NORTHWEST AIRLINES, Inc. annual dUlplnf-fJJS/talldwldilM_ 1949 NORTHWEST AIRLINES, INC. Board of Directors K. R. Fergu on ..................................... .Vice Pre ident- Operation and Engineering, orthwe t Airlines, Inc. Wm. Tudor Gardiner ................ Chairman, Board of Director , Incorporated Investors Bo ton, Ma . Robert M . H ardy .............................. Pre ident, Sun hine Mining Co., Yakima, Wah. Croil Hunter ............. .......... ....................................... Pre ident, Northw t Airlin s, Inc. Jo eph T. John on ........... ...... ............. Pre ident, The Milwaukee Co., Milwaukee, Wis. Malcolm . Mackay ... ..................... Special Partner, Laidlaw & Co., ew York, . Y. Dr. Charle, W. Mayo ......................... ........................... Mayo Clinic, Roche ter, Minn. Alonzo Pettey .................................. Vice Pre ident and Director, Farmers tate Bank Brush, Colorado William tern ......... ............................. Pre ident, Dakota ational Bank, Fargo, . D. Edwin White ................ Chairman, Board of Director , Kalman & Co., St. Paul, Minn. E. I. Whyatt ....................... .Vice Pre ident and Comptroller, orthwe t Airline , Inc. Officers Croil Hunter ............... ........................................................................ .. ................ . President E. I. Whyatt ........................................... .... ....... ........ .... .Vice President and Comptroller K . R . Fergu on ...... ... ...................... ......... Vice Pre ident- Operation and Engineering Linu C. Glotzbach .................................. Vice Pre ident and A i tant to the Pre ident Amo Culbert ......................... .... ...................................................... .Vice Pre ident- ale . E. Floan ............................................... ........................... Vice Pre ident and ecretary L. . Hol tad ...... .................................................................................................. Treasurer Frank C. Judd .................................... ........ .. Regional Vice President- Western R egion D. J. King ................................. ................. ...... Regi.onal Vice President- Orient Region Wm. J. Eiden .... ......................................................... ......................... A sistant Treasurer General Office : 1885 Univer ity Avenue, St. Paul 4, Minnesota The Cha e ational Bank of The City of ew York, ew York, . Y. Principal R egi trar Banker Tru t Company, ew York, . Y. Principal Tran fer Ag nt Harri ru t and aving Bank, Chicago, Illinoi Co-Regi trar he Fir t ational Bank of Chicago, Chicago, Illinoi Co-Tran fer gent Annual m eeting of shareholders third Monday in April PRESIDENT 'S REPORT YO R compan , during a year which estab- li hed ne, high record in the amount of revenues and the volume of bu ine s, made a net profit, after taxe, of 1 357,679 in 1949. Thi compares with a net lo s of $787,474 for the preceding ear. In m report a year ago I pointed out that although this company wa faced with many difficult problem , there were indication of im- provement; and the shm ing of 1949 bear out that foreca t. In addition to an increa e in olume and profit, there were other important develop- ment . e received and began operation of our fleet of Boeino- Stratocruisers; and the e planes, together , ith our fleet of Martins, provide North- west Airline with the most modern aircraft of any airline dome tic or international. During the year , e introduced, or expanded, pecial ervice which found favorable acceptance by the public. We continued the expan ion of our freight business. Contributing to the re ult for 1949 were these factors: Improved earnings hown on our Alaska- Orient operation, de pite the fact that we closed service to Shanghai when that city was occupied by the Chinese Communists. Introduction of coach flights. Inauguration of Boeing Stratocruiser opera- tions. Full utilization of Martin plane . Expansion of cargo busine s. Increa ed patronage of such servi e a the family plan ex ur ions, and package tour . ervice to H awaii. Mail re enue for 1949 is computed on the ba is of the temporary rate effecti e during the period. It i expe ted that permanent mail rates will be determined this ear. Coach Service In a previous report, I pointed out the need for a service, without de luxe features, which could be offered to the public at fares low enough to attract the ma -travel market. The wide accept- ance of our coach ervice ha justified this ven- ture. V ./e started our Seattle-Anchorage coach flight on Januar 3, 1949. On March 24 1949, we began coach operations tran continentally be- tween New York and Seattle-Tacoma on Sep- tember 25, between Chicago and Portland and on December 15, between Minneapolis-St. Paul and Anchorage, Ala ka, via Edmon ton, Canada. During the summer months, load factors on coast-to-coast oach flights were over 90 per cent. A total of 90,896,559 pa senger miles were flown on the domestic coach flights in 1949. It is ex- pected that during 1950, our coach ervices will produce even more volume as they become better known. PRESIDENT'S REPORT \\'e now have eight four-engine Douglas DC-4 aircraft converted to 55-pa enger combination coach-cargo plane and we are currently convert- ing two other into high den it 66-passenger coach-cargo plane . argo Increa e Cargo more than doubled_ in ton-miles during 1949 compared with the pre iou year bringing a ubstantial increa e in revenue. Cargo ton-miles totalled 9,138;691 compared with 4,448,819 in 1948 an increa e of 105.4 per cent. Revenues were 2,575,689, compared with 1,442 274, an increase of 78.6 per cent. To further develop thi cargo bu ine , your compan ha recently converted two DC-4 aircraft into all-freighter plane . The e are provided with pecial double-door. -have a payload capacity of 20 000 pound , and will accommodate ingle pieces up to 6,000 pound . During the year, priority handling of cargo in re erved pace aboard trato- crui er wa inaugurated under the name of "Gold Ribbon" ervice. Thi fill a demand by shippers for a pecial priority erv1ce. tratocruiser One of the major event of the past year has been the delivery of our full fleet of ten fa t, double-deck tratocrui er by the Boeing Com- pany, and the beginning of ervice by the e aircraft. We now ar flying tratocrui er coast-to-coa t between ew York and eattle-Tacoma; between the Twin Ci tie and Chicago and between the Pacific orth, e t and Honolulu. Pa enger approval of the e luxury liners has been enthu ia tic. Traveler appreciate the com- forts of the large and well-appointed cabins, and the speed and omfort of high altitude flying at ea-level cabin pre ure. The hakedown period of our tra tocruiser per- mitted only limited u e of that part of the fleet put into ervice during 1949. During 1950 the entire fleet of ten plane will be in u e and it is anticipated that their utility will be increa ed from approximately four hour to eight hour per day per plane. very ub tantial increa e in available eat mile and ton miles will re ult. It i planned to tart tratocrui er flight be- tween eattle-Tacoma, Anchorag Ala ka, and the Orient in late 1950. As part of our general promotional program, one of the tratocrui er wa taken into a number of the large t citie on our ystem, where it was open to public inspection and wa u ed for courtesy hop . It wa al o taken to several off line major citie in Canada, California and ew England. The e vi it timulated intere t in our plane and al o in the territory erved by orthwe t Airlines. Training hakedown and operating co t for the tratocrui er are pre ently high. Thi i a com- parahle ituation to that faced in the pa t by thi company in the initial operation of ne, t pe of airplane and one which normall ' ha been faced b other airline und r imilar cir um tance . Be- cau e of the ize and co t of the trato rui er fleet, the e exce i\' expen are urrentl er ub- tantial in amount and the ituation i likel to continue durino- much of 1950. The compan_ and the manufacturer concerned are , orking to elimi- nat the cau e of the ex e o t . v\Te e, p t that , e will ub tantiall o ercome thi handicap later in the ear ,vh n we ha e had more experien e in maintaining and operating the hip and after uneconomi al feature are corr cted. t that time we believe the trato rui er , ith it fine public acceptan e will ha e ati factory operating co t profi tabl, in line v ith it revenue producing potential. Martin Our fleet of l[artin ha provided tra eler and hipper in all itie along our coa t-to-coa t sy - tern , ith a fa t luxur type of er ice. The aircraft are ideall uited to the t pe of operations to which the ha been a igned and to the airport facilitie . heir pe ial feature uch a built-in tep rever ible prop Iler and underwino- fueling contribute to their utility. Performance records have met expectation . the fir t airline to u e M artins, your company i gratified to note that other major airline are buying Martin or planning uch purcha e . R e- PRESIDENT 'S REPORT cently t,\o of the e airlin ha e announ d their intention to acquire fleet of I fartin . D ouo-la D -4 Dougla D -4 ar being u d on our oa h and freight flight and on all la ka and Orient flight . In addition to the ten DC-+ whi h orthv e t i u ino- on it oach flight there are two all-freight- er and one tandard 44-pa eno-er tandb hip , hich the ompan own . Fi e other DC-4 being u ed on the la ka-Orient flight are lea ed from the Go ernment. D ougla D -3 Durino- th pa t year the la t of our fleet of Dougla DC-3 airplan which , e o, ned or had on lea e w re taken out of cheduled operation and all but t\\ o were di po ed of. One of the tv o i now u ed a a freight r and the other i u ed as a tandb hip for variou purpo e . Of tv ent - four D -3 aircraft which we had in 1947- fifteen o, ned and nine lea d- w made al to hed- uled and un heduled airline including the en- tral ir Tran port ompan of China, , hich bought ix of th e hip . The la t of the nine lea ed D -3 were returned to the government. ale Proo-ram Inten ifi d effort are beino- made to ell all of T orthwe t irline ' ervice . Conte t to enli t the ma effort of all non- ellino- mplo ee have been adopted. One of PRES IDENT 'S REPORT the e was conducted a year ago, and proved so succe sful that a second contest-now under way- wa started thi year. ot only has new business been generated, but greater intere t in sales has been timulated among all employees. During 1949, package tour were conducted to Hawaii, Japan and Ala ka through our travel agent . Thi program i being expanded, with more tours to Alaska; to Wahington, D. C., and Iew York, and to national park ; and Holy Year tour to Rome and other part of Europe. timu- lated largely by these tours, busine through travel agencie ha been hawing an increa e. The family plan, under which an adult member of a family pay full fare and other members of the family travel at half fare on pecified days of the week , attracted more than 47,000 pa sengers, and over 1 000,000 in revenue. Convention bu ine s, both in number of pas- senger and revenues, more than doubled. The indu try-wide fare di count of ten per cent to military personnel generated ome traffic and i expected to bring an increa ed number of uch pa engers thi year. Charter flight , undertaken a aircraft were available, attracted various groups, including athletic team . ight- eeing flights also were ucce sfully operated. orthwe t Airlines travel films of Hawaii and the Orient were een by many persons. o popular were the e pictures that prints have been booked for month in advance by various groups. ew ale offices were opened during the year in Los Angeles, an Francisco, Vancouver, British Columbia, and Japan's industrial city of Osaka. Navigation Aid Improvement in the flight performance record has continued throughout the past year, due to improved navigation aid , more effective use of them, and better air traffic control at key terminals. The radio-telephone network on the Honolulu run reached an efficiency of close to 100 per cent. It was placed early this year under full ownership and operation of Aeronautical Radio, Inc. During 1949 orthwest-owned radio stations at Tokyo and Seattle were sold to Aeronautical Radio, Inc., and radio-telephone equipment was added to the An- chorage station. By mid-1950 we hope to have full implementation of the radio-telephone air- ground-air operation between Seattle and Tokyo, and throughout the Orient by the end of 1950. Very High Frequency equipment i being in- stalled in our aircraft for utilization of the new omni-directional ranges which are being commis- sioned along the airways of the United State . The current year, like 1949, should ee steady progress toward attainment of all-weather flying. Operation Changes The tran fer to eattle of the part of our opera- tions incidental to our Orient flights materially m'r '. -d thL u.c of u1r faciliti's .1t th' St:1 ttl '- T.1 'cm;1 :1irport. Cur Str:1( cru iser scrn ' c intci 1'\\. Yt1rk 1s :11 ldk " ild :1irp 1rt. This h. s pron:d :1 sc(.' i:11 t' ,n- \cnicnc ' l0 wcr 'c:1s p:1sscnr,"t'rs sini.'' they cn1 nuke - 1nnccti1.1ns th ' re ''"ith . ll tr the f(1 rcigu r.1rricrs \rhich :1 n' usinQ l dlc,,ild. wthwcst " :1s the first 1949, and December 31, 1948 Operating revenues: Transportation: Passenger .................................................................................................................. . Mail ................................................................. .......................................................... . Express, freight, and excess baggage ........................................................................ .. Re~~ir~e~da~e~1~~e[~~~~~~--;~~t~,- ~t~:~~~t:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 1949 $27,873,942 9,039,154 3,426,022 74,626 87,273 TOTAL 0 PERAT11 G REVE ES ............................................................ $40,501,017 Operating expense : Flying operations ........................................................................................................... . Ground operations ......................................................................................................... . Maintenance and repairs ............................................................................................... . Passenger ervice ........................................................................................................... . Traffic and sales ........................................................................................................... . Advertising and publicity ............................................................................................ . Administrative and general, pay roll taxes, property taxe1>, etc ............................... .. Provision for depreciation and amortization ............................................................... . Provision for doubtful accounts, adju tments, recoveries, etc .................................... . $11,1 39,374 5,710,053 7,970,909 2,252,960 3,608,294 1,353,129 2,961,539 3,956,668 35,983 1918 $24,074,778 8,444,106 2,332,453 282,770 11,848 $35,145,955 $ 8,583,862 5,467,114 7,329,050 2,052,536 3,187,786 882,114 2,878,999 6,077,853 16,163 $38,988,909 $36,475,477 0PERATI. G P ROFIT (Los ) .................................................................. $ 1,512,108 ($ 1,329,522 ) Other income and credits: Adjustment of prior years depreciation on station communication and motorized vehicles equipment ................................................................................................... . Profit from sale of surplus inventories ........................................................................... . Di counts and interest earned ....................................................................................... . Overaccrual for prior years rentals .............................................................................. .. R eduction in reserve on . S. Government war contracts less applicable recover- able income taxe (1 949- $17,000, 1948-$102,000 ) ........................................... . Profit from disposal of depreciable assets .................................................................... . undry ........................................................................................................................... . Other deductions: Interest on long term debt ........................................................................................... . Other intere t expense............................... . .................................................... . Route expension and d,evelopment. ............................................................................. . Sundry .......................................................................................................................... . $ 137,248 120,210 78,780 52 47 26 635 19,737 34,909 1,982,274 377,101 5,187 5,369 43,438 431,095 PROFIT (Lo ) B EFORE T AXE o, L co:-vn: ...................................... $ 1,551 J79 Provision for taxes on income of the year-e tirnated: Federal ........................................................................................................................... $ tate ............................................................................................................................... . $ Reduction in taxes payable on income of the current year arising from carry-over of operating loss of prior y ar -e timated ............................................................ . 530,000 35,500 5 5,500 372,000 193,500 ?\ET PROFIT (Lo ; .............................................................................. s 1.'.i57.679 ( 1 lndicat s red figures. ee accompanying notes to financial stat-ments. ................. 76,036 53,9 0 . 167,006 421,224 68,227 ($ 543,0691 193,723 1,435 34,753 14,494 $ 244,405 ($ 787,4741 $ $ $ ($ 787,474 ASSETS .. 1,h ll Crrtifir.1t1s of l ndcbtLdncss at rost plus., rued interc,t (rnb,t.111ti.1lh equiv;1il'nt to m:irkct ) .\ ccounts rcccivabh-: FLH' tr.111,JHH t.1tion ( in luding- ,OVl'rlHllL'll( ,I(- rounb of 1,379,8'.l9 ) ................................... . L ther cu1TL'nt .1crounts lm'L'n to1 iL's Llf rquir m;1ttri.1ls .rnd pn:itin supplil's- !1,L't\L'rall: at lo, - er f co,t (first-in, fi1st-out ) or repl:i emcnt market. 2 7--1 ,018 --168,1-4 3,217,--1-42 25,000 BALANCE 1,617,484 1,0 l l,320 Decembe r r T \ L ~ l ' RRI, ' T . \ S:SFT:-- ............................................................................................... .. 7--16, 30 ,568, 176 (_ fllFR . ~:--FT.S Estim.1trtl incrnm ta , es which will be recover:iblc upon s1ttil'nwnt L f ,, .11 c 1nt1.1ct, .. :und1 ,. 1\'l,1t1d bu. ines. im c,tmcnts (.1t quoted markct \ dtposits, :ind notes st n PROl'I RI 'I. P 1 .\ NI. , , n E )llJP:'11 I<'. r ( 11 till' ba is of rost (mduding .1sscts of ~).801.'.1!'.2 compktrh amorticd t 1 rrsi lu.11 ,1 111ount of ~ ':2::!8,060 ) 1otl' .\ L.111d ............................................ . \in r.1ft ,11\d restnL' t'quipml'nt ..................................... . C\1m11,io11 L ' lsh Llll kasrd .1irrr:-ft .............................. . Huildin(!'~ l n I.ind not ow1wd. .. ............................. .. tlll'r building-. . rnd rquipmcnt ............................. . llllJHO\ 'llll'nts t0 11',bl'd pror l'l t, . . . . ...... .. l\1,t of .1i1c1.1ft cq111p111c11t, building-s :1 11d nthn cquip- llll'lll in proc,n~, on-orr.1tm~ propl'rt\ I l'I R1'.1 I l . 11 \ l' l~ I ~ Prep.1id i11,u1 .111('1', n n t, t., L'S, l11c~. et . l'fnrcd l'1lsh in r1,n1we tio11 " ith JH'\, ,1irrraft fleet It" .111101ti;.1t in11 nf '25.101 , oil' B ,o t 30,1 37 J8,200,8'.?6 1.60 ,808 1,9 6,001 l.96+,578 1,099,809 I, 111, I. 9 10,006 ; 19.0 I '.?.~)-1 108,700 7,500 Reen ' 10,--158,60 l I. 09.808 180,635 1,9--18.810 806 80 ............... '.:!.161 ' 15,306,8_--I 86 000 101,200 Balan ~ 30,--137 _ 7, 742,-25 ............. 1,505,J 6 3,015,768 _93,000 I, 111,-199 7,8-15 ''.1'.) ,70 ,I.JO 6 6, 1--15 765 .05 7 187,'....00 ''3 ,706,140 SHEET 31, 1949 LIABILITIES URRE T LIABILlTIE count pa able and accru d xp n c : Trade ac ount ........................................................................................................ . alarie , wage and va ation compen ation ............................................................... . ir trav 1 ontract depo it - gro .......................................................................... .. Pay roll taxes and taxe withheld from employee ' wages ............. .......... . R ti rement plan contributions, including amount withheld from emplo e wag - ote ........................ .................. ............. .............................................. .. aving bond and other deduction from employee \\'age ................................. . crucd local taxes ....................................... ............ .. .............................................. .. crued r nt .............................................................................................................. .. n arned tran portation r v nue- timated ............................................................... . Fed ral and tate taxe on in om ................................................................................ . urrent maturities of long term debt. ..... ............... .. ................................................... . TOTAL RRE T LIABILITIE ER r D EBT- e ured- ot Bank redit agreement dated eptember 1. 194 : I 000,000 payable on the fir t da of J anuar pril July, and ctober of each year beginning July 1, 1950: 2,271,105 1,313,688 443,275 333,050 71,857 55,448 240,213 88,94-1- B:ilan e De ember 31 1949 ................................................................................... 17400000 L curr nt maturitie hown above a current liabilitie , in luding +,6 7 paid on February 3 1950, and applied to notes in inver e order of due date ......................................................................................................... ... 2,004 637 PIT L T CK ND RPL and D apital tock: +. c-o umulati e preference sto k, par valu 25 per hare: entitled upon liquidation or redemption to 26.25 per har at D e ember 3 1, 19--l-9, redu ing to 25.25 per hare after fay 1 1953. plu ac- umula ted unpaid _April 30, 1950, subject to certain condition . On February 15, 1950, the Company borrowed an add1t10nal $2,400,000. The Company has agreed to mortgage as security for all loans under the Credit Agreement, its hangars and other improvements located at airports at Minneapolis, Minnesota, and Seattle, Washington, and _c~m- pletion of such mortgages is a condition precedent to the Company's right to borrow the remammg $1,200,000 under the Credit Agreement. The loans under the Credit Agreement at December 31, 1949, were secured by a chattel II.IOrtgage on all Douglas DC-4, Martin 202, and Boeing 377 flight equipment consisting of complete aircraft and spare engines, propellers, major assemblies and parts, having a depreciated cost of $25) 11,112. Under terms of the Credit Agreement applicable to these loan , the Company has agreed, among other things: (a) to maintain a cash collateral account as security for the payment of principal and interest of the loans which shall at all times be equal to that amount by which the unpaid balance of the loans exceeds 80% of the depreciated cost of all flight equipment; (b) to maintain current assets in excess of current liabilities ( exclusive of current maturities owing on the principal of the loans under the Credit Agreement) in the amount of $3,000,000 prior to July 1, 1950; $.3,500,000 from July 1, 1950 to July 1, 1951; and $4,000,000 thereafter; ( c) to encumber or mortgage as security for the loans under the Credit Agreement, uch other properties as the banks or R econstruction Finance Corporation shall elect; (d) to limit additional borrowing, mortgages and liens, capital expenditures and commitments, lea_s- ing of properties, investment in and guarantees and endorsements for others-all as s~t fo~th m the Credit Agreement; not to enter into any merger or consolidation or to sell or otherw1 e dispose of substantially all of its assets; and (e) not to declare or pay any dividend (other than stock dividends) on its capital stock and not to purchase, retire, or redeem any of its capital stock except that (a) 4.6% cumulative preference stock may be retired under the provisions of the Amended Articles of Incorporation, and (b) div- idends on 4.6% cumulative preference stock may be declared and paid to the extent that the net improvement in earned surplus since March 31, 1949, exceeds $224,250. At D ecember 31, 1949, such improvement in earned surplus amounted to $2,280,024 after deduction of all dividends chargeable against the same for the purpose of the foregoing restriction. B-The Company has deferred the direct costs of training personnel, familiarization, and pre-operation in connection with its new fleet of Boeing 377 aircraft. These co ts are being amortized over the esti- mated seven-year ervice life of the fleet beginning on the dates such aircraft were placed in sched- uled operation. C-The Company provides for an unin ured employees' retirement plan which is contributory on the part of both the employees and the Company. Charges to profit and loss on the part of the Company for past service and future service benefits for the year ended December 31, 1949, aggregated $257,300 of which $11,531 was for the benefit of officers and directors. The actuaries' report as of September 30, 1949, the end of the third plan year, indicates a maximum aggregate liability of the Company for unfunded past service benefits estimated at $699,125 which may be paid, at the discretion of the Company, in variable amount each year and which is presently being funded over a period estimated not to exceed twenty-five years from October 1, 1946, the effective date of the plan. D-On or before M arch 31, 1950, the Company is required by it Amended Articles of Incorporation to set aside $90,918 for the retirement of shares of its 4.6% cumulative preference stock under provi- sions ummarized as follows: (a) The Company shall et aside on or before each March 31st to and including March 31, 1957, the les er of ( 1) 3% of the par value of the total number of shares of 4.6% cumulative preference tock at any time theretofore issued, or ( 2) an amount equivalent to 10% of the net income ( as defined for thi purpose) for the preceding calendar year for the purchase and retirement of the 4.6% cumulative preference stock, at prices not to exceed $25 per share, exclusive of brokerage and taxes. Any amount not so applied during the twelve-month period following the date of its having been set aside hall be returned to the general funds of the Company; and (b) Beginning on M arch 31, 1958, and on each March 31st thereafter so long as any 4.6% cumulative preference tock shall be outstanding, the Company shall set aside an amount equivalent to 3% of the par value of the total number of shares of 4.6% cumulative preference stock at any time theretofore issued, plus inking fund arrearages, if any; provided that if the net income ( as de- fined for this purpo e) for the preceding calendar year hall have been less than such 3%, then the Company shall set aside an amount equivalent to such net income. Sinking fund arrearages are defined as the excess of such 3% above such net income and are to be cumulative. The Company is required to apply such funds in each twelve-month period subsequent to March 31st to the purchase, or redemption, and retirement of shares of 4.6% cumulative preference stock at prices not to exceed $25.25 per share plus unpaid accumulated dividends. Du-ring any period while the Company is in default with respect to the payment of dividends on cumulative preference stock, the Company shall not purcha e any of its cumulative preference stock except pur uant to an off er to all holders thereof and shall not redeem less than all of the cumulative preference tock at such time out tanding. The terms of th, ck cont. in ert:iin rctrict1on rebti,e to dividends n ;11d repurcha~ of the pr hibition und r th ' ...,redit Agre nwnt. E-The inYoh-ed in a number lawsuits , hi h re outline 11 ws: (. ) th sc in which am b, tl . nY will be fullY reimbursed bv the crnmcnt under ,ari us war cont og , h ur uits t th . ul 1f dific ti nter and aircr:-ift t at l\ _-. A.l d Billin_,:. 1fonL th se in wh 1. ims p. id bv t 1- pany will be fully reimbur ed under insur:-ince imr :::i a cidents :it 1ft. . . la-k . nd Fountain 'is on-in : ( ) s n of ppro.imateh , hich are n t ,er 1r:111 e or ther in h belieYCS the ultir - position- will ha,e n adYerse effect up p . In Yie" f the outlined. n n m:::ide f r anY p n t: i1w h- d. F- The ,omp ny ommitment f r . pit.l exp nditure at De ember 31. 1 ~9. :1mounted t appro.im. t ' - ly 1.780.000 f which approximateh ~1.t+0.000 w:-i- f r -Pere p:-irt and :::issemblie- for flight quip- rnent. E E F PLU Ye r nded e mb r '11. 1 4 , PITAL URPL .: Balance at January 1, 1 4 ............ ........... ................................. .................................................................... $3.00 7.:..+_ Dedu t a h dividend on --1-.6 % umulati,e pref ren e to k d clared nd harged to apital urplu a" per- mitted by prO\i ion of finne-ota tatutes-57.50 ents p r hare for the two quarter - endincr .May 1. 1949, during whi h time there wa n earned ur- plus available for d.i,-id nd ........................................................................................................... ............ . '.!24.250 Balance at Decen1ber ~ 11. 1949 ....................................................................... ............................................... ti2,782,992 EARNED URPL Balance at J:inuarY 1, 19+ .......................................................................................................................... .. 108,778 ,\dd net profit for th ,e r. .... .... .................... .... .......... .. ...... ................................... ..................................... . Deduct ca h di,idend - n 4.6C". umulatiw pr ference stock-5 7 .50 ent per hare for the two quart rs ending ovemb r 1. 1 4 (divid nd payable F bru- arv 1, 1950, , er declared from earned urplus on Januar 6 150 ) .... ....... ........ ...... ................... ........... ................................................. ............................... . 22.-1,_r.o Balan e at Decemb r 31, Board of Dire tor Northwest irlin . Inc. aint Paul, finne ota l,2+2,207 ac mp n incr note to finan ial tatement. TA ' REP R We have xamined the b Ian heet of r O R TR\ E T AIRLI1 E . I r ,., a ember 31, 1 49, and the related tatement of profit and lo a !l'plu for the year then ended. accordance with generally a cepted andard , and a c rdin Iv included mad m ountin re ord and su h other uditin procedur . idered nece ar .in th ir um. tan c . In our opinion the a ompan ing balan e h et and tatem nt of profit and l s and surplu pre ent foirl the finan ial po ition of r R TH E T IRLI E , I . at D c mbcr 1, 1949. and th rt ult of it per- tions for the ear then ended, .in conformit with generally ac cptcd ac ountin prin iples applied n ba is consi t nt , ith that of the pre eding ear. a.int Paul, finne M ar h 10, 1950 ER T" ER T ,crtifi d Publi :\ countant.