Northwest Airlines Annual Report 1971

' . l
NORTI-IWEST OR ENT AIRLI ES
1971 ANNUAL REPORT
ND RTHVVEST ORIENT AIRLINES
GENER AL OFF I CES : M I NNEAPOLIS - ST. PAUL INTERNATION A L
A I RPORT ST, PAUL, M I NNESOTA 551 1 1 AREA C O DE 612/72 6 -2111
DIRECTORS *
.JAMES H. BINGER
Chairman of the B oard , H oneyw ell Inc.
M inneapolis, Minneso ta
H AD L EY CASE
President, Case, Pomeroy & Company, Inc .
New York, New York
A . E . F L OAN
Sec retary , N o rthwest A irlines, Inc .
St. Paul , Minnesota
DONA L D H . HARDESTY
Vice President, N orthwest A irl ines, Inc .
St. Pa"ul , M innesota
MA L COLM S. MACKAY
President, Foothills Company
Rosc oe, Montana
DONALD G . M c NEELY
President, S p ace C ent er, Inc.
St. Paul, Minne so t a
DONALD \N. NYROP
President, N orthw est A irl ines, Inc.
St. Paul, M inneso ta
C . FRANK REAVIS
Partner, Reavis and M c G rath
N e w Y ork, N ew York
ALBERT G. REDPATH
Vice President, Thom son a n d M cKinnon ,
Auchincloss , Inc .
New York , New Y ork
LYMAN E. \NAKEFIELD, .JR .
Vice President, Piper, Jaffray & H o p wood
Min n ea polis, M innesota
OFFICERS *
DONALD \N. NYROP
President
.J AMES A . ABBOTT
V ice President - L egal
C L AYT ON R . B RAND T
Vice President-Purchasing and Stores
RO B ER T \N. CAMP BELL
V ice President-Budgets
.J . \NILLI AM CAMPION
Vice President-Regulatory Proceedin gs
ROLAND \N. CHAM B ERS
Assistant Vice President-Properties
RO B ERT A . EBERT
V ice President-Personnel
ROY K. ER ICKSON
V ice President-Public Relations
A . E . F LOAN
Sec retary
B EN.JAMIN G . GRIGGS, .JR .
V ice President-Assistant to the President
DONALD H. HARDESTY
Vice Pre s id e nt-F inanc e a nd Trea surer
\NILLIAM E . HUSKINS, .JR.
Vice President-C omm u n icat ions
and Computer Services
REGINALD C . .JENKINS
Vice President- O rie nt Region
FRANK C . .JUDD
Vice President-Mainten ance & Engineering
M . .JOSEPH LAPENSKY
Vice P resident-Economic Pla nning
RONALD M c V ICKAR
V ice Presid ent
BRYAN G. MOON
Vice President-Advertising
ROBERT .J . PHILLIPS
Vice President-C o m ptroller
C . L. STE\NART
Vice President -Transportation Services
ROBERT .J . \/I/RIGHT
Vice Presid ent-S ales
REG I STRAR: T he Chase Manhattan Bank, New York, New York
TRANSFER AGENT: Bankers Trust Company, New York, New York
STOCK LISTE : Common Stoc k listed on New York Stoc k E xchange , Pacif ic Coast
Sto ck E xchange a n d M idwest S t o c k Exchange
* As o f M arch 1, 1972
Front Cover: A No rthwest Orient 747 and its
f light crew an d ca b in attendants
at Tokyo Int ern at ion al A irport.
TABLE CF CONTENTS
PRESIDENT'S MESSAGE ........... .. .... .. . . . .. . .. ...... .... .... .. .. . PAGES 4 -5
MERG E R PROPOSED BRINGS BENEFITS .. . . .. ... . ....... .. .... . ... .. . P A G ES 6 - 7
F INANC IAL REVIEW OF 1971 . .. .. ... . ... .......... .. . . ... .. .. .. .. . . ... P A GE S S - 9
F INANCIAL REPORTS . ..... . .. . .. .. .. .... ....... ... .. . . ... .. ... . . .... PAGES 10 -19
H IGHLIGHTS OF 1971 .. .. .. .... . . .. .. .... . . . ... . . . .. .. ... . ...... . . .... PAGES 20- 2 3
HIGHLIGHTS CF 1971
Total Operating Revenues
Operating Income .... . .
Net Earnings for the Year
Per Common Share
Stockholders' Equity ...
Per Common Share
Dividends Paid . .. .. .
Operating Expenses-
Per Available Ton-Mile
Per Revenue Ton-Mile
Revenue Traffic-
Passengers Carried
Passenger-Miles Flown
Ton-Miles, Mail, Freight and Express
Common Shares at Year End . ... . ... . . .
$
1971*
425,519,246
18,166,420
21,3 61 ,262
1.01
477,053 ,922
22.56
9,517,530
14.5
42.1
6 ,089,273
5 ,553,043,000
258,099,000
21 ,149,756
1970 *
$ 3 79,040,136
51,082 ,622
4 4 ,439,469
2 .11
465,2 10, 190
22.00
9,464, 5 3 2
18.0
4 3 .5
4 ,682,8 12
4 ,506,256 ,000
204,714,000
21 ,149,756
* Operating results were affected by a maj or strike wh ich extended from July 8 throu g h Decem b er
14, 1970 and by the strike recove ry period in 1971.
3
4
45THANNUAL REPORT TO THE SHAREHOLDER S
From the President:
Financial Performance
After leading the U.S. airline industry in net earnings
for three consecutive years, Northwest Airlines slipped
to second place for the calendar year 1971 with an after-
tax profit of 21,361,262. This was down $23,078,207
from 1970 net earnings of $44,439 ,469.
The principal factors which accounted for the decline
in 1971 net earnings were:
l. The lingering effects of a lengthy strike in the
last half of 1970.
The rebuilding of the airline's schedules and the
need to recover passenger and freight business
that was lost to competition during the strike
resulted in a loss for the first six months operation
of 1971. A very strong comeback in the last half
of the year made possible the profitable perfor-
mance for 1971.
2. New competition on Northwest Airlines routes.
In 1970 the Civil Aeronautics Board certificated
additional air carriers on the direct Milwaukee-
New York, the direct Twin Cities-New York , and
the Twin Cities- Seattle -Portland routes. Earl}
in 1971 an additional air carrier was certificated
over NW A's routes from the Twin Cities to
Florida. The addition of four new airlines on these
routes has resulted in reduced revenue from
these markets.
Taking these factors into consideration, your Man-
agement feels that the 1971 performance was satisfactory.
although disappointing if measured by your Company's
standard of recent years.
Dividends Declared
In 1971 the Company declared and paid fou r
quarterly dividends. The last of these dividend pay-
ments was made in December, 1971 and marked the
67th consecutive quarterly dividend paid by NWA to
its shareholders. This is noteworthy in a year in which
many U. S. trunk airlines paid no dividends.
Fare Increase
Revenues in 1971 were aided b a general passenger
fare increase of approximately six per cent hich as
authorized by the Civil Aeronautics Board effective
May 7. 1971.
This increase v. as needed to partially offset the
spiraling labor costs and sharply rising expenses for fuel
landing fees and services which beset the airline industry.
Fleet Expansion
The upgrading and modernization of J our Company's
aircraft fleet was continued in 1971.
Five new Boeing 747B 's were delivered and placed
into scheduled service. These Model B' aircraft are the
longer-range 747 s with an operating range of 6,750
statute miles nearly 1.000 miles more than the earlier
model.
The five 747B 's represent a capital expenditure of
$119 million.
As these wide bodied modern jet aircraft were
acquired, a successful sales effort was mounted to dispose
of certain older aircraft. In 1971, a total of ten NWA
aircraft were sold - three Boeing 320's three Boeing
720B's and four Lockheed Electra 188's.
Boeing 7 4 7 Scheduling
With the acquisition of the five Boeing 747B 's.
Northwest Airlines was operating a total of fifteen 747's
at year-end.
This Boeing 747 fleet investment, largest of any
U. S. airline relative to size, permitted your Company
to become the first airline to offer B-747 service across
the Pacific from the major U. S. gateways of Honolulu
Los Angeles San Francisco and Seattle.
Domestically. we nm provide B-747 service to New
York , Chicago Minneapolis/ St. Paul. Miami , San
Francisco, Los Angeles. Seattle, Honolulu, Anchorage,
Tampa/ St. Petersburg and Milwaukee.
Service to China
Northwest Airlines' operating authority to serve the
cities of Shanghai Peking, Nanking Mukden, Harbin
and Dairen was granted on July 20, 1946. Scheduled
service to Shanghai was initiated in July 1947 and
continued for nearly a two-year period. In 1948 the
Shanghai route accounted for 30 per cent of the passenger
miles on NWA's international system.
Your Management has advised the U.S. Government
that when conditions permit resumption of service to
the Asian mainland, it is our desire and intention to
reinstate such service.
DC-lO's Coming
Delivery of the Company s first DC-10 will be made
in November 1972. A total of 14 of the long-range series
of this airplane has been ordered which with spare parts
represents a total investment of $290 million. All such
airplanes will be powered by the Pratt & Whitney JT9D
engine used in our B-747 fleet. providing a commonality
of engines for orthwest Airlines wide-bodied jets.
New Director Named
The death of Morton H. Fr a director of Northwest
Airlines since 1952. as a loss deeply felt. His counsel
in the area of finance as invaluable over the years.
Elected to replace Mr. Fry was Donald H. Hardesty,
vice president-finance and treasurer of NWA, , hose
career with the Company spans more than 29 years.
Corporate Responsibility
Today every major U. S. company must be con-
cerned with its responsibilities not only to its employees
and its shareholders - but to the general public as , ell.
Your Management has recognized this.
By our Affirmative Action Program, we have demon-
strated our continuing concern for minority elements in
our society.
In the areas of ecology and environmental concern,
Nortl1west Airlines has been aw arded national honors
for its leadership in aircraft noise abatement. We are
also participating full in the retrofit program of the
airline industry to reduce smoke emissions from air-
craft engines.
The Year Ahead
Economic forecasts indicate that passenger traffic
will increase by eight to ten per cent and that air freight
business will increase at a slightly greater rate during
the year.
With the U. S. economy's continuing recovery your
Management expects 1972 to show increased earnings
over 1971.
March 15, 1972
Donald W. Nyrop
President
5
B
MERGER PROPOSED
Background and Status of Merger
On September 23, 1971, the Boards of Directors
of orthwe t Airlines, Inc. and National Airlines,
Incorporated signed an Agreement of Merger.
This Agreem ent is subject to the approval of the
Civil Aeronautics Board and the President of the
United States, since international routes are involved.
Under term of the m erger agreement, each share of
National Airlines common stock outstanding will be
exchanged for .85 of a share of Northwest Airlines
ommon stock.
Shareholders of National Airlines voted to approve
the merger on December 13, 1971 with 6.7 million
shares favoring and only 49 ,743 voted against.
Northwest Airlines shareholders approved the merger
on December 15 1971 by an even greater majority,
with 17.7 million shares voted for and only 45 ,920
against.
Mer ger hearings before the Civil Aeronautics
Board E aminer began on January 25, 1972 and con-
luded on February 4, 1972.
Next step in the proceedings will be the issuance
of a recommended decision by th Examiner to the
five member Civil Aeronautics Board.
Following this will come the hearing of oral argu-
ments by the Board members. Its decision will then
be made and transmitted to the White House for
review and approval by the President.
Your Management expects final decision on the
merger will be made by December 1, 1972.
Many Public Benefits in Merger
A number of important benefits to the public will
\NITH NATIONAL AI R
result from the merger of National Airlines and
Northwest Airlines in terms of new and improved air
service to many parts of the U.S.
1. The Upper Midwest, for example, will receive
first single plane service to a number of addi-
tional cities on Florida's West Coast.
2. Major cities in the South and Southwest like
Miami, New Orleans, Houston and Las Vegas
will be on a direct international route to the
Orient for the first time.
3. The California cities of Los Angeles and San
Francisco will benefit from increased traffic
through these gateways in both directions.
4. New England will benefit from the combina-
tion of the two route systems with Boston
becoming an ever more important air hub in
the merged airline.
5. The Pacific Northwest and Montana will have
greatly improved service to cities in the South
and on the Atlantic Coast.
Additionally, they will benefit from increased
tourism as access to their cities is made
much easier.
6. Florida and its tourist industry will profit from
the merged airline's status as a more important
air carrier in the state.
Savings Important to Public Too
There are a number of savings that will be achieved
through merger of the two airlines. These savings are
important to the public, too, for they act to hold down
V
NORTHWEST ORIENT-NATIONAL
C O MBI N ED SYST E M ROUTE MAP
- - NORTHVVEST ROUTES
NATIONAL ROUTES
L INES \/\/DU L BRING
passenger and air cargo tariffs. Savings will be gen-
erated in a variety of ways:
1. More efficient use of facilities can be achieved
at the 12 common stations: San Francisco, Los
Angeles, Atlanta, Miami, Tampa /St. Petersburg,
Ft. Lauderdale, Washington, O.C., Philadelphia,
Boston, New York Kennedy, New York
LaGuardia and Newark.
2. More efficient use of aircraft will be possible
since National Airlines' peak operations are in
the resort months and are a natural complement
to Northwest's operations which peak in the
summer months. Because of this ability to bal-
ance aircraft, a superior level of scheduled ser-
vice will also be given in peak periods by the
merged airline.
3. Increased market identity will result from the
ability to consolidate sales and advertising
efforts in common markets. This will result in
reducing costs for the merged airline.
Merger Does Not Create 'Giant'
Despite providing these many public benefits in
terms of improved service and lower operating costs,
the merger of National and Northwest will
not create another 'giant' in the U.S.
airline industry.
In fact, the merged airline will
remain seventh in size among trunk
airlines - Northwest Airlines'
present p~sition - if approval of
the Oelta-N ortheast merger is
granted by the CAB.
P U BLIC BENEFITS
So, the present balance in the U.S. airline industry
would be undisturbed.
No Lessening of Competition
All of the benefits outlined above will be achieved
without any real lessening of competition.
There are only four markets in which Northwest
and National have competitive authority.
1. Miami-Tampa. Six other carriers presently
serve this market.
2. New York-Washington. Eleven other carriers
presently serve this market.
3. Philadelphia-Washington. Seven other carriers
presently serve this market.
4. Philadelphia-New York. Five other carriers pre-
sently serve this market.
Few, if any, other mergers among U.S. airlines
can provide such an impressive array of public benefits
as those found in the Northwest Airlines-National
Airlines merger.
While providing these many public benefits, this
merger also meets the criteria set forth in the Executive
Branch guidelines prepared by the Department of
Transportation in consultation with the Department
of Justice.
It is indeed in the public interest.
on,..i/Je
Ila 8
o each
Ourne
Sf Pain-,

. Laude Beach
'am; rdate
West
7
B
FINANCIAL REVIEW OF 1871
Revenues
Northwest Airlines' total operating revenues for
~971 were ~425,519,246 compared with $379,040,136
m 1970 which was affected by a major strike in the
last six man ths of the year.
The operating revenues for 1971 were reduced by
payments to other carriers under the Mutual Aid
Agreement of $461 ,889 which compares with mutual
aid receipts in 1970 - net of payment to others -
of $46,324,695. The Civil Aeronautics Board, on
No:7ember 23, 1970, issued an order remanding for
review only the amended portion of the Mutual Aid
Agreement which provided for increased level of
supplemental payments. The order stated that con-
s~deration would be given to making any modifica-
tion to the Agreement prospective only. A hearing
was held before an examiner of the CAB during the
latter part of 1971 but no final decision has been made.
. Compar~sons of individual revenue categories
with the pnor year are not meaningful due to the
extended strike in 1970. During the post-strike
recovery period in 1971 , the Company gradually
restored schedules as traffic returned to normal. The
buildup of operations continued until a full pattern
of service was reached in June.
The yield per passenger-mile increased to 5.98
or 3.5 % over the yield of 5.78 in 1970. Trans-Pacific
and other international fare increases approximating
5 % were placed into effect on March 15, 1971. The
Civil Aeronautics Board issued its tentative decision
in the fare level phase of the Domestic Passenger-Fare
Investigation and granted a 6 % interim fare increase
y-rhich was placed into effect on May 7. A further
mcrease of 3 % was deferred pending decision in other
phases dealing with discount fares and fare structure.
At the same time the CAB decided the rate of return
phase of the fare case and set 12 % as a fair and reason-
able return on investment for the trunkline carriers
which compares with a 10.5 % investment return
established previously. Also, as a result of court actions,
the CAB is currently conducting a hearing on the
reasonableness of the level of domestic fares between
October 1, 1969 and October 14, 1970, and a decision
can be expected sometime in 1972.
A Domestic Air Freight Rate Investigation is mov-
ing ahead with preliminary procedural steps under
way. It is expected that the hearing in this matter
will be held late in 1972. Domestic mail and express
rates are also open and progress toward settlement is
be_ing made. It is anticipated that rate improvements
will result from these investigations.
Revenues from charter and other transportation
were $31,588,334 compared with $20,800,298 in 1970.
This increased revenue included $8 370 039 from
commercial charters and other income ~ompared with
$3,322,003 in 1970, and $23,218,295 from military
charte~s_
in 197~ ~ompared with $17,478,295 last year.
The Military Airlift Contract expires on June 30 1972
and we will seek a renewal contract for the G~vern-
ment's 1973 fiscal year.
Expenses
Operating expenses in 1971 amounted to
$407,352,826 compared with $327,957,514 in 1970
which were abnormally low due to the strike and for
this reason most of the individual categories of expense
are not comparable with the prior year.
Depreciation and amortization increased to
$77,245 ,465 from $69,173,449 in 1970. This was
primarily due to the adding of the Boeing 747 air-
craft to our fleet, ten of which were received during
1970 and five in 1971. In 1971 the U. S. Govern-
ment cancelled the Supersonic Transport research and
development program and Northwest Airlines
received a ref~nd of the $5,500,000 previously
advance~ for this program. As a result, and in accor-
d_an~e with a CAB accounting directive, 1971 depre-
ciat10n and amortization was reduced by $3,300,000
to re~ect the reversal of the prior years' amortization
of t~is research and development payment. Inflation
contmues to accelerate the costs in the airline industry
and 1971 saw ~ubstantial_ increases in employee wages
and be_nefits, mcreases m rentals, landing fees and
other airport costs and in the cost of services materials
a!1d supplies. Your Company has continued 'to empha-
size ~o~t control pr_o~edures and improvement in pro-
ductivity. The addit10n of the 747 to our aircraft fleet
has contributed to this productivity improvement.
Unit costs per available ton-mile in 1971 were
14.5 compared with 18.0 in the 1970 strike year.
Only 01;-e other time in the last ten years, 1967, have
we achieved this low a unit cost.
Earnings and Dividends
North west Airlines' net earnings for 1971
amounted to $21,361,262, or $1.01 per average share
of common stock, compared with $44,439,469, or
$2.11 per share in 1970. The reduced earnings in 1971
are a reflection of the slow recovery process from the
OPERATING REVENUES AND EXPENSES OPERATING EXPENSES PER
AVAILABLE TON MILE
BREAK EVEN AND ACTUAL
PAYLOAD FACTOR
MILLIONS OF DOLLARS
500 50%
45%
400
16
35%
200 14
::
1967 1968 1969 1970 1971 1968 1969 1970 1971 1967 1968 1969 1970 1971
STRIKE STRIKE STRIKE
[ , ,561.000.
Cash Flow
I und en r
105,805,927 w
o.
l i
Iii
rl m
L9Tl al nn
hare. L971 rn. ..
i di id nd
t
trm ,J
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during
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r:
00
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l
90,000 i11 1971. Al
in d '10.983,300 l
hi h appli d
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111 l971, "as
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LONG TERM DEBT VS.
[
, l , n
, 19TI.
qunl I ,
u[l ar
1 1973.
STOCKHOLDERS' EQUITY
MIi l I N11 0 1 11011 AHS
bOO L--.J lOUllY
- llllll
400
JOO
~00
I I
100
I
IRIIT 11011 1non I 70 \Oil
SIIW(I
9
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
ASSETS
December 31
Current Assets 1971 1970
Cash ............ . .................................. . $ 42,468,318 $ 51,525,395
Accounts receivable .................................. . 43,303,034 32,906,579
Recoverable federal income tax ....................... . 15,394,400 16,526,200
Flight equipment spare parts, at average cost, less
allowances for depreciation of $6,662,645
(1970 - $5,544,776) ................................ . 15,985,804 14,850,678
Maintenance and operating supplies at average cost ...... . 4,441,808 4,088,318
Prepaid expenses ..................................... . 3,608,902 2,149,483
Total Current Assets 125,202,266 122,046,653
Property and Equipment
Flight equipment at cost .............................. . 1,012,567,920 929,180,892
Less allowances for depreciation ....................... . 303,134,687 261,051,456
709,433,233 668,129,436
Advance payments on new flight equipment-Note C ..... . 41 ,130,050 64,134,857
750,563,283 732,264,293
Other property and equipment at cost .................. . 90,327,722 84,755,904
Less allowances for depreciation ....................... . 31 ,394,624 25,621,826
58,933,098 59,134,078
809,496,381 791,398,371
Deferred Charges and Other Assets
Training and development costs-Note F ............... . 3,337,857 4,944,297
Rentals .................... . ........... . ............ . 4,003,320 2,619,231
Other .............................................. . 2,261 709 2,117,304
9,602,886 9,680,832
$944,301 ,533 $923,125,856
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable .................................... .
Employee compensation ............................. . .
Air travel card deposits ............................... .
Unredeemed ticket liability ............................ .
l ncome taxes .................................. . ..... .
Current maturities of long-term debt . . ........ . ..... .. .
Total Current Liabilities
Long-Term Debt-Note A ............................... .
Deferred Credits - Note D
Income taxes-arising principally from
accelerated depreciation methods ................... .
Investment credit .. . .... . ............................ .
Stockholders' Equity - Note B
Common Stock $1.25 par value; authorized 40,000,000
shares; issued and outstanding 21,149,756 shares ...... .
Capital surplus ...................... , ...... . ........ .
Retained earnings ... . .. . . . ... . .... . . ...... . .......... .
Commitments - Note C
See notes to financial statements.
December 31
$
1971
56,299,152
15,535,334
1,056,125
6,419,023
727,377
3,000,000
83,037,011
252,500,000
120,727,300
10,983,300
131,710,600
26,437,195
116,987,969
333,628,758
477,053,922
$944,301 ,533
1970
$ 38,376,415
12,345,069
1,104,150
2,133,669
530,328
18,000,000
72,489,631
260,914,635
109,138,100
15,373,300
124,511,400
26,437,195
116,987,969
321 ,785,026
465,2 10, l 90
$923,125,856
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Operating Revenues
Passenger ..... .. . . . ... .. .... ...... . ................ .
Cargo ............................................. .
Mail .............. .. ............................... .
Charter and other transportation ...................... .
Mutual Aid Agreement-Note H ...................... .
Nontransport ............................ . .......... .
Operating Expenses
Flying operations ................................... .
Maintenance ....................................... .
Passenger service ....... . .... . ....................... .
Aircraft and traffic servicing ......................... .
Reservations, sales and advertising . ..... . ............. .
Administrative and general ........................... .
Depreciation and amortization-Note F ............... .
Other Income and (Deductions)
Interest on long-term debt . . ................ .. ........ .
Disposals of property ................................ .
Other .. . . . . ........................................ .
Earnings Before Taxes ................................. .
Taxes on Earnings including deferred taxes
and in e tment credit- ote D ....................... .
Net Earnings for the Year .. .. ..... ......... ............ .
Average shares of Common Stock
outstanding during the year ........................... .
Earning per share of Common Stock . . ... . ........ . ...... .
*Operating results in 1970 were affected by a major strike which
extended from July 8 through December 14, 1970. See Note H.
See notes to financial statements.
Year Ended December 31
1971 1970*
$331,966,391 $260,335,218
39,641,301 30,052,685
19,442,669 18,958,456
31,588,334 20,800,298
( 461,889) 46,324,695
3,342,440 2,568,784
425,519,246 379,040,136
122,181,445 87,899,274
47,936,083 41,240,434
39,009,954 31,383,737
65,332,134 49,183,105
41,373,888 36,706,873
14,273,857 12,370,642
77,245,465 69,173,449
407,352,826 327,957,514
18,166,420 51,082,622
( 13,050,806) ( 6,295,259)
6,198,195 739,108
486,453 (966,302)
( 6,366,158) ( 6,522,453)
11,800,262 44,560,169
( 9,561,000) 120,700
$ 21,361,262 $ 44,439,469
21,149,756 21,023,949
$1.01 S2.11
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Year Ended December 31
Source of Funds 1971 1970
Net earnings ........................................ . $ 21,361,262 $ 44,439,469
Add expenses not requiring current outlay of working capital
Depreciation and amortization ...................... . 77,245,465 69,173,449
Deferred income taxes ......................... . .... . 11,589,200 19,885,700
Deferred investment credit. ........ . .. . ............. . ( 4,390,000) ( 4,484,400)
Total from Operations 105,805,927 129,014,21 8
Proceeds from sale of common stock, less expenses ...... . 3,438,328
Increase in long-term debt ....................... . . . .. . 148,914,635
Disposals of operating property ....................... . 12,364,883 2,725,579
Refund of SST development cost .................. . 5,500,000
Total of Sources 123,670,810 284,092,760
Application of Funds
Flight equipment and other property additions .......... . 87,330,076 176,256,285
Advance deposits on aircraft. ............... .......... . 23,166,916 38,049,353
Deferred Boeing 747 training costs ..................... . 1,287,427 2,786,927
Cash dividends ............................... . ...... . 9,517,530 9,464,532
Decrease in long-term debt .. . ............. . .......... . 8,414,635
Other .............................................. . 1,345,993 877,983
Total of Applications 131,062,577 227,435,080
Increase (Decrease) in Working Capital ($ 7,391,767) $ 56,657,680
Changes in Working Capital Consist of:
Increase (decrease) in current assets:
Cash ............................................ . ($ 9,057,077) $ 24,705,933
Receivables ....................................... . 9,264,655 4,845,311
Inventories ....................................... . 1,488,616 4,308,895
Prepaid expenses .................................. . 1,459,419 462,544
3,155,613 34,322,683
Increase (decrease) in current liabilities:
Current maturities of long-term debt ................. . ( 15,000,000)
Accounts payable ................................. . 17,922,737 ( 10,273,261)
Other accrued liabilities ............................ . 3,339,289 ( 8,352,035)
Unredeemed ticket liability ..................... . ... . 4 285,354 ( 3,709,701)
10 547 380 ( 22,334,997)
Increase (Decrease) in Working Capital ($ 7,391,767) $ 56,657,680
See notes to financial statements
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Common Stock
Shares Amount
Capital
Surplus
Balance January 1, 1970 . .................... 20,914,272 $26,142,840 $113,843,996
Shares issued pursuant to Employee
Stock Purchase Plan, less expenses. . . . . . . . 235,484 294,355 3,143,973
Net earnings for the year .................. .
Cash dividends-$.45 a share .............. .
- - - -
Balance December 31, 1970 . ................. 21,149,756 26,437,195 116,987,969
Net earnings for the year .................. .
Cash dividends-$.45 a share ............... ___ _
Balance December 31, 1971. ................. 21,149,756 $26,437,195 $116,987,969
See notes to financial statements.
Retained
Earnings
$286,810,089
44,439,469
( 9,464,532)
321,785,026
21,361,262
( 9,517,530)
$333.628.758
Period
1962-1970
Available*
$61,955,000
8,744,600
Reflected in
NetEamingst December31
1971 .............. .
Total .............. .
To Net Earnings ...... .
$70,699,600
59,716,300
To Be Amortized . . . . . . $10,983,300
$46,581,700
13,134,600
$59,716,300
~ I
* All investment credit amounts generated 1962-1971 have been
utilized to reduce income tax payments except $2,797,700 from
1970 and $8,744,600 from 1971. See Note D to financial state-
ments.
t lncome benefits of investment credit generated in 1962-68 are
amortized over an eight year period. The flow-through method of
accounting was adopted for investment credit generated after 1968
and the income benefits have been reflected in the year generated.
Aircraft Type
JET:
707-320B & 320C
720B ...............
727 & 727C-100 ......
727-200 ............
747 . ...............
DC-10 ..............
Total Jet ..............
1970 1971 On Order
36 33
16 13
32 32
24 24
10 15
14
-
118 117 14
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Years Ended December 31, 1971 and 1970
Note A -Long-Term Debt
Note purchase agreements with twelve insurance companies payable $3 000,000 annually
and $4,000,000 on October I, I 978 plus interest at 6% per annum. Certain optional pre-
payments at par are permitted. The agreements contain certain other provisions with
respect to redemption as a whole, but not from borrowed funds, at premiums ranging
from 5% to 1% ............... .. ........... . ... .. ........................... .
The Fourth Amendatory Credit Agreement with fifteen banks providing for credit which
is payable $5,000,000 quarterly and terminated October 1, 1971. Interest on funds
borrowed was at 4 % .............................................. .
A credit agreement with twenty-four banks providing for a revolving credit of $250,000,000
reducing to $230,000,000 by October 1, 1972, to $210,000,000 by October l , 1973, to
$90,000,000 by October 1, 1974 and terminating July 1, 1975. Interest on funds borrowed
is at the prime commercial loan rate to December 31, 1970 and at % above the prime
commercial loan rate thereafter. As of December 31, 1971 the agreement makes available
at any time an additional $75,000,000 (1970-$35,000,000) for working capital and
other purposes .... . ........ . .... . ........................................... .
Credit agreements with aircraft and aircraft engine manufacturers providing for financing
of purchases from those manufacturers through the issuance of five-year notes to aggre-
gate not more than $60,000,000 .. ...... . . . ...... . ............. . .... ..... ... ... .
Less amounts due within one year included in current liabilities ..................... .
December 31
1971 1970
$ 22,000,000
175,000,000
58,500,000
255,500,000
3,000,000
$252,500,000
$ 25,000,000
15,000,000
215,000,000
23,914,635
278,914,635
18,000,000
$260,914,635
The Company had complied with the covenants of the debt agreements at the end of both years.
The aggregate repayment of the outstanding long-term debt over the years 1973 through 1976 is $3,000,000, $88,800,000,
$116,915,000 and $37,585,000, respectively.
Note B Stockholders' Equity
Cumulative Preferred Stock, $25 par value:
Authorized ................................................................. .
Issued December 3 I ....... . .................... ............................. .
Common Stock Options for officers and employees at prices ranging from $32.375 1 36.625
a share which were not less than 100% of market at date of grant:
Outstanding ............................................................ . . .
Became exercisable during year .. ...... .. ..... .. ............................ .
Exercisable at end of year .. .... ............... ... .......................... .
Common shares reserved for merger with National Airlines, Incorporated- Note G . . .
Common shares reserved for additional stock options and/ or the Employee Stock Purchase
Plan at December 31 .. ....... . .. .......... .......... ........................ .
Shares
1971
1,000,000
None
71,768
24,167
67,468
7,321,603
792,748
1970
1,000,000
one
71,768
24,167
43 301
792,748
The orthwest Airlines I 968 Employee Stock Purchase Plan provides for the ale of Common Stock to eligible employee
through payroll deductions of up to lOo/i'. of their salary not to exceed $3,000 a ear. The sale price is 901c, of the highe t
price of the stock on the ew York Stock E change on specified annual date ~.
-
Note C-Commitments
At December 31, 1971, the Company has contracted to purchase jet aircraft for delivery in 1972 through 1973 which, with
spare engines, will require expenditures of $290,060,000 ($408,368,000 at December 31, 1970). Of this amount, $41,130,000
has been deposited with manufacturers at December 31, 1971 and approximately $60,809,000 and $188,121,000 become
payable during the next two years, respectively.
As of December 31, 1971 annual rental payments of approximately $8,800,000 (1970-$7,800,000) were required under
various lease agreements for periods up to forty years covering airport facilities, ticket offices, etc.
Note D - Taxes on Earnings
Since 1969, the Company has used the flow-through method of accounting for the investment credit. No change has
been made in accounting for the deferred investment credits arising in prior years which are amortized over eight years
from the dates the credits arose.
The provision for taxes on earnings consists of the following: Year Ended December 31
1971 1970
Current:
Operating loss carry back for tax purposes ............................... .
Provision ........................................................... .
Investment credit:
Flow-through ..................................................... .
Refund for carry back to prior years .................................. .
Reduction of refund for limitation of credits utilized in prior years ....... .
Deferred :
Provision ............................................................ .
Unapplied investment credit:
Flow-through ..................................................... .
Arising from operating loss carryback ................................ .
($18,192,100)
2,797,700
( 15,394,400)
21,765,700
( 8,744,600)
( 2,797,700)
10,223,400
Deferred investment credit being amortized over eight years. . . . . . . . . . . . . . . . . . ( 4,390,000)
($ 9,561,000)
$ 1,688,900
( 443,300)
( 16,526,200)
( 15,280,600)
19,885,700
19,885,700
( 4,484,400)
$ 120,700
Investment credits not applied on tax returns but offset against deferred income taxes at December 31, 1971 will expire
as follows: $8,925)00-1978 and $2,617,000-1980.
Note E - Pension Plans
The Company has several pension plans covering substantially all of their employees. The total pension expense was
$8,557 205 (1970-$5,348,098) and includes amortization of prior service costs over a period of forty years. It is the
Company's policy to fund pension costs accrued. As of the latest valuation date, the total amount of fund assets was
sufficient to cover vested benefits.
Note F - Depreciation and Amortization Policies
Provi ion for depreciation of aircraft and related flight equipment approximated $73,424,000 (1970-$62,993,000) and
\J as computed on the straight line method assuming ten year lives and 15% residual values, except as to 747 jet aircraft
a to \J hich the life is fifteen years and residual value is 10% .
Included in operating expenses for 1970 is the amortization of SST aircraft development costs of $1,100,000. Upon
abandonment of the project by the United States Government during 1971, all such costs were refunded, and accordingly,
$3,300 000, a credited to reduce depreciation and amortization expense for 1971 in accordance with Civil Aeronautics
Board accounting requirements.
Boeing 74 7 aircraft ~raining costs are being amortized over five years.
NOTES TO FINANCIAL STATEMENTS (cont'd)
Note G - Proposed Merger
Under terms of an agreement which would merge National Airlines, Incorporated into the Company, National stock-
holders would receive .85 of one share of Northwest stock for each share of National held, an exchange for approximately
7,223,000 shares. The merger is subject to approval of the Civil Aeronautics Board and the President of the United
States. If accomplished, it will be accounted for as a pooling of interests. The issue of 41,310 shares may be required
in connection with National's employee stock option plan and 57,344 shares for conversion of National's debentures.
Note H - Mutual Aid Agreement
The Company was struck by the Brotherhood of Railway and Airline Clerks (BRAC) on July 8, 1970 and the strike
continued through December 14, 1970. For this period the Company received payments from other carriers under the
Mutual Aid Agreement. The Civil Aeronautics Board on November 23, 1970 issued an Order remanding for.,.review
only the amended portion of the Mutual Aid Agreement which provided for increased level of supplemental payments.
The Order states that consideration will be given to making any modifications to this agreement prospective only. A
hearing was held before an examiner of the Civil Aeronautics Board during the latter part of 1971 but no final decision
has been made. In the opinion of management of the Company, there is no reason to believe that the modification to
the Agreement will not be approved and that the total amount received by the Company during the strike period will
not be retained.
ACCOUNTANTS1 REPORT
To the Stockholders and Board of Directors
Northwest Airlines, Inc.
Saint Paul, Minnesota
We have examined the financial statements of North west Airlines, Inc. and subsidiaries for the years ended December 31,
1971 and 1970. Our examinations were made in accordance with generally accepted auditing standards, and accord-
ingly 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 of financial position, earnings, stockholders' equity and changes in
financial position present fairly the consolidated financial position of Northwest Airlines, Inc. and subsidiaries at
December 31, 1971 and 1970 and the consolidated results of their operations, the changes in stockholders' equity
and changes in financial position for the years then ended, in conformity with generally accepted accounting principles
applied on a consistent basis.
Saint Paul, Minnesota
February 21, 1972
Certified Pu blic Accountants
NOTICE TO STOCKHOLDERS
A new rule adopted by the Civil Aeronautics Board, effec-
tive August I, 1970, requires that any person who owns, as
of December 31 of any year, or acquires ownership either
beneficially or as trustee, more than five percent, in the
aggregate, of the capital stock or capital_ o_f th~ air carr!er,
shall file a report with the CAB containing information
required by Section 245.13 of the CAB Econom_
ic Regula-
tions. This report must be filed on or before April I of each
year as to capital stock or capital owned as of December 31
of the precedi ng year. The regulation also provides that a
report must be filed by any person acquiring more than
five percent of the capital stock or capital within ten days
of acquisition.
Any stockholder who believes he may be required to file
such a report may obtain further information by writing to
the Director, Bureau of Operating Rights, Civil Aeronau-
tics Board, Washington, D. C. 20428.
-
-
NORTHWEST AIRLlNES, INC. AND SUBSIDIARIES
(Dollars in thousands except per share figures)
Operating Revenues 1971 t 1970t 1969
Passenger ......................................... $331,966 $ 260,335 $ 350,504
Cargo ............................................ 39,641 30,053 51,006
Mail ............................................. 19,443 18,958 29,386
Charter and Other Transportation ................... 31,588 20,800 35,090
Mutual Aid Agreement. ............................ (462) 46,325 (509)
Nontransport ..................................... 3,343 2,569 2,461
Total Operating Revenues $ 425,519 $ 379,040 $ 467,938
Operating Expenses
Depreciation and Amortization ...................... $ 77,245 $ 69,173 $ 60,833
Other ............................................ 330,108 258,784 324,979
Total Operating Expenses $ 407,353 $ 327,957 $ 385,812
Operating Jncome .................................... $ 18,166 $ 51,083 $ 82,126
Other Income and (Deductions)-Net. .................. (6,366) (6,523) (1,153)
Earnings Befcre Taxes ................................ $ 11,800 $ 44,560 $ 80,973
Jncome Taxes ........................................ (9,561) 121 29,507
Net Earnings ........................................ $ 21,361 $ 44,439 $ 51,466
Earnings per Average Share As Reported Each Year()) ..... $ 1.01 $ 2.11 $ 2.55
Cash Dividends ...................................... 9,518 9,465 9,117
Dividends per Share As Paid Each Year ................ .45 .45 .45
Stockholders' Equity .................................. 477,054 465,210 426,797
umber of Shares Outstanding at End of Year .......... 21,149,756 21,149,756 20,914,272
Book Value per Share at End of YearC1
) $ 22.56 $ 22.00 $ 20.41
Recomputed per Share Figures After Stock Splits :C2
)
Earnings per Average ShareC2
) . 1.01 2.11 2.55
Dividends per ShareC2
) .45 .45 .45
Book Value per Share at End of Year(2) .............. 22.56 22.00 20.41
Assets and Long-Term Debt
Flight Property at Cost ................................ $ 1,012,568 $ 929,181 $ 697,938
Flight Property at Net Book Value ..................... 709,433 668,129 492,241
Total Assets ......................................... 944,302 923,126 742,732
Long-Term Debt ..................................... 252,500 260,915 112,000
Unit Expenses
Per Available Ton-Mile ............................ 14.5e 18.0 15.2c
Per Revenue Ton-Mile ............................. 42. le 43.5 34.5
Per Cent of Operating Revenues ..................... 95.7% 86.5 82.4%
Statistics - Scheduled Services
Re enue Plane Miles (000) .......................... 100,992 83,177 123,966
Available Seat Miles (000) .......................... 15,614,614 10,234,060 13,504, l l l
Revenue Passenger Miles (000) ...................... 5,553,043 4,506,256 6,208,725
Passenger Load Factor ............................. 35.6% 44.0% 46.0S-~
Revenue Passengers Carried ........................ 6,089,273 4,682 812 7,517,780
Freight and Express Ton-Miles (000) ................. 161,345 110,215 198,494
Total Revenue Ton-Miles (000) ...................... 813,403 655,339 942,050
Statistics - Total Operations
Revenue Plane Miles (000) .. . ....................... 110 045 89,938 135,563
A\ailable Ton-Mile (000) .......................... 2,806,407 1,819,439 2,535,137
t Affected by major strikes in 1966 and 1970, and from the strike recovery period in 1971.
(1) Per share figures reflect the increase in outstanding shares resulting from stock issues in 1964, 1969 and 1970 and from the conversion
of preferred stock in 1962.
(2) The stock was split 'two-for-one" in 1964, 1966 and 1969. The recomputations in this section are shown to provide coml?arability on an
adjusted basis and follow the form recommended by the Accounting Principles Board. These figures, of course, do not reflect the way the
corporation was operated.
1968 1967 1966t 1965 1964 1963 1962
$ 301 ,277 $ 275,873 $ 216,239 $ 198,457 $ 163,807 $ 135,222 $ 121,781
43,902 38,118 29,515 24,779 18,402 13,745 11,828
28,605 26,898 22,557 17,421 15,313 14,233 14,228
41,060 41,799 39,205 21,851 12,965 6,442 2.646
2,491 (717) (21) (1 2) (858)
1,446 1,291 1,312 1,207 1,144 (842) 828
$ 416,290 $ 383,979 $ 311,319 $ 262,998 $ 211,610 $ 168,788 $ 150,453
$ 49,817 $ 41 ,252 $ 33,195 $ 24,011 $ 22,852 $ 19,159 $ 18,445
268,529 229,969 177,469 153,140 135,627 123,713 112,802
$ 318,346 $ 271 ,221 $ 210,664 $ 177,151 $ 158,479 $ 142,872 $ 131,247
$ 97,944 $ 112,758 $ 100,655 $ 85,847 $ 53,131 $ 25,916 $ 19,206
(3,220) (2,391) (1,243) 224 (1,125) (4,166) (4,578)
$ 94,724 $ 110,367 $ 99,412 $ 86,071 $ 52,006 $ 21,750 $ 14,628
44,673 51,651 46,276 40,377 25,220 11,297 7,398
$ 50,051 $ 58,716 $ 53,136 $ 45,694 $ 26,786 $ 10,453 $ 7,230
$ 5.47 $ 6.42 $ 5.81 $ 9.99 $ 5.86 $ 5.73 $ 3.97
7,320 6,405 5,490 3,657 2,602 1,823 1,702
.80 .70 .60 .80 .60 1.00 .80
306,717 263,986 212,727 165,081 I 22,960 68,436 59,71 2
9,149,628 9,149,626 9,149,626 4,574,8 13 4,568,634 1,824,452 1,820,714
$ 33.52 $ 28.85 $ 23.25 $ 36.08 $ 26.91 $ 37.51 $ 32.80 -
2.74 3.21 2.90 2.50 1.47 .72 .50
.40 .35 .30 .20 .15 .1 2 .IO
16.76 14.43 11.62 9.02 6.73 4.69 4.10
$ 582,646 $ 467,859 $ 401 ,476 $ 304,072 $ 219,523 $ 176,655 $ 169,413
424,522 346,029 311 ,803 233,858 160,925 127,074 122,980
627,538 481 ,206 422,040 333,311 237,226 196,765 186,887
160,000 85,000 96,000 72,000 45,000 64,996 74,968
14.6 14.5 15.6 16.4 18.5 21.7 23.9
30.8 30.3 30.1 33.0 39.7 46. 8 50.2
76.5% 70.6% 67.7% 67.4% 74.9% 84.6% 87.2%
107,646 93,395 67,780 61 ,653 52, 157 45,356 41 ,821
10,840,758 9,198,150 6,773,257 6, 140,7_17 5,129,944 4,305, 147 3,697,796
5,458,128 4,901 ,520 3,699,85 1 3,303,809 2,668,8 12 2, 179,208 1,904,11 2
50.3% 53.3% 54.6% 53.8% 52.0% 50.6 0 51.5%
7,173,805 6,489,295 4,963,275 4,593,462 3,663,077 2,911 ,914 2,437,342
169,416 141 ,175 108,914 82,7 15 55,100 39,41 7 35, 179
836,085 709,165 533,556 452,553 35 1,886 284,732 254,033
121,077 I 06, 197 77,7 15 67, 125 55,477 47,207 42,7 18
2,186,234 1,864, 128 1,348,983 1,079,832 856,6 I 2 657,761 548, 159
0
HIGHLIGHTS OF 1971 .. .
FIVE BOEING 747'S ADDED TO N\NA ..JET FLEET:
!iv r 747B 's and th addition f
hi t ri Bo t Air-lines' route ystem
ranked a f 1971.
Th cembcr
b r 1 1
NWA 747 in new hang ar
1, 1971 num-
rn in th U.S.
st relnliv lo
NWA'. l l,a only four ty f j t
72 727 and 747. The raft
a r er ' t LI l p s jct cngi1 th
J a, Pratl & Whit s.
T his s ta ndnrdi z~ Li n f qL n ontinucs to
repr s 'n l im ortant ;_wings l r Airline~ in
mainl ' I\Onc . SJ nr pL rts and s par l fa ililics
and pilot trn i ning.
With ..
W 's 7 apilal
xpcnditur n 74713 ' y ur
om pa 11 , 11 1 l in j t m n l
t o er on ' bi
N w 747 e r ices lnau uratcd
As tht' 747 11' t gr' , n , crvi ' w P in tr du d.
Much or this nc,v 747 s 'rvi 'C was initial ,ct n th
Pncifi , and ri 'nl in t r-porl roul s, hclpin th ri nl
R gion of th Company to its most succes fol year
in history.
On January 23, 1971 Boeing 747 service be an to
M nila ; on January 31 to Hon Kong; on February 1 to
Taip i; on Mar h 1 to Tokyo from San Francis o via
H nolulu and on August 1 to Tokyo from the Twin
ili s via Lo Angeles and Honolulu.
With the tremendou ar o apa ity of the 747 came
th opportunity to introduce .new ar o rat from Hong
Kon and Taipei to th U.S. mainland. Th se new tariffs,
bas d on use of 747 cargo ontainers, nerated sub-
stantial new business.
747's Help Sales Efforts
The prim mphasi
lo recapture pa senger and ar o business and to offset
the irnpa t of n w omp tition. H re, the ability to sell
our 747 service -
which the competi-
tion could not match
- was important.
A 1971 ended
NWA was the onl
ff n 74
, t follow
ke : Twi
c Y rk
T pa
u ; T
- Mi a
S a Ltle-Anchora
Twin
Chi L
go ; Twin Ci tie
- Los Ang e les-
Hon o I u \LI_ Tok y O ; Minnesota Twins signed with NWA
Twin i Li s- nn Fran isco ; Miami-S atlle; Tolry -Taip t ;
T kyo-Maniln and enltl -Honolulu.
Thi rvi e advantage wa instrnm ntal in g ncrat-
ing busin s wilh travel agenls, always a major our c
f bu incss for Norlhwe t Airlines. For 1971, revenue
fr m trav I a, nt lolal d $L24.5 million - highest in
NWA hi t ry.
0 liv ry f n w 747 air raft al o provid d th
BOSTON-NE\N CITY ON N\NA ROUTE SYSTEM
Boston's Skyline behind Logan International
tunity to u oth r, mall r aircraft in the harter ale
ar a. With a sp ial ale team formed to sell charter
travel, volume grew to nearly double that of the most
re ent omparabl year. Special attention was d voted
to ports r 1 t d trav 1, app d by th signing of the
Minne ota Twins bas ball team for the 1972 season.
Advertising Concentrates on 747's
With the competitive edge of 747 equipment which
Northwest Airline po es ed in many markets, much
of the adverti ing tr s ed this advantage.
Advertising stressed 747 sup remacy
A new trans-Pacific campaign, "Fly The Orient
Expressway," was launched in 1971 and will continue
through 1972. It is based on four color, full page adver-
tisements in national magazines, underlining the choice
of routes, service and 747 equipment supremacy offered
by North west.
The return of NW A to television advertising centered
on the Florida campaign - "The Good Times To
Florida." This campaign relied heavily on TV commer-
ial run in the Twin Cities, Chicago, Miami and Tampa/
St. Petersburg, backed by newspaper and radio schedules.
Boston Becomes On-Line City
" Hello, Boston, We're Your New Airline" was the
theme of the special adverti ing ampaign develop d to
support the inauguration of service from the Twin Cities
and Milwaul ee to Boston which began September 1,
1971. Newspaper, radio and TV advertising were all
used to register NWA in ths historic and major market.
Initial chedules included two flights daily in each
direction between Boston-Twin Cities and Boston-
Milwaul ee - one a non-stop.
At the end of thr e month , Northwe t Airline had
succeeded in capturing more than 50 percent of the
non-stop business in these marl ets.
747 Support Facilities Expanded
The support services and facilities necessary to han-
dle the 747 .fleet - and the growth in passen er and
cargo business it will generate - were greatly xpanded
in 1971. A number of
departments within
your Company were
involved:
Maintenance and
Engineering's major
effort was the com-
pletion of the pro-
gram to provide for
the maintenance,
overhaul and testing
of th 747 fleet. N ew 747 engine test cell
21
22
HIGHLIGHTS OF 1971 ...
Commissioning of the two new 747 hangars at the
Twin Cities headquarters was accomplished and a new
$1.5 million test cell facility was built and put into
operation in July.
This provided post-
overhaul and repair
test capabilities for
the JT9D Pratt &
Whitney engine
which now powers
the 747 and which
will be used in the
DC-10.
INSTA -RES gives fast answers In the Computer
Services area, the
dividends on the Company's investment in new and
larger computer equipment were very evident in 1971.
The INSTA-RES system provided an instantaneous
reservations system - a completely standardized pro-
cedure with the ca-
pacity to develop a
passenger name
record - that was
the most advanced
in the industry.
In August,
1971, a flight infor-
mation system
(FLIFO) was com-
puterized. This pro-
TV screen shows complete record vides sales, reserva-
tions and operations
personnel with up-to-the-minute information on each
flight's status - departure time, en route delays, arrival
time. This information, captured by the computer directly
from radio reports,
appears on the agent
set in TV picture
form.
Use of the com-
puter was also
expanded to sched-
uling of flight crews
- improving crew
productivity and
working conditions.
Pilots check flight dispatch Today, NW A's
computer services
also function in point to point communications, monitor-
ing engine performance, fare quotations and a number
of accounting functions of the Company.
The expansion program that was made necessary by
the arrival of the 747, continued throughout 1971.
Two new 747
hangars were com-
pleted and occupied
and a new $3 .5
million flight ser-
vices and cargo
building was also
finished.
Additionally, a
$4.3 million satellite
terminal was con-
structed and put Weather g ets constant study
in to operation at
Twin Cities International Airport. Built primarily to
provide gate positions for wide-bodied jet aircraft, the
satellite can accommodate four 747's or DC-l0's - or
seven smaller jets - simultaneously.
At Miami, a concourse was extended to provide the
capacity for handling two 747's at once. And at Tampa/ St.
Petersburg, NW A became custodian and tenant of Airside
Building No. 4 in that handsome new terminal complex.
A new $2.9 mil-
lion 747 flight simu-
lator was installed in
the new flight ser-
vices building in the
Twin Cities and,
combined with actual
747 training flights,
aided in qualifying a
total of 30 4 NW A
pilots on the aircraft N e w Twin Cit ies sa tellite term inal
in 1971.
Testimony to Northwest Airlines' leadership in air-
craft noise abatement came from the National Organiza-
tion to Insure a Sound-
Controlled Environment
(NOISE), a nation-wide
citizen group concerned
with aircraft noise
impact, when they singled
out NW A as the air carrier
for its national award.
The Federal Aviation
Administration and air-
port authorities from
around the U.S. also
recognized WA's leader-
ship and came to the
Twin Cities to watch
demonstration flights
using NWA noise abate-
n1ent procedures. Boeing 747 flight simu lator
Route Case Activity Is Slow
New route case proceedings were almost totally
dormant in 1971. Three cases already before the Board
in which Northwest Airlines is an applicant are still
awaiting CAB final decision: Omaha/ Des Moines to vari-
ous east and west coast terminals; Detroit/ Cleveland-
Atlanta and Chicago-Jamaica.
New Services Introduced
In addition to the service to Boston inaugurated on
September 1, 1971, Northwest Airlines introduced its
non-stop service in the Twin Cities-Philadelphia mar-
ket and it has been very well received.
All-cargo service connecting Philadelphia to Detroit,
the Twin Cities and Seattle was also inaugurated, with
connecting services to the Orient.
In the area of air freight, NW A introduced an experi-
mental program with motor carriers trucking freight
from system cities lacking air freighter service to the
NWA city nearest which offers this service. This has
provided a much larger market base.
Personnel Key to Success
Even with the newest and best of equipment, an
airline's success is based on the ability and enthusiasm
of its personnel.
In 1971 , the people of Northwest Airlines demon-
strated their interest in, and concern for, the customer
and the Company. There were a number of ways to
document this:
The establishment of a new annual on-time per-
' formance record with 81.2 per cent of all flights departing
on published sched-
ule - a very favor-
able ranking among
U.S. airlines.
The receipt by the
Company in 1971 of
a record number of
commendation letters
from customers, cit-
ing excellent perfor-
mance by flight
Activity in new flight kitchen crew and ground
employees.
The creation of a voluntary public relations pro-
gram by the pilots called PEP (Pilot Employee Program)
to assist in selling the airline's services. This has brought
NW A pilots before a number of civic, church and school
groups across the system.
The participation by 4,372 NW A employees m
the Company's Employee Stock Purchase Plan.
During 1971,
NWA's employment
grew from 6,507 to
10,113 persons at
year-end. The in-
crease reflected the
build-up of scheduled
services during the
year following the
strike of late 1970.
The stability of Ground hostess aids passengers
NWA's work force is
well illustrated by the fact that 1,200 employees have
25 years of service or more with the airline.
Affirmative Action Program Continued
The Company continued its active participation in
the Affirmative Action Program - providing employ-
ment opportunities for members of minority groups.
Ern,phasis on job upgrading was also continued.
Northwest Airlines also participated in the national
convention of the NAACP and, for the third year,
sponsored 'Operation Kidlift' in which jet flights were
provided to disadvantaged youngsters from the Twin
Cities area.
Bright Outlook fo r 1972
As 1971 ended, Northwest Airlines was noting the
upswing in business that was reflected in the econ-
omy generally.
With this momentum, and continued dedication by
Northwest Airlines' employees in all departments, your
Company looks forward to bright prospects for 1972.
~--'.,:;,.
- ll'llialdli!~III'!!
Tampa/St. Petersburg's new airport
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