. M. LEFFINGWELL
WILLIAM STERN
EDWIN WHITE
E. I. WHYATT
OFFICERS
CROIL HUNTER ------- President
E. I. WHYATT - - Vice President and Treasurer
K. R. FERGUSON - - Vice President--Operatio7is
A. E. FLOAN ------- Secretary
L. S. HOLSTAD . . . . -Assistant Treasurer
CAMILLE L. STEIN . . . . Assistant Secretary
General Offices: 1885 University Avenue, St. Paul 4, Minnesota
The Chase National Bank of The City of New York, New York
City.
Principal Registrar
Bankers Trust Company, New York City
Principal Transfer Agent
City National Bank and Trust Company of Chicago, Chicago,
Illinois
Co-Registrar
Continental Illinois National Bank and Trust Company of
Chicago, Chicago, Illinois
Co-Transfer Agent
Annual meeting of shareholders last Monday in September.
I
N THE LAST YEAR your company has entered an unparalleled
period in its history. It is approaching the final phases of its exten
sive war activities and, strengthened beyond measure by the ex
perience gained in carrying out these responsibilities, it has set in mo
tion the machinery for the broad expansion of its commercial routes.
We stand on the threshold of unigue opportunity. The airplane has
become a symbol of power in the minds of all the world. No single ele
ment in the conduct of the war has had so great an influence, and none
will bear more directly on the building of a prosperous and lasting peace
for all nations. On the following pages, the story of your company's
commercial and war activities in the last year is presented. We look
forward with eagerness and confidence to the new year, determined to
complete our part in achieving a speedy victory and to build on the

results of the past a brighter future.
St. Paul, Minnesota
October 9, 1944 President and General Manager
COMMER/IAL
mm
ACTIVITIES
FORMER ARMY PLANE BEFORE CONVERSION INTERIOR OF PLANE WHEN TURNED OVER TO NWA
T
HE LAST YEAR has seen many sig
nificant developments in the commer
cial airline activities of your company,
notably the completion of pre-hearing con
ferences and final hearings on several of our
route applications, the acquisition of six
Army aircraft to replace those requisitioned
by the Army from the company in the fiscal
year 1942, the addition of three daily round
trips between Chicago and the Pacific North
west and four local trips between Chicago
and the Twin Cities, and the acquisition or
remodeling of ticket offices and the plan
ning of others to strengthen our expanded
sales organization.
This has been a historic year for North
west Airlines. The natural expansion of your
company has been continued, and we now
enter the new year with the inviting pros
pect of seeing the achievement of our most
immediate goal, the extension of our com
mercial routes into New York.
Final hearing on our application for this
extension was conducted before the Civil
Aeronautics Board in February, 1944, and
a decision is expected from the Board be
fore the end of 1944. We await that
decision with the encouragement of the
Board's examiners' report, which vigorously
supported our case and recommended that
the application be granted. Upon this de
cision will depend, in large measure, the
course of our future. If the certificate is
granted, as we believe it will be, your com
pany is prepared to begin operations into
Detroit, Cleveland and New York promptly.
Hearings also have been completed on
Northwest's application for routes to Hono
lulu from the co-terminals of Portland and
Seattle, and briefs are now in preparation.
Pre-hearing conferences on the West
AFTER CONVERSION AND READY FOR NWA SERVICE
Coast applications were held April 27, 1944,
with the final hearings tentatively set for
November 1 of this year. The preliminary
conferences on the North and Central Paci
fic applications, including Northwest's pro
posed routes to Asia, were held September
15, 1944.
These proceedings represent the begin
ning of your company's actions to weave
together a 30,000-mile network of routes,
serving the industrial East, the great agri
cultural empire of the Northwest, the in
creasingly important Pacific gateways of the
Seattle-Portland area, Honolulu, Alaska and
the nations of the Orient which are certain
to emerge from the ravaging war as almost
unlimited markets for American business
and culture.
The broadening of our commercial service
during the last year has resulted chiefly from
the acquisition of six Army aircraft of the
DC-3 type and the conversion of these planes
to NWA standards. The present fleet con
tains 13 DC-3s, the same number of that
type operated by the company before the
war.
Conversion of the former Army aircraft
was done by Northwest at the NWA Twin
Cities Wold-Chamberlain airport base and
the planes, now standard in every respect,
have been put into regular service.
The company has succeeded in achieving
outstanding utilization of its aircraft during
the difficult times when it was forced, by
the needs of the military, to operate with
only half of its normal fleet. Development
of time-saving devices in the maintenance
and overhaul of the aircraft and changes
in methods and procedures have enabled
Northwest to increase flying time to nearlv
13 hours per day per plane.
WORKERS WATCH AS PLANE AWAITS FIRST FLIGHT
Despite the fact that during- the last year
your company operated with fewer than its
normal complement of airplanes, loads of
mail, express and passengers have increased,
with reports showing- several all-time month
ly records.
The following figures represent the extent
of service provided by Northwest in the fis
cal year just ended: 5,501,672 revenue miles;
4,611,411,451 pound-miles of mail; 1,007,-
198,896 pound-miles of express; 84,718,273
revenue passenger miles. The revenue pas
senger load factor for the fiscal year was
85.17 per cent, the performance factor 96.73
per cent and the number of revenue passen
gers carried was 122,521. A table on page
23 shows comparative figures since the be
ginning of our operation.
Frequency of service to virtually all sta
tions on the NWA system was increased
during the year as a result of the acquisition
of the Army aircraft and the greater utiliza
tion of all our planes. On July 1, 1943,
Northwest was operating two transconti
nental round trips between Chicago and
Seattle, one trip between Chicago and Win
nipeg and two local flights between Chicago
and Minneapolis-St. Paul. Since that date
increases have been made so that five trips
are now operated between Chicago and the
Pacific Northwest, plus seven local trips be
tween Chicago and the Twin Cities, making
12 in all, including the Chicago-Winnipeg
flight. Service was resumed into Yakima,
W ash., in June of this year and into Port
land, Ore., in August, with three flights be
tween Portland and Spokane operating as
segments of the transcontinental flights and
in effect giving Portland three transconti
nental daily round trips.
To accommodate this increase in business
and in anticipation of greater needs in the
new expansion period the city ticket office
at Fargo was remodeled and enlarged, the
ticket office at Seattle was remodeled and
the Portland ticket office is being enlarged
and remodeled and will be opened before
the end of 1944. Northwest also opened
for the first time a street-floor ticket office
on hifth Avenue in New York. Work is now
nearing completion on a new city ticket
office in Chicago, at Monroe street and Mich
igan avenue, which will give your company
one of the largest and most modernly-equip-
ped transportation offices in the country.
The former Motor Power Equipment
building at 2303 1 Yrd Parkway in St. Paul,
Minn., has recently been purchased and re
modeling work has already been started to
provide a centralized unit parts overhaul
base of sufficient capacity to handle a threc
to four-fold expansion of overhaul activity
and yet representing an immediate saving
in operation costs over existing scattered
shop operation. The construction of main
base shops and executive offices must wait
until war building restrictions are lifted,
until a site can be selected, and until the ex
tent and direction of our expansion is more
clearly defined.
In anticipation of the expansion of our
commercial routes, all possible steps have
been taken to improve maintenance and op
erating equipment. Communication facili
ties have been substantially improved bv
the installation of new and modern equip
ment in the radio stations at Seattle, Chi
cago, Billings, Fargo, Miles City and Port
land, and by the installation of a 24-hour
private line teletype system serving everv
NWA station. Construction of a new radio
station at Milwaukee is now being planned.
In October 1943, personnel of vour com-
pany, engaged in both commercial airline
and military projects, reached an all-time
high of more than 10,000 as compared with
881 immediately before the war. Elimina
tion of some of our military projects and im
proved efficiency obtained from personnel
as a result of broad experience has brought
a reduction in personnel to approximately
6,500 as of September 1 of this vear.
FUTURE HOME OF NWA MAINTENANCE ACTIVITIES IN TWIN CITIES IS THIS MODERN STRUCTURE
ACTIVITIES
N
ORTHWEST AIRLINES has carried on
extensive war activities for our government
in the last year, expanding the operations in
some of these and completing our assignments in
three others. The results of this emergency work
have already been made clear to us all in the prog
ress our country has made in prosecuting the war.
What more we can contribute, we are prepared to
give. Your company has gained for itself, in impor
tant measure, a store of experiences which have
helped us prepare for new expansion of our com
mercial activities and will continue to aid us when
our airline plans are developed into realities.
MAIL, CARGO AND MILITARY PERSONNEL
ARE FLOWN NORTH BY NWA
A LONG THE MILITARY cargo routes
of your company's Northern Region,
..m- pjgh priority cargo, military per
sonnel and mail are daily being flown by
Northwest Airlines pilots in fulfillment of
our obligation as an arm of the national
defense.
The importance of Alaska and the Aleu
tian Islands in our country's operations
against Japan is now evident to all; they
constitute a major cornerstone in our mili
tary structure, and the supplying of those
far-north bases has been and is continuing
to be a task of front-rank importance.
Our pilots have carried on a unique oper
ation in the north, since much of the pioneer
ing of these routes was their responsibility.
In the last year, we have continued the
smooth operation of the inland military
ARMY AIR FORCES
HEADQUARTERS ALASKAN WING
STATION NO. 1, AIR TRANSPORT
COMMAND
Northwest Airlines, Inc.
St. Paul, Minnesota
Gentlemen :
1. I have just read your initial report of
the Aleutian Chain operation.
2. It is my desire to commend in the
highest manner, the personnel connected
with this operation. The efficiency of oper
ation indicated, knowing as I do the general
conditions of the Aleutian Chain, clearly
indicates that the personnel involved have
carried out a superior performance of flying
under most difficult conditions. Such flying
requires a constant study, evaluation and
knowledge of conditions encountered at few,
if any other parts of the globe. By such
performance it would appear that an entire
new phase of operations under such condi
tions has been developed. Certainly the
percentage of flights performed would not
have been performed a few months past.
3. Please see that this expression of ap
preciation is forwarded to the individuals
concerned, ground crews as well as air
crews, and with the further expression that
it is my sincere hope that a good start indi
cates a continuation of what may be termed
superb performance of a hazardous oper
ation.
/s/ D. V. GAFFNEY
Brig. General, U. S. A.
Commanding
routes, carrying supplies from the United
States through northwestern Canada to
Alaska, and in addition, we have inaugu
rated an entirely new military operation on
the islands of the Aleutian chain.
In January of this year a route from
Anchorage, Alaska, to Adak on the Chain
was established by the Alaskan Wing, Air
Transport Command, AAF. This route has
been operated with outstanding success by
NORTHERN REGION
your company, under contract to the Army.
Operations have since been extended to Attn,
1,600 miles out on the Chain and only 2,063
miles from Tokyo.
Day and night, against difficult weather
conditions, our pilots have carried mail to
American soldiers and sailors and have
hauled in high priority cargo and military
personnel, averaging two round trips per
day. By the resourcefulness and skill of all
who have contributed to this operation, your
company has succeeded in establishing de
pendable mail service to the islands, a sig
nificant achievement in view of the fact that
previously it had sometimes required weeks
for the trip from Anchorage to Adak.
Operation of the new line posed unique
problems and required special training, in
cluding study of all weather recordings kept
by the Army and Navy for all years past
and analysis of what weather to expect at
each season of the year. A system of alter
nating pilot crews when possible on the reg
ular commercial routes and the Aleutian
routes was adopted in order that each pilot
might be given an opportunity to gain in
valuable experience in the unusual conditions
of the north.
Virtually the entire length of the 1,600-
mile Aleutian chain route is now being flown
on instruments, an achievement once be
lieved impossible. The operation is now be
ing conducted with 15 airplanes and indica
tions are it will remain at this level.
That the Army has placed a high value on
your company's far-north operations is evi
dent in the letter, reprinted in this section,
from Brigadier General D. V. Gaffney, com
manding the Alaskan Wing of the ATC.
Much of the activity now being carried
on by Northwest Airlines on its Northern
Region is of a restricted nature and cannot
be disclosed in this report. We have played
a major role in advancing the military plans
of our country in the north, and with each
day's work we have gained experience. More
than anything else, we have pieced together,
from the experiences of pilots and all con
cerned, a clearer picture of these new re
gions where your company proposes to fly
commercially when the war emergency is
ended.
We will apply the lessons of our experi
ences to the tasks that lie ahead in the new
expansion of your company.
EXPANSIVENESS OF `FLYING BOXCARS' ON NORTH
ROUTES IS SHOWN HERE
NORTHWEST'S ALEUTIANS ROUTE SERVES ARMY BASE
AT ADAK
TWO MAJESTIC PEAKS ON THE ALEUTIANS
MILITARY ROUTE
MODIFICATION CENTER
O
NE OF THE CONTRIBUTIONS of
your company to the war effort of
the nation is now being* dramatically
demonstrated as the war in Europe draws
to an end. Liberator bombers from North
west Airlines' bomber modification center at
St. Paul, Minn., have cleared the way for
advancing- Allied troops in France, and the
toll they have taken in smashing- assaults on
German factories and military installations
is now being felt in its full force.
No figures can tell the story. There is no
adequate way to evaluate the importance of
this project except in the terms of precious
lives saved as a result. The letter which we
have reprinted in the next page makes this
abundantly clear.
Liberators from the St. Paul center now
are operating in all theaters of war. In the
last year more than 1,000 of these aircraft
were modified at the center and delivered to
the Army, and only last month delivery was
made on the two-thousandth aircraft to be
assigned to the project since its inception in
the early months of 1942.
1 hese are records of which we may be
proud. They have been made in the face
of difficult Army quotas which have not only
been met but, in each of the last five months,
have been exceeded.
Despite the fact that production has been
increased, it has been possible to meet our
quotas with reduced personnel. From a peak
of more than 5,000 in September of last year,
we have been able to reduce personnel to
approximately 3,500 in September of this
year, chiefly as a result of more efficient pro
duction methods, better planning and a bet
ter understanding by all of the job to be
done. It must be taken into consideration,
too, that proficiency of a large percentage
of the workers has increased as a result of
two years' experience in the handling of air
craft.
In the last year, more than 30 types of
modifications were completed at the project
and delivered to the Army. This work fell
AN ASSEMBLY LINE IN ONE OF THE HUGE HANGARS B-24 BOMBERS AWAIT TURN ON MODIFICATION LINES
into four different major classifications:
camera aircraft, cargo aircraft, straight
bombing aircraft and training aircraft. On
all of these assignments the center worked
from general directives and, beyond that, all
engineering and mockup work was accom
plished at the project itself.
The modification center, along with others
of the same general type, has played an
exceedingly important part in supplying the
war theaters with up-to-date aircraft with
a minimum of delays. Airplanes are flown
from factories to the center where they are
equipped with the desired armor plate, arma
ment and safety devices. When the changing
methods of warfare require new devices, they
are provided at the modification center until
such time as the factories can handle the
changes without slowing down production.
In successfully carrying out these assign
ments, the St. Paul center has made a sig-
nihcant contribution to the war effort which
has led our nation toward victory.
As in all our war projects, your company
has gained for itself a broad experience in
the many phases of this extensive operation.
It is impossible to foresee the extent of
operations at the St. Paul center in the next
year, since obviously the need for aircraft
will depend upon the progress of the war
in both the European and Pacific theaters.
It is possible that when action ceases in one
major war area, planes from that theater
will be returned to the United States for
further modification and then reassigned to
other war zones.
WHEELS GO UP ON B-24 LIBERATOR AS VISITORS
WATCH THIS TAKEOFF
HEADQUARTERS
ARMY AIR FORCES
WASHINGTON
Northwest Airlines
St. Paul Modification Center
St. Paul, Minnesota
Gentlemen :
At this time, I wish to commend all per
sonnel at your Center who have been con
nected in any capacity with the B-24 H2X
program. By consistently meeting your
schedules for the past several months, you
have made a material contribution to the
success of many overseas operations.
Many more gold stars would be in the
windows of American homes if it had not
been for the supply "in time and enough''
instead of "too little and too late'' of the
B-24's modified at your Center and used on
D-Day to clear the Normandy beaches.
Your performance is a splendid example
of what is being done by the civilians at
home to "back the attack" by providing the
right weapons at the right time. May you
continue to maintain your commendable
production rate.
Yours very truly,
/s/ E. M. Powers
Brigadier General, U. S. A.
Deputy Asst. Chief of Air Staff
Materiel and Services
EXPERT MECHANICS ARE THESE WOMEN,
RECRUITED AND TRAINED BY NWA
PROJECTS
aL (RsMOhck.
P
ERSONNEL of this project lias been increased to 110
in the last year and expanded operations have made
it necessary to move into larger quarters in the large
Air Transport Command hangar at the edge of the Twin
Cities Wold-Chamberlain airport, Minneapolis. Additional
airplanes also have been based at the project, and the scope of
research being carried on to circumvent crippling icing condi
tions on military aircraft has been extensively broadened.
1 he project has been changed from an independent project
under jurisdiction of the ATC to an operational base under
Wright Field. The full story of this project, to which your
company is contributing mechanics, engineers and pilots, can
only be told when the war is ended, but the results have
already begun to be evident in some present and all future
aircraft design.

(phaciftiicdum,
SiatuL
I
N THE LAST YEAR the precipitation static program
has been housed in a new half-million-dollar plant built
by the Navy at the Twin Cities Wold-Chamberlain air
port, Minneapolis. Northwest is continuing to supply mechan
ics, engineers and pilots to this project, at which research is
conducted to eliminate static which develops when planes are
flown through moisture, dust storms and dry snow, blocking
out communications and navigation signals. Activities are
now in full swing and will continue, not only for the dura
tion of the war, but probably for years afterward. The value
of this work to military and postwar commercial aircraft is
inestimable.
N
OR I I IW ES F AIRLINES has continued through the
last year to furnish flight personnel for Army con
tract work assigned to the aeronautical division of
the Minneapolis-Honeywell Regulator company, engaged in
de\ elopment and manufacture of electronic control systems for
aii craft. Nearly all of the work carried on at this project is
of a restricted nature and cannot be detailed here. Aircraft
equipment developed at the project is of extremely high prior
ity and importance to the Army Air Forces and will fit well
into the postwar commercial aircraft picture.

O
N OCTOBER 31, 1943, Northwest Airlines completed
operation of the Airmen's Transition Training Pro
gram for the Air Transport Command at the NWA
base at Billings, Mont. The work was undertaken in Febru
ary of that year and a total of more than 700 Army men were
trained in all phases of the operation of the large transport
aircraft. Along with the training of pilots, your company as
signed experts to train Army men in complimentary work as
radio operators, radio mechanics and line mechanics. Count
ing supervisors, the entire NWA staff devoted to the work of
the school included 107 top men of the airline with approxi
mately 25,000 man-hours contributed each month. For three
months, Northwest conducted an Operational Training Unit
program to co-ordinate functions of the complete transport
crew. For a short time part of the mechanical training was
conducted at the NWA Seattle base.
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N
ORTHWEST AIRLINES completed its assignment
from the Army Air Forces to train Army flight con
trol officers on August 31, 1944. The training program
was inaugurated in January of this year and a total of 40 Army
officers were instructed in all phases of flight control proce
dures. The officers were given practical training at your com
pany's Seattle and Minneapolis bases, working directly with
NWA flight superintendents as assistants on all problems
which arose in the normal operation of the airline. These men
are now stationed at the various Army flight control centers
throughout the United States. Your company has been ad
vised by the Army Office of Flying Safety that graduates of
the NWA training course have contributed invaluable aid in
avoiding unnecessary risks by Army pilots on missions within
the country.

(JandalicL
I
N ACCORDANCE WITH its agreement with the Army,
your company ceased to operate the experimental modifi
cation and accelerated service testing center at Vandalia,
Ohio, on February 20, 1944. The airline's success in establish
ing quickly the immense modification center at St. Paul, Minn.,
led the Army Air Forces Materiel Command in the fall of 1942
to request that the company undertake the new project, aimed
at giving American fighting fliers the very best in equipment
through special modification of military aircraft and a series of
gruelling tests. Work on the planes was begun in May, 1943.
Your company supplied all personnel for the project, and dur
ing the 10 months it was operated by Northwest, planes and
gliders were modified and planes were checked in the acceler
ated service testing branch.
BOLDING FOR THE
T
HE SUDDEN RISE of the war
emergencies presented an extraor
dinary labor condition. While the
need for workers in all departments of the
company expanded as much as ten fold, the
supply of such persons was constantly being
depleted by the needs for men and women
in the armed forces and by the generally ab
normal employment situation throughout
the country.
Since aviation is a comparatively new
business, the number of skilled workers was
limited and those who were equipped with
qualifying knowledge of airplanes were, for
the most part, already established firmly in
organizations which were also engaged in
rush war work.
With industries of all kinds simultane
ously entering a state of remarkable expan
sion, men and women without special skills
rushed into jobs which required less back
ground and training, and were reluctant to
leave well-paying jobs to enter others which
would require tedious training.
One of the greatest gains made by North
west Airlines in the carrying out of the im
mense tasks assigned to us by our govern
ment has been experience. Meeting war
problems has hastened the development of
personnel in all branches of the company,
and it has added incalculably to the stature
of the men who share the responsibilities of
guiding your company in its proposed ex
pansions.
TWO EXAMINERS WATCH AS MECHANIC TAKES
TRADE TEST FOR UPGRADING
IF MECHANIC PASSES TESTS HE WILL BE
ADVANCED TO HIGHER RANK
W e have discerned in these emergency ac
tivities the opportunity, not only to fulfill
our obligations to our government in its
crisis, but to assimilate for ourselves the les
sons of experiences which might otherwise
have been years in coming.
This experience has been our chief divi
dend from our war activities of this last
year. It will be a powerful factor in the all-
important decade ahead.
Since the beginning of our war work, we
have been able to build up a pool of skilled
workers in all branches of your company,
keeping in mind the need for such workers
which is certain to develop as our commer
cial activities expand.
Through a system of specialized training,
many thousands of men and women--me
chanics, stewardesses, co-pilots, traffic per
sonnel and others--have been trained, and
the majority of these Northwest will be able
to draw on to fill jobs as the needs develop
in our commercial activities.
In an effort to stimulate initiative and to
assign workers to tasks at which the com
pany might make maximum use of their
abilities, a trade testing program was inau
gurated, giving workers the opportunity to
prove by actual test their right to a different
classification. More than 1,200 have passed
their trade tests and subsequently have been
upgraded. Only 316 have failed to pass
these tests.
In addition to other personnel, your com
pany has increased the number of its pilots
in the last year in order to maintain its full
operations on the military routes and to
operate the commercial service added during
the year.
The pioneering operation under Army
contracts of many of the far-north routes
has been done by these men, along the in
land routes to Alaska by way of Canada
and out on the Aleutian Islands chain where
Northwest proposes to fly commercially
when the war has ended and such activity
becomes practical. These men have written
one of the most glowing pages in the his
tory of the war, combating most severe
weather conditions and gaining a familiarity
with the country which has prepared them
thoroughly for the flying which lies ahead
in these re-discovered regions.
In these ways, your company has been
building personnel for the future. It has
created a pool of skilled workers in all de
partments, and it has been alert to the op
portunities for developing resourcefulness,
courage, sagacity and confidence in men and
women of all ranks as a dividend from its
varied wartime experiences.
UPGRADING TESTS LIKE THIS ONE REVEAL MECHANIC TACKLES PROBLEM ON B-24 TURRET
MAXIMUM ABILITIES OF WORKER AS EXAMINERS LOOK ON
LO O K I X G
THIS NEW CHICAGO TICKET OFFICE WILL
BE ONE OF NATION'S FINEST
OUR COMPANY'S PLACE in the
promising aviation picture of the fu
ture is now being prepared. The avia
tion industry as a whole is entering a phase
of its development which has no parallel in
the past. The war has focused the imagina
tion of the entire world on the airplane and
has demonstrated the myriad advantages of
air transportation. The immense increases
in travel and transport in the immediate
postwar era, with the new emphasis on
speed, will demand a vast expansion of com
mercial air routes as quickly as such service
can be made available.
Northwest already has developed a basic
pattern for its participation in this expan
sion. Our thinking and action has been pri
marily directed at the attainment of our New
York route. We have worked arduously to
ward that goal, believing that the comple
tion of this fourth great trans-continental
air trunk line is the one essential step in
building the sturdiest possible structure for
expansion.
Your company also has asked the Civil
Aeronautics Board for authority to estab
lish alternate routes adjacent to those now
being operated in order to provide a more
complete service for those centers within
the natural sphere of our operations which
could justify such service.
We look to Alaska as a new great empire
in the postwar air world and, beyond, to the
Orient and the Far East as areas of vast po
tential trade, brought close to the industrial
Americas by the speed of the airplane. The
welfare of Asia's war-sick nations, their
chances for a healthy recovery, will be bound
up inextricably with the producing centers
of our own nation, and the interchange of
commerce of all kinds will require greatly
expanded transportation facilities. To this
end, we have asked the CAB for permission
to operate commercial airline routes to
Honolulu, Alaska and the Orient.
We look forward confidently to a favor
able decision by the CAB on our New York
application. In recommending that the cer
tificate be granted, the Board's examiners
described the application as one of the most
important ever to be presented.
Northwest's prewar fleet of 13 DC-3
Douglas aircraft has been re-established by
the acquisition of six Army planes of the
same g'eneral type and the conversion of
these to NWA standards. Additional DC-3s
are needed for our present routes until larger
and better aircraft can be purchased. It is
now probable that the first of these to be
come available will be the Douglas DC-4, a
four-engine aircraft with a cruising speed of
approximately 235 miles per hour and with
a capacity of 44 to 55 passengers. Planes
of this general type are now being studied
by our engineers. It is likely that deliveries
of this type of plane would not be possible
before late in 1945.
Other manufacturers are making strong
bids for postwar aircraft business, and we
have under consideration other planes than
the DC-4 or the larger DC-6. No radical im
provements or changes in appearance or per
formance can be expected in the early post
war aircraft.
Many municipalities are now engaged in
planning new airports or drafting plans for
enlarging present airports, and these pro
grams will affect our operations. Present
war curbs on construction have prevented
immediate realization of many plans and the
actual date of beginning construction is still
undetermined for many projects.
Work already has been started on New
York's Idlewild airport. Cleveland and Mil
waukee are planning to enlarge their pres
ent facilities and Detroit has plans for a new
airport. The airlines, through a technical
committee, have recommended that a new
airline airport for Chicago be constructed,
but no action has yet been taken by the
city on the recommendation. The Minne-
apolis-St. Paul airport situation awaits fur
ther action by the controlling Metropolitan
Airports Commission. The next year will
see the completion of the new Seattle-
Tacoma airport and the start of terminal
building and hangar construction. (It is
possible this field may soon become our
western terminal.) Early action is expected
on airport terminal building plans which
have been prepared and submitted to the
cities of Yakima, Wenatchee and Butte.
The major active item in the planning be
ing done for new administration buildings
at airports on the NWA system is a pro
posed $1,200,000 terminal project at Chi
cago. The Port of Seattle now has under
consideration a plan calling for a $1,500,000
terminal building, and Fargo has taken def
inite action toward construction of a new
administration building in the form of a
bond issue and some architectural studies.
These projects will mean new facilities in
one form or another for your company's use.
We have proceeded with our plans in the
face of the uncertainty as to when the war
will be brought to an end and what the new
peace-time world will be like. We are obli
gated to carry on our war activities until
such time as they are no longer needed, and
we are preparing now for the day when we
will finish this emergency assignment and
turn our energies full-force to our postwar
opportunities.
| This unique cross-section view shows
| both exterior plan and interior of the Doug-
1 las DC-4, one of several postwar aircraft
I now under study for postwar use by North-
1 west Airlines. Passenger capacity of this
I plane is more than twice that of the two-
! engined DC-3 currently used by your com-
! pany.
PRESENT AND PROPOSED
EW YORK
WASHINGTON
This polar projec
tion map shows
present NWA routes
(solid lines) and
proposed NWA
transcontinental and
international routes
(broken line). Ap
proximate overall
mileages are listed.
<5
The Company holds certificates of public convenience and
necessity from the CAB, which authorize it to engage in air
transportation with respect to persons, property and mail as
follows :
! Between the terminal point Chicago, Ill., the interme
diate point Milwaukee, Wis., and (a) beyond Milwaukee,
Wis., the intermediate points Madison, Wis., Rochester, Minn.,
Minneapolis, Minn., St. Paul, Minn., Fargo, N. D., and (b)
beyond Milwaukee, W is., the intermediate points Green Bay,
Wis., Wausau., Wis., Eau Claire, Wis., Minneapolis, Minn.,
St. Paul, Minn., Fargo, N. D., and (c) beyond Fargo, N. D.,
the intermediate point Grand Forks, N. D., and the terminal
point Winnipeg, Canada, and (d) beyond Fargo, N. D., the
intermediate points Jamestown, N. D., Bismarck-Mandan, N.
D., Miles City, Mont., Billings, Mont., Great Falls, Mont., (as
temporary intermediate point and for non-stop service to and
from Missoula, except for local non-priority passengers be
tween Great Falls and Billings, Helena or Butte), Butte,
Mont., Helena, Mont, Missoula, Mont., Spokane, Wash., and
(1) beyond Spokane, Wash., the intermediate points Wenat
chee, Wash., Yakima, Wash., and the terminal point Seattle,
Wash., and (2) beyond Spokane, Wash., the intermediate
point Yakima, Wash., and the terminal point Portland, Ore. ;
provided, that (a) the service to and from Green Bay, Wau
sau, and Eau Claire, Whs., is not to be inaugurated until the
Board notifies the Company that the national defense no longer
required that the same be delayed.
2. Between the terminal point St. Paul-Minneapolis,
Minn., and the terminal point Duluth, Minn.-Superior, Wis.,
provided that it is authorized to suspend service temporarily on
said route with respect to persons only until the further order
of the Board and to operate single-engine equipment for air
transportation of property and mail.
Service to and from Green Bay, Wausau, and Eau Claire,
Whs., has not yet been inaugurated.
The Company has filed with the CAB the following appli
cations for certificates of public convenience and necessity for
the transportation by air of persons, property and mail :
1. Between the terminal points Minneapolis-St. Paul,
Minn., and New York, N. Y., via the intermediate points,
Milwaukee, Wis., Detroit, Mich., and Cleveland, Ohio.
2. From Chicago, Ill., to Minneapolis-St. Paul, Minn.,
via Rockford, Ill., Beloit, WGs., Dubuque, Iowa, and La
Crosse, Wis.
3. Between Minneapolis-St. Paul, Minn., and Billings,
Mont., the additional intermediate stop Aberdeen, S. D.
4. From Seattle, Washington, USA, to Honolulu, Ha
waii. From Portland, Oregon, USA, to Honolulu, Hawaii.
5. Between the intermediate point Fargo, N. D., and the
intermediate point Spokane, Wash., the intermediate point
Great Falls, Mont.
6. Between the terminal points Seattle, Wash., and Vic
toria, B. C., via the intermediate point Port Angeles, Wash.
7. Between the terminal points Seattle, Wash., and Port
land, Ore.
8. Between the terminal points Chicago, Ill., and Wash
ington, D. C., via Dayton, Ohio.
9. Between the terminal points Chicago, Ill., and Nome,
Alaska, via the intermediate points Minneapolis-St. Paul,
Minn., Fargo, N. D., and Fairbanks, Alaska ; with an alter
nate route between the terminal points Chicago, Ill., and Nome,
Alaska, via the intermediate points Minneapolis-St. Paul,
Minn., and Fargo, N. D., McMurray, Alberta, Canada; Nor
man Wells, Northwest Territory, Canada; Fort Yukon,
Alaska ; and Gulkana, Alaska.
10. Between the terminal points Seattle, Wash., and
Nome, Alaska, via Anchorage, Alaska.
11. From Anchorage, Alaska, to Manila, Philippine Is
lands, via Dutch Harbor, Kiska and Attu, Aleutian Islands ;
Paramushiro, Kurile Islands, Tokyo, Japan; and Shanghai,
China.
12. From Anchorage, Alaska, to Calcutta, India, via
Dutch Harbor, Kiska and Attu, Aleutian Islands; Paramu
shiro, Kurile Islands, Tokyo, Japan; Dairen, Manchuria;
Peiping and Chungking, China.
13. From Seattle, Wash., to Manila, Philippine Islands,
via Anchorage, Alaska; Dutch Harbor, Kiska and Attu,
Aleutian Islands; Paramushiro, Kurile Islands, Tokyo,
Japan; and Shanghai, China.
14. From Seattle, Wash., to Calcutta, India, via Anchor
age, Alaska; Dutch Harbor, Kiska and Attu, Aleutian Is
lands; Paramushiro, Kurile Islands, Tokyo, Japan; Dairen,
Manchuria; Peiping and Chungking, China.
15. Between the terminal points Nome, Alaska, and
Manila, Philippine Islands, via the intermediate points
Peiping and Shanghai, China.
16. Between the terminal points Nome, Alaska, and
Calcutta, India, via the intermediate points Peiping and
Chungking, China.
17. Between the terminal points Seattle, Wash, and
Manila, Philippine Islands, via the intermediate points An
chorage and Nome, Alaska; Peiping and Shanghai, China.
18. Between the terminal points Seattle, Wash., and Cal
cutta, India, via the intermediate points Anchorage and
Nome, Alaska; Peiping and Chungking, China.
19. Between the terminal points Butte, Mont., and Port
land, Ore., via the intermediate points Pendleton, Oregon,
or LaGrande, Oregon.
20. Between the terminal points Milwaukee, Wis., and
Spokane, Wash., via the intermediate points, Green Bay,
Wis., Duluth, Minn., Fargo, N. D., Minot, N. D., and
Great Falls, Mont.
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REPORT
F
OR THE FISCAL YEAR ended June
30, 1944, your company made a net
profit of $517,889 after deduction of all
taxes and reserves, including a reserve provi
sion for war and postwar contingencies in
the amount of $100,000. This profit was an
increase of 72% over that of the previous
fiscal year, as adjusted and reported to you
in my letter of March 17, 1944. This profit
of $517,889 amounts to $1.45 for each of the
356,380 shares of common capital stock out
standing at the end of the year. At the close
of the year the company's surplus was
$1,513,910.
On the following pages you will find a
report from Ernst & Ernst, Certified Public
Accountants, covering statements of profit
and loss, surplus and balance sheet.
You will find on the comparative state
ment of profit and loss that our operating
revenues increased 44% over the previous
fiscal year as a result of great increases in
the amount of passenger business done and
fees earned from our Army contracts, in
creases which were only slightly offset by
minor decreases in mail, express and miscel
laneous operating revenues.
The receipt from the Army during the
year of Douglas DC-3 type airplanes and the
high daily average use of all flying equip
ment, as outlined earlier in this letter, have
combined with the extraordinary demand
for passenger transportation so that our pas
senger revenue exceeded that of the previ
ous year by 79% and reached a total pas
senger revenue amount of nearly $4,250,000.
Mail revenue of $1,413,203 was down
5j4% under the previous year. This was in
spite of an increase of 54% in the amount of
mail service rendered and was due to the
fact that our mail rate was reduced as of
March 1, 1943. There was a drop of about
$70,000 in express and miscellaneous operat
ing revenues. Notwithstanding these minor
reductions in cargo and miscellaneous oper
ating revenues, the total loads carried, in-
eluding both cargo and passengers, were
near the average practical capacity of our
aircraft. These revenues (that is, exclusive
of contract fees) amounted to $1.09 per reve
nue mile.
Operating expenses were up 53%, mostly
as the result of flying 43% more miles in
commercial service than in the previous year.
The total of expenses has been greatly in
fluenced on the one hand by less favorable
division of common costs between the com
pany's commercial operations and its war
contract operations, and on the other hand
by the greater spread of expense resulting
from the increase in our commercial aircraft
and schedules. A further important element
of our operating expenses is the increasing
cost of doing business under wartime condi
tions of labor and governmental regulation.
A cash dividend of 50 cents per share, pay
able September 1, 1943, was declared during
the past fiscal year, and since its close a 50
cents per share dividend was declared on
August 1, 1944, payable September 1, 1944.
During the year the company issued rights
to its stockholders as of March 25, 1944, cov
ering 117,460 common shares at $16 per
share. All of these rights were exercised or
sold by stockholders except rights represent
ing about 4,000 shares, and these shares
were sold to underwriters. Also during the
year the president purchased 4,000 shares
under option rights, so that a total increase
of 121,460 shares resulted. These sales, less
expenses, increased our cash by about
$1,850,000, and the net proceeds were in
vested in U. S. Government securities pend
ing their investment in airplanes and other
airline equipment.
As a result of the company's profitable
operation during the year and the cash real
ized from this financing, the net current as
sets of the company increased to a figure of
$3,088,617.
Our present capital is adequate for current
needs, for an immediate extension to New
York and for the addition of some four-
engined aircraft.
flalance. Sheet
Northwest
JUNE
Airlines, Inc.
30, 1944
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""""""" 111 I' mini Liniiiiiii
ASSETS LIABILITIES
CURRENT ASSETS
Cash
United States Government securities--at cost plus accrued interest
Trade accounts receivable, including United States Government
accounts of $280,973
Unreimbursed costs and accrued fees under United States Govern
ment cost-plus-fixed-fee contracts--Note A $15,033,962
Less advances 13,863,297
$2,923,904
1,975,772
619,351
$ 1,170,665
Less reserve 400,000 770,665
Inventories--at the lower of cost or market:
Parts, materials, and supplies 534,107
TOTAL CURRENT ASSETS
OTHER ASSETS
Accounts receivable from employees including advances to be al
located to contracts, less reserve of $25,000 $ 50,048
Sundry accounts, deposits, etc., less reserve of $15,000 66,355
Deposit in escrow 10,000
Income taxes recoverable upon utilization of reserve for contract
cost adjustments--estimated--Note A 168,000
$6,823,799
294,403
PROPERTY, PLANT, AND EQUIPMENT
On the basis of cost to the Company or
its predecessors--Note B: Cost Reserve Balance
Land ...$ 12,419 $ 12,419
Aircraft and reserve equipment... ... 1,771,288 $1,208,319 562,969
Buildings on leased ground ... 483,437 227,065 256,372
Other buildings and equipment... ... 1,096,288 531,804 564,484
Improvements to leased property. ... 167,950 80,798 87,152
$3,531,382 $2,047,986 1,483,396
INTANGIBLE
Cost of United States Government air mail route 48,737
DEFERRED CHARGES
Unexpired insurance $ 62,204
Other prepaid and deferred expenses, supplies, etc 52,563 114,767
CURRENT LIABILITIES
Accounts payable $ 1,186,022
Salaries, wages, and vacation compensation 1,051,810
Pay roll deductions for employees' income tax 277,379
Pay roll deductions for employees' war bonds 215,956
Pay roll taxes 241,895
Air travel contract deposits 90,680 $3,063,742
Accrued taxes
Federal and state taxes on income--estimated:
For the year ended fune 30, 1944
For prior years
$ 430,000
35,500
205,940
465,500
TOTAL CURRENT LIABILITIES $3,735,182
DEFERRED INCOME--Unused transportation 77,307
RESERVES
For possible inventory obsolescence $ 115,000
For war and post-war adjustments 100,000 215,000
CAPITAL STOCK AND SURPLUS
Common stock--no par value:
Authorized 600,000 shares; unissued 243,620 shares of which
20,000 shares are reserved for options (10,000 shares at $14.00
per share, 5,000 shares at $18.50 per share, and 5,000 shares
price and allocation to be fixed by the Board of Directors) out
standing 356,380 shares at aggregate stated capital amount....$ 3,223,703
Earned surplus 1,513,910 4,737,613
$8,765,102
$8,765,102
COMPARATIVE STATEMENT OF PROFIT AND LOSS
Northwest Airlines, Inc.
YEARS ENDED JUNE 30. 1944 AND 1943
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Operating Revenues:
Transportation: 1944
Passengers $4,234,565
Mail . 1,413,203
Express, freight, etc 296,708
Repair and service income, rents, etc 47,367
Fees from cost-plus-fixed-fee contracts 865,648
1943*
$2,364,291
1,495,032
362,897
50,777
491,937
TOTAL OPERATING REVENUES $6,857,491 $4,764,934
Operating Expenses $5,476,858
Unallowed costs under government contracts charged off
Provision for contract cost adjustments--Note A 213,512
$3,577,384
340,000
260,000
$5,690,370 $4,177,384
OPERATING PROFIT $1,167,121 $ 587,550
Other income and credits 16,640 52,919
$1,183,761 $ 640,469
Other deductions 68,987 61,192
PROFIT BEFORE TAXES THEREON $1,114,774
Taxes on income--estimated:
Provision for the year:
Federal normal income taxes and surtax and declared value
excess profits taxes $ 527,000
State income taxes 33,000
Under (over) provision for prior years ( 5,115)
$ 579,277
$ 477,000
30,000
12,185
$ 554,885
Less:
Credit for reduction in mail revenue
Amount recoverable upon utilization of reserves--Note A ( 58,000)
$ 519,185
( 130,000)
( 110,000)
$ 496,885 $ 279,185
$ 617,889
Provision for war and postwar contingencies 100,000
$ 300,092
--o--
NET PROFIT $ 517,889 $ 300,092
Provision for depreciation and amortization included in expense $ 301,533 $ 267,842
As revised in report to stockholders, March 17, 1944.
NOTES TO FINANCIAL STATEMENTS
Northwest Airlines, Inc.
JUNE 30. 1944
Note A--Since February, 1942, the Company has been engaged in substantial operations under cost-
plus-fixed-fee contracts witli the United States Army. Total costs incurred in these operations to June
30, 1944, have amounted to approximately $46,855,000.
Agreement has been reached with the Army Contracting Officer as to cost determination procedures for
1942, and the Company has withdrawn its appeal to the Hoard of Contract Appeals on items amount
ing to $340,000 mentioned in the annual report for the year ended June 30, 1943. This amount was
charged off in that year, but some recovery particularly in connection with training costs, is antici
pated upon final determination as to allowable costs for the period ended December 31, 1942.
Negotiations between the Company and the Army Contracting Officer in connection with 1943 costs
have resulted in an amendment to the contract which has been approved by the Secretary of War.
The Company has proceeded with the revision of the cost allocations involved; the accompanying
statements have been prepared on the basis of the Company's interpretation of the amendment, and
revised reimbursement vouchers are in process of preparation.
The costs for the six months ended June 30, 1944, have been allocated in accordance with formulae
agreed upon with the Army Contracting Officer, and no revision of such formulae is anticipated.
In addition to approval by the Army Contracting Officer, contract costs are subject to audit and
approval by the Comptroller General's Office. To date, approximately 25% of the total costs have
been approved by the latter.
The Company believes that its allocation of the costs have been fairly determined in accordance with
the formulae referred to herein. However, in recognition of the probability of unallowable costs and
differences of opinion as to interpretation, provisions in the amount of $473,512 have been made by
charges against profit and loss for the current and preceding year. Such items as are now considered
to be unallowable or without adequate support have been charged off in the amount of $73,512, leav
ing a balance of $400,000 in the reserve.
The income tax recoverable when and in the event it becomes necessary to utilize this reserve in full
is estimated at $168,000, which amount has been reflected in the balance sheet.
Note B--During the year the United States Army authorities returned to the Company five 21-pas
senger aircraft to replace in part those acquired from the Company in 1942. The cost of the aircraft
and allowances to be received by the Company for costs of reconditioning have not been finally deter
mined, but the Company has made provision in accounts payable in amounts which it believes will
be sufficient to cover the ultimate cost. Provision for depreciation on these ships has been made on
a basis of two years from the dates on which they were placed in service.
Note C--Profits of the Company include those from transactions which may be subject to the pro
visions of the Sixth Supplemental National Defen se Appropriation Act of 1942, as amended, providing
for the refund of any profits found, as a result of renegotiation, to be excessive. The Company be
lieves that the profits realized on such transactions will not be found excessive and no provision for
refunds has been reflected in the accompanying statements.
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STATEMENT OF SURPLUS
Northwest Airlines, Inc.
YEAR ENDED JUNE 30. 1944
PAID-IN SURPLUS
Balance at July 1, 1943
Expenses incurred in connection with sale of capital stock $ 41,315
Transferred to capital stock account 484
BALANCE AT JUNE 30, 1944
EARNED SURPLUS
Balance at July 1, 1943
Net profit for the year $ 517,889
Dividends paid (in cash), 50c per share 117,460
BALANCE AT JUNE 30. 1944
$ 41,799
41,799
$ --o--
$1,113,481
400,429
$1,513,910
BOARD OF DIRECTORS
Northwest Airlines, Inc.
St. Paul, Minnesota
We have examined the balance sheet of NORTHWEST AIRLINES, INC., as of June 30, 194-4,
and the statements of profit and loss and surplus for the year then 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 support
ing evidence, by methods and to the extent we deemed appropriate. Our examination was made in
accordance with generally accepted auditing standards applicable in the circumstances and included all
procedures which we considered necessary. It was impracticable to confirm by direct correspondence
the amounts receivable from United States Government Departments as of June 30, ld44, as to which
we satisfied ourselves by other auditing procedures.
There are a number of unsettled matters resulting from wartime conditions which may affect the
accompanying financial statements. A substantial part of the costs under cost-plus-fixed-fee contracts
have not been finally audited and accepted by the Army and the General Accounting Office and may
include unallowable items; the fees accrued in 1943 and 1944 may be subject to renegotiation; and the
related income tax questions are still unsettled, all of which may not finally be determined until after
the contracts are completed. These questions have been considered and dealt with in the statements
on a basis believed to be reasonable in the light of present information and conditions.
In our opinion, the accompanying balance sheet and related statements of profit and loss and sur
plus, together with the notes thereto, present, as fairly as can now be stated, the position of NORTH
WEST AIRLINES, INC., at June 30, 1944, and the results of its operations for the year then ended,
in accordance with generally accepted accounting principles applied on a basis consistent with that of
the preceding year.
ERNST & ERNST
Certified Public Accountants
September 28, 1944
St. Paul, Minnesota
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A RECORD OF PROGRESS
Total
Express Revenue Mail Plane
Calendar Mail Passenger and Freight Passenger Pound Miles
Year Revenue Revenue Revenue Miles Miles Flown
3 Months, 1926 $ 11,790 --o-- Not Avail. --o-- Not Avail. 47,397
1927 76,029 $ 8,663 " 126,000 " 211,667
1928 195,315 24,890 " 402,400 " 314,496
1929 495,708 121,075 " 1,956,400 " 736,664
1930 648,799 119,349 $ 146 2,129,600 " 1,032,340
1931 917,635 205,164 575 3,934,093 89,706,330 1,434,555
1932 884,719 200,984 343 4,127,800 77,867,566 1,639,015
1933 762,208 188,966 1,873 4,108,313 82,613,032 1,823,850
1934 251,133 199,074 4,319 4,301,145 44,034,248 1,643,127
1935 629,724 481.528 12,388 10,342,834 315,817,803 2,841,198
1936 1,050,639 759,981 27,318 16,528,401 671,011,789 3,699,818
1937 1,076,293 761,839 33,768 16,685,852 841,274,933 4,462,439
1938 1,286,549 829,554 41,625 21,153,258 1,116,975,430 5,310,015
1939 1,763,288 1,324,728 61,186 34,749,246 1,166,518,244 5,399,024
1940 1,769,735 2,151,311 79,531 51,175,254 1,370,076,043 6,079,669
1941 1,955,826 2,526,721 118,885 59,659,145 1,871,311,191 6,353,659
1942 1,850,601 2,410,512 240,800 52,061,159 2,528,042,954 4,931,815
1943 1,353,822 3,139,713 297,941 63,787,683 4,005,180,807 4,584,766
1st 6 mos., 1944 . . . 675,745 2,245,458 82,769 44,406,468 2,201,237,162 2,920,835
PBISTED IS U.S.A.
VJ44