Northwest Airlines Annual Report 1972

NORTHWEST ORIENT AIRLINES
General Offices :
Minneapolis-St. Paul International Airport
St. Paul, Minnesota 55111
Area Code 612/726-2111
DIRECTORS *
JAMES H. BI GER
Chairman of the Board, Honeywell, Inc.
Minneapolis, Minnesota
HADLEY CASE
President, Case, Pomeroy & Company, Inc.
ew York, ew York
A. E. FLOA
Secretary, orthwest Airlines, Inc.
St. Paul, Minnesota
DO ALD H. HARDESTY
Vice President, orthwest Airlines, Inc.
St. PauL Minnesota
MALCOLM S. MACKAY
President, Foothills Company
Roscoe, Montana
DO ALD G. Mc EELY
President, Space Center, Inc.
St. Paul, Minnesota
DO ALD W. NYROP
President, orthwest Airlines, Inc.
St. Paul, Minnesota
C. FRA K REA VIS
Partner, Reavis and McGrath
ew York, ew York
ALBERT G. REDPATH
Vice President, Thomson and McKinnon,
Auchincloss, Inc.
ew York, ew York
LYMA E. WAKEFIELD, JR.
Vice President, Piper, Jaffray & Hopwood
Minneapolis, Minnesota
REGISTRAR: The Chase Manhattan Bank,
ew York, ew York
TRANSFER AGENT: Bankers Trust Company,
ew York, ew York
STOCK LISTED: Common Stock listed on
ew York Stock Exchange, Pacific Coast Stock
Exchange and Midwest Stock Exchange
* As of iarch 1, 1973
OFFICERS *
DO ALD W. YROP
President
JAMES A. ABBOTT
Vice President-Legal
CLAYTON R. BRA DT
Vice President-Purchasing and Stores
ROBERT W. CAMPBELL
Vice President-Budgets
J. WILLIAM CAMPIO
Vice President-Regulatory Proceedings
ROLA D W. CHAMBERS
Vice President-Properties
ROBERT A. EBERT
Vice President-Personnel
ROY K. ERICKSON
Vice President-Public Relations
A. E. FLOA
Secretary
BE JAMI G. GRIGGS, JR.
Vice President-Assistant to the President
DO ALD H. HARDESTY
Vice President-Finance and Treasurer
WILLIAM E. HUSKI S, JR.
Vice President-Communications
and Computer Services
REGI ALD C. JE KI S
Vice President-Orient Region
FRA KC. JUDD
Vice President-Maintenance & Engineering
M. JOSEPH LAPE SKY
Vice President-Economic Planning
RO ALD McVICKAR
Vice President
BRYA G. MOO
Vice President-Advertising
ROBERT J. PHILLIPS
Vice President-Comptroller
C. L. STEWART
Vice President-Transportation Services
ROBERT J. WRIGHT
Vice President-Sales
HIGHLIGHTS OF 1972
Total Operating Re,enue
Opera tin a Income ..
~ et Earn.in a for the Year
Per Common hare
tock.holder ' Equity
Per Common hare
Di,idends Paid ....
Operating Ex.-penses -
Per }i.sailable Ton-:\Iile
Per ReYenue Ton-~Iile
ReYenue Traffic -
Pas enaers Carried .
Pas enaer-:\Iile F1o n1
Ton-:\1iles :\fail, Freiaht and E:\.-pre
Common hare at Year End
Employee at Year End
1972*
39:....500 605
15 09 630
1- ,6 :2 391
16.9c
-19.6c
5150.636
-1565 61 ,000
:215 -1 -1 000
:...1 604136
10 000
1971
S -125 519,:...46
1 166.--120
21 361.:26:...
1.01
-1 -;,053.9:...2
22.56
9 51 530
14.5c
-12.lc
6 0 9,:2 3
5 553 043,000
25 ,099.0
:...1,1-19. 56
10)13
*Operatina resul were affected by a major strike which e:x.-tended from June 30 through October 2 19 2.
President' :\fe sage
DC 10-40 Arri,es
Financial Re,ie,, of 19 .... :2
_ ~YA. Jet Fleet
Financial Reports
Route Case Route :\fap
TABLE OF CONTENTS
Co er Photo: Xorthu;est Orient Airlines' neu;est Jet aircraft - the McDonnell
Dougllls DC 10-40. A. total of 22 hace been ordered.
Paae
Page
Paae
Paae
Paae
p ae
4:-5
6--;
-9
10
11-:...1
2:2-:23
1972 was not a good year for orthwest Airlines
when measured in terms of net earnings. The net
earnings after taxes were $17,682,391 which is a
decline of $3,678,871 from the net earnings of 1971.
The cause of the reduced earnings was the 95-day
strike by the Airline Pilots Union which came during
July, August and September, the peak traffic period
for orthwest Airlines.
Financial Strength
However, lorthwest Airlines' financial strength
continued to improve during 1972. A review of the
indicators commonly used to measure corporate
vitality bears this out:
1. Northwest Airlines leads the United States air
carriers in retained earnings with $341,690,000.
This is nearly 100 million dollars more in retained
earnings than the second-place airline.
2. orthwest Airlines on December 31, 1972 had
the lowest debt to equity ratio of all United
States airlines. The debt at year end was
$211,000,000 and the equity was $493,0000,000 -
a ratio of 42.8%
.
3. orthwest Airlines does not have any jet air-
planes under lease arrangements - its entire fleet
of 109 aircraft is owned by the Company. This
is most unusual in the airline indusby today.
4. orthwest Airlines has one of the most con-
servative accounting methods for depreciating its
aircraft. All wide-bodied jets are depreciated
over a 15-year period with a 10% residual, and
all Boeing 727 and Boeing 320 airplanes are
depreciated over a 10-year period with a 15%
residual. This conservative practice provided a
cash flow from depreciation and amortization of
S81,054,000 in 1972 and represents 20.6% of
operating revenues.
5. orthwest Airlines has paid quarterly dividends
for eighteen consecutive years. The amount of
dividend payments to shareholders in 1972 was
$9,620,000.
Equipment Advantage
On ovember 10, 1972 orthwest Airlines accepted
delivery of the first long-range DC 10-40. During
the year 1972 orthwest Airlines exercised its option
for eight additional DC 10-40's and the Company now
has purchase conbacts for 22 such airplanes.
The DC 10-40 is unique because it is powered with
the same time-tested Pratt & Whitney JT9D engine
that is used on orthwest Airlines' fleet of 15 Boeing
747's. By ordering this engine, Northwest avoided
the problems that are commonly associated with the
introduction of newly developed powerplants. This
engine standardization results in increased operating
efficiencies and reduced training and spare part costs.
A decision to convert the early Pratt & Whitney
JT9D-3 engines used on the Boeing 747's to the more
powerful and reliable JT9D-7 engine was made in
March 1972. This program is now two-thirds com-
pleted and will be finished by August 1973.
Sale of Airplanes
As the Boeing 747's and the new DC 10-40's have
been delivered into the fleet, some of the older and
more fully depreciated aircraft have been sold. Twelve
jet airplanes were sold in 1972 for $24,935,000. All
were sold for cash. The Company now has firm con-
tracts for the sale of 10 jet airplanes in 1973. The
deliveries are spaced throughout the year as addi-
tional DC 10-.J0's are delivered.
Merger Agreement Cancelled
On ovember 28, 1972, the Board of Directors of
ational Airlines advised orthwest Airlines that it
had taken unilateral action to terminate the orthwest-
lational Merger Agreement. orthwest Airlines does
not have under consideration any merger proposals
at this time.
Strike by The Pilots' Union
The Airline Pilots Union rejected a Company offer
of a 26.7% average increase in wages and benefits
over a three-year period and the Company was struck
on June 30th. During negotiations after the strike
commenced, the Company increased its offer to 29.5%
on July 5th. This latest offer was finally accepted on
October 2nd and the strike ended after 95 days.
The Federal Pay Board has now ruled that the 12.3%
increase which was to be granted for the "control
year" commencing on July, 1972, pursuant to the terms
of the labor agreement, must be reduced to an increase
of not more than 6.2%. Agreement has been reached
with the pilots union in accordance with the ruling
of the Pay Board.
Service to China
orthwest Airlines' operating authority to serve
the cities of Shanghai, Peking, 1 anking, Shenyang,
Ha-erh-pin and Lu-ta, granted by the Civil Aeronautics
Board on July 20, 1946, has been validated b_ legal
opinon. It does not appear likely that orth,, est can
resume in 1973 the service to China that the Compan_
provided from 1947 to 1949. However, Iorthwest's
Management remains enthusiastic about the prospect
of renewing trade and commerce with the People's
Republic of China and the commencement of air
services in the future.
Continuing Corporate Concern
The seniority recall of most employees who , ere
idled by the strike is nearly complete and therefore
the Company is able to resume the recruitment
program for new employees. Additional progress is
being made in the employment and promotion of
minorities.
1 orthwest's continuing efforts in the en ironmental
areas have produced good results. For example, the
jet engine retro-fit program on the JT8 engine is more
than 80% complete at this time. This program virtuall
eliminates the exhaust smoke from the Boeing 727
airplanes. A recent report by the Presidential Aviation
Advisory Commission commends orthwest Airlines'
flight procedures that effectively reduce aircraft noise
in the vicinity of airports and the report recommends
the adoption of these procedures b other nited
States airlines.
Forecast for 1973
New labor agreements ha, e been signed with nearly
all labor organizations represented on the airline. The
Compan, anticipates stabilit) in this area in the ) ear
ahead.
Inflationary pressures will continue in 1973 on all
such items as jet fuel, landing fees, contract labor
settlements, and materiel purchases.
It is expected that passenger traffic and freight
baffic on an industry basis will increase ten to t,-veh-e
percent in 1973 over 197:2. This growtl1 in traffic
togetl1er with tl1e recovery of re enues lost dming
the sbike, will make 1973 a successful ear for
l orthwest Airlines.
Sincerel ',
Donald \, 1

~ yrop
:.larch 15, 1973
6
The most sophisticated flight simulator yet developed is
the DC 10-40 simulator shown here, housed at Northwest
Orient's flight services building in the Twin Cities. Heart
of the closed circuit TV visual system is the terrain
diorama, 60 feet long and 22 feet high.
Behind Scenes Support
for DC 10-40 Requires
New Equipment & Skills
Arrival of a new type aircraft like the
DC 10-40 must be preceded by careful planning
if the airplane is to be introduced smoothly into
scheduled service.
There is a requirement for both supporting
'hardware' and for training of personnel.
Personnel Training
Training is needed for a host of individuals
- the pilots, the cabin attendants, the ramp
service and cargo personnel, the mechanics and
technicians.
A new DC 10-40 flight simulator, a $3.2 million
investment, is the key to flight crew training.
The most sophisticated system ever developed
for airline use, the Mark V simulator uses a
closed circuit color television camera tracking
over a huge terrain diorama.
Use of the new simulator greatly reduced the
time required for pilot transition training and
reduces the need to fiy actual aircraft for training.
A view of the simulator cockpit, which is identical in every respect to that
of the actual DC 10-40 cockpit.
Proving Flight
Before the DC 10-40 was introduced into scheduled service,
the Federal Aviation Administration requirements called for
completion of a successful 'proving flight'. This was conducted
December 9-11 and saw the aircraft visit Tampa, Miami,
Milwaukee, ew York, Philadelphia, Detroit, Chicago, Seattle,
Portland, Spokane and the Twin Cities.
This proving flight, termed by FAA officials involved as the
most successful ever staged by WA, provided necessary orien-
tation and training for other personnel.
Standardization Important
One of the strong management beliefs of
orthwest Airlines is to standardize whenever
possible.
Thus, the same cargo containers and the same
loading equipment are used for the DC 10-40 and
the 747. This has saved time for shippers and
expense for the airline.
Another area where standardization has proved
important is in the commonality of the Pratt &
Whitney JT9D engines to both the DC 10-40 and
the 747.
With spare engines costing over $1,000,000
each, the great saving is immediately evident.
Additional savings flow from less time required
for training of pilots, mechanics and technicians.
Computer Break-Through
An industry 'first' was recorded by orthwest
Orient in the field of computer technology in
1972.
The airline's Insta-Res, a computerized reser-
vation system featuring a passenger name record,
became the first in the industry to produce
computer generated, magnetically encoded flight
coupons. This completely eliminates the need
for any handwriting by ticket agents and forms
the basis for future automation of many other
passenger services.
Bright Future
The DC 10-40 was introduced into scheduled
service on December 13 with daily round trip
service between the Twin Cities and Tampa/St.
Petersburg via Milwaukee.
With the delivery of the fourth aircraft
on February 16, additional daily service was
announced for March 1 between the Twin Cities,
via Chicago, to Tampa/ St. Petersburg and to
Fort Lauderdale, via Chicago. Daily non-stop
service began March 1.5 between the Twin Cities
and San Francisco.
Based on the enthusiastic response it has
already received, the DC 10-40 h3.s a bright
future with orthwest Orient irlines.
Automation is used increasingly in the airline
industry. Here, LD-3 cargo containers are
being loaded into the DC 10-40 by an NW A
employee using a Clyde hydraulic loader.
Use of sealed containers minimizes damage,
provides greater security and increases ease
of handling.
The same engine - the Pratt & Whitney JT9D _, powers both WA's 747's and
DC l0's. This standardization gives the airline many savings in both time and
expense. Jn these photos, two mechanics are completing overhaul of a JT9D
engine while another performs a routine check on the engine on a 7 47.
orthwest Orient's compute,ized passenger name record reservations system,
called Insta-Res, is the most advanced in the industry today. Here, reser ation
sales agents at the Twin Cities general office are aided by miniature TV monitors
which display complete information on the screen when called for by the
operator.
7
FINANCIAL REVIEW OF 1972
Revenues
The total operating revenues for 1972 amounted to
$392,500,605 compared with $425,519,246 in 1971. This
r duction in revenue resulted from the major curtail-
ment of operations during the pilot tri\e, June 30
through October 2, 1972. Therefore, comparisons of
the individual revenue categories with the prior year
are not meaningful.
The operating revenues for 1972 included mutual
aid - net of payments to others - $43 629,192. The
Civil Aeronautics Board (CAB), on ovember 23 1970,
issued an order remanding for review, only the amended
portion of the Mutual Aid Agreement which provided
for an increased level of supplemental payments. After
further hearing, the CAB on February 27, 1973,
again approved the Amendments to the Mutual Aid
Agreement retroactive to the effective date of such
amendments and for a future period of five years.
This had the effect of reapproving all payments made
under the new provisions.
In April 1972, the Civil Aeronautics Board approved
IATA agreements which provided for fare increases for
trans-Pacific travel and for travel between foreign ports,
approximating 8%
. The CAB, in the Domestic Passenger-
Fare Investigation, approved a 2.7% increase in domestic
fares effective in September 1972. The system passenger-
mile yield increased to 6.09 or 1.8% over the yield of
5.98 in 1971, however passenger-mile yields continue
to be diluted by increased use of tourist and pro-
motional fares. Other phases of the domestic fare in-
vestigation are still pending and final decisions are
not expected until late in 1973. As a result of court
action brought against the CAB, the Board has under
review the domestic passenger fare levels which were
charged between October 1, 1969 and October 14, 1970.
The hearing examiner has concluded that the fares were
lawful however, the CAB will review this deci ion and
it is e;qJected that a final ruling will be released during
1973.
A Domestic Air Freight Rate Investigation which
began in 1971 is still in preliminary procedural steps
with a formal hearing now scheduled for October 1973.
Domestic mail and express rates are also open and
procedural steps are progressing with a hearing
cheduled for September 1973. o final decision is
xpected in either case until 1974. It is anticipated
that rate improvements will result from both of these
inv tigations.
Revenues from charter and other transportation
, ere 20 008 467 in 1972. This revenu included
5 19 140 from commercial charters and other income
and $14189 327 from military charters. The Military
Airlift Contract expires on June 30, 1973 and we will
eek a renev.ral contract for the Government's 1974
fi cal year.
Ex enses
Operatina expen e in 1972 were reduced as a
r ult of the trik and amounted to $377,401,975
compar d ,vith 407 352 826 in 1971.
Depreciation and amortization expenses amounted
to $81,054,263 in 1972 compared with $77,245,465 in
1971. This increase is primarily the result of fifteen
747 aircraft being depreciated in 1972 for the full year,
whereas five of these aircraft were delivered during
the year in 1971. Inflationary trends continue to increase
costs in the airline industry, including wages, rentals,
services and costs of material and supplies.
Operating expenses per available ton-mile in-
creased in 1972 to 16.9 compared with 14.5 in 1971.
Productivity improvements anticipated with the 747
equipment do not show in the 1972 unit costs as they
were offset by the effect of the strike. Pre-strike unit
costs for the first six months of 1972 were 14.3 per
available ton-mile.
Earnings and Dividends
et earnings for 1972 amounted to $17,682,391, or
$.83 per average share of common stock outstanding
compared with $21,361,262 or $1.01 per share in 1971.
Interest on long-term debt in 1972 declined to
$8,355,485 from $13,050,806 in 1971. Gain on disposals
of property before tax application, increased to
$9,923,380 from $6,198,195 a year ago.
The Company has continued its dividend policy
even though many airlines have discontinued such
payments. Dividends in 1972 amounted to $.45 per
common share and represented the 18th consecutive
year in which Northwest Airlines has paid dividends.
Taxes on Earnings
Taxes on earnings in 1972 resulted in a net credit
of $429,300 compared with a net credit of $9,561,000
in 1971. The income tax credit is made up of the
normal tax provision including current and deferred
taxes amounting to $8,856,300, less additional benefits
for carryback to federal surcharge years amounting to
$1,602,800, resulting in a net provision of $7,253,500.
Investment tax credits recorded in 1972 of $7,682,800
were deducted from the normal income tax provision,
resulting in a net tax credit of $429,300.
The Company continues to use accelerated method
of depreciation for computation of income tax payments.
Investment tax credits which could not be applied
to income tax returns, but which were offset against
deferred income taxes, total $20,909,900 for 1972 and
prior years. ( See Note E to Financial Statements ).
Cash Flow
Funds generated from operations in 1972 totaled
$102100,154 which included net earnings, depreciation
and amortization, deferred income taxes and deferred
investment tax credit. Other funds generated totaled
$155,594,836 coming principally from the Employ e
Stock Purchase Plan, disposals of operating property,
and from a new long-term debt arrangement with banks.
Application of funds in 1972 totaled $286,943,387
and is made up primarily of re-payment of the prior
long-term debt arrangement with banks, additions of
flight equipment and other property, advance deposits
on aircraft and dividend payments. ( See Statement of
Chang in Financial Position, Page 14).
Traffic and Services
Traffic results in 1972 show reductions in all areas
in comparison with 1971, reflecting the effect of the
strike. Traffic data for the two calendar years are
shown on page 20; but, as noted, specific item com-
parisons would not be meaningful.
Passenger traffic recovered rapidly after the end of
the strike and in December 1972, scheduled passenger-
miles flown exceeded those of 1971 by .9%
. By February
1973, passenger-miles were up 4.3% over 1972 despite
one less day in the 1973 month.
ew services have been inaugurated to increase
traffic. Late in 1972, I orthwest Airlines received the
first two McDonnell Douglas DC 10-40 jet aircraft.
This new wide-bodied airplane was put into service
between the Twin Cities/Milwaukee and Tampa and
between the Twin Cities/ Chicago and Florida for the
winter vacation season. The DC 10-40 was put into
service between the Twin Cities and San Francisco
during March 1973, and additional flights will be added
in east-west transcontinental markets to impro e our
competitive position in key city pairs. Early traffic
response has been most satisfactory.
In June the DC 10-40 will be assigned to fly the
Orient Express, replacing narrow-bodied flights in the
Washington-Chicago-Anchorage-Tokyo-Korea markets.
"\ ith inauguration of this service, I orthwest irlines
vrill be the first carrier to offer its entire trans-Pacific
passenger schedule in modern wide-bodied equipment.
Financial Condition
The financial condition of orthwest Airlines con-
tinues to be one of the strongest in the airline industry.
In December 1972, the Company rearranged the
Credit Agreement with its banks. The new agree-
ment provides for a $100 million long-term credit with
repayment beginning in April 1981 and terminating in
January 1983. It also provides for a revolving credit of
$250 million, reducing $20 million quarterly beginning
July 1976 and terminating April 1979. Other previously
arranged financial commitments remained in effect and
totaled $79 million at year end. ( See 1 ote B to Financia]
Statements ). Outstanding debt at year end amounted
to $211 million or 42.8% of stockholders' equity. This
preferential debt equity ratio is one of the lowest, if
not the lowest, of the U.S. trunkline carriers.
Stockholders' equity at December 31, 1972 was
$492,837,186 compared with $477,053,922 at the end of
1971. The book value per average common share
increased to $22.81 from $22.56 a year ago.
At year end the Company had on order an
additional 20 DC 10-40 wide-bodied aircraft from the
McDonnell Douglas Corporation. This will require an
expenditure of $422,120,000 of which $74,117,000 has
been deposited with manufacturers at December 31,
1972. Internally generated funds and the existing
financial arrangements will cover the purchase of all
aircraft on order. These new aircraft are scheduled
for delivery in 1973 through 1975.
SOURCE AND
DISTRIBUTION OF REVENUES
.8%
OTHER
PASSENGER AND MU UAL AID
81 .9%
SOURCE
DISTRIBUTION
STOCKHOLDERS' EQUITY
VS.LONG TERM DEBT
MILLIONS OF DOLLARS
600
500
400
300
200
100
0
c::=::J EQUITY
- DEBT
1968 1969 1970 1971 1972
9
Northwest 0r!ent's allJet~
fleet totals 109 aircraft
15 BOEING
747'S
Statistic :
Length, 231 ft.;
range, 5,850 miles
with 362 pa sen-
g er ; crui ing
peed, 585 mph
cruising altitude,
45,000 feet max.
++
++
++
++
++
++
++
+
2 DOUGLAS
DC 10-40'5*
Stati tic :
Length, 182 ft.;
range, 5,100 miles
with 242 passen-
gers; cruising
peed, 555 mph;
cruising altitude,
42,000 feet max.
*20 additional
aircraft on order.
30 BOEING
320B/C'S
Statistics:
Length, 1.53 ft.;
range, 5,620 miles
with 142 passen-
gers; cruising
speed, 550 mph;
cruising altitude,
42,000 feet max.
6 BOEING
720B'S
Statistic :
Length, 137 ft.;
range, 3,600 miles
with 109 passen-
gers; cruising
speed, 565 mph;
cruising altitude,
42,000 feet max.
24 BOEING
727-200'5
Statistics:
Length, 153 ft.;
range, 1,760 miles
with 122 passen-
gers; cruising
speed, 570 mph;
cruising altitude,
42,000 feet max.
+++
+++
+++
+++
+++
+++
+++
+++
32 BOEING
727-l00'S
Statistics:
Length, 133 ft.;
range, 2,380 miles
with 93 passengers;
cruising speed 570
mph; cruising alti-
tude 42,000 feet
max.
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
++
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Operating Revenues
Passenger
Cargo . . ............. .
Mail .. . .... . ..... . .......... .
Charter and other transportation
Mutual Aid Agreement- Note H
Non transport
Operating Expenses
Flying operations
Maintenance ..
Passenger service . . . . . . . . . . . . . . . . . . . . . . . . . ....
Aircraft and traffic servicing
Reservations, sales and advertising
Administrative and general
Depreciation and amortization - Note G ..... .
Other Income and (Deductions)
Interest on long-term debt ....... .
Disposals of property . . . . . . . . . ........ .
Other . . . . . . . . . . .. ____ .. _
Earnings Before Taxes
Taxes on Earnings, including deferred taxes
and investment credit- Note E ....... .
Net Earnings for the Year ........... .
Average shares of Common Stock
outstanding during the year
Earnings per share of Common Stock
* Operating results in 1972 were affected by a strike which extended
from June 30, 1972 through October 2, 1972- see Note H
See notes to financial statements.
Year Ended December 31
1972 * 1971
$277,890,978 $331,966,391
34,694,315 39,641,301
13,309,095 19,442,669
20,008,467 31,588,334
43,629,192 461,889 )
2,968,558 3,342,440
392,500,605 425,519,246
100,642,511 122,181,445
47,503,176 47,936,083
33,462,312 39,009,954
62,170,832 65,332,134
38,410,180 41,373,888
14,158,701 14,273,857
81,054,263 77;245,465
377,401,975 407,352,826
15,098,630 18,166,420
8,355,485 ) 13,050,806 )
9,923,380 6,198,195
586,566 486,453
2,154,461 6,366,158 )
17,253,091 11,800,262
429,300 ) 9,561,000 )
$ 17,682,391 $ 21,361,262
21,361,255 21,149,756
$ .83 $1.01
11
L
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
ASSETS
Current Assets
Cash and short-term invesbnents
Accounts receivable ....
Recoverable federal income tax
Flight equipment spare parts, at average cost, less
allowances for depreciation of $7,141,035
( 1971- $6 662,645)
Maintenance and operating suppli s at average cost
Prepaid expenses
Property and Equipment
Flight equipment at cost ...
Less allowances for depreciation
Total Current Assets
Advance payments on new flight equipment - Note D
Other property and equipment at cost ...
Less allowances for depreciation ...
Deferred Charges and Other Assets
Training and development costs
Rentals
Other ..... .
December 31
1972 1971
$ 23,340,648 $ 42,468,318
41,012,970 43,303,034
7,901,803 15,394,400
18,785,638 15,985,804
4,457,932 4,441,808
1,924,095 3,608,902
97,423,086 125,202,266
1,008,040,777 1,012,567,920
326,020,308 303,134,687
682,020,469 709,433,233
74,117,238 41,130,050
756137,707 750,563,283
94,805,390 90,327,722
37 254,176 31,394,624
57,551,214 58,933,098
813,688,921 809,496,381
3,139,391 3,337,857
4,062,435 4,003,320
2,103,681 2,261,709
9,305 507 9,602,886
$920,417,514 $944,301,533
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
Employe compensation
Air travel card deposits
Unredeemed ticket liability
Income taxes ....... .
Current maturities of long-term debt . .. . ......... .
Total Current Liabiliti s
Long-Term Debt - Note B
Deferred Credits - Note E
Income taxes - arising principally from
accelerated depreciation method
Investment credit . . .... . .
Stockholders' Equity - Note C
Common Stock $1.25 par valu ; authorized 40,000 000
shares; issued and outstanding 21,604,136 shares
( 1971 - 21,149,756 shares)
Capital surplus
Retained earnings . . ..... .
Commitments - Note D
See notes to financial statements.
Dec mb r 31
1972
53 330 067
l ,4 6 35
l 009 00
7 556 0...,9
1123 974
3 000 000
84 506 22
20 000 000
127 875 900
719 ,200
135 074,100
27 005,170
L4,l--O 34
341 6911 ...,
49_,,837186
9...,0 417,514
1971
$ 56,299152
15,535 334
l 056,125
6,419,0 .... 3
727 377
3 000 000
83 037 0ll
252,500 000
120 727,300
10 983 300
- - - --
131,710 600
26,437,195
ll6 987 969
333,628,758
477 053,922
$944,301 533
l '
14
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Source of Funds
Net earnings ....
Items not requiring current funds:
Depreciation and amortization
Deferred income taxes .......................... .
Deferred investment credit .
Total from Operations
Sale of Common Stock, less expenses
Issuance of long-term debt ..
Disposals of operating property - book value
Refund of SST development cost
Total of Sources
Application of Funds
Flight equipment and other property additions ....... .
Advance deposits on aircraft . ..
Deferred DC 10-40 ( Boeing 747 in 1971) training costs
Cash dividends ........... .
Payment of long-term debt ... .
Other ............... . .. . .......... .
Total of Applications
Increase (Decrease) in Working Capital
Changes in Working Capital Consist of:
Increase ( decrease) in current assets:
Cash and short-term investments ..................... .
Receivables ....... .
Inventories . . . . ............. .
Prepaid expenses .............. .
Increase (decrease) in current liabilities:
Current maturities of long-term debt ..... .
Accounts payable ...
Other accrued liabilities
Unredeemed ticket liability ................... .
Increase (Decrease) in Working Capital
notes to financial statements.
Year Ended December 31
1972
$ 17,682,391
81,054,263
7,148,600
3,785,100)
102,100,154
7,720,840
133,500,000
14,373,996
257,694,990
58,156,479
39,530,611
665,534
9,619,967
178,000,000
970,796
286,943,387
( $ 29,248,397)
( $ 19,127,670)
( 9,782,661)
2,815,958
1,684,807)
27,779,180)
2,969,085)
3,301,296
1,137,006
1,469,217
( $ 29,248,397)
1971
$ 21,361,262
77,245,465
11,589,200
4,390,000)
105,805,927
34,585,365
12,364,883
5,500,000
158,256,175
87,330,076
23,166,916
1,287,427
9,517,530
43,000,000
1,345,993
165,647,942
($ 7,391,767)
( $ 9,057,077)
9,264,655
1,488,616
1,459,419
3,155,613
15,000,000)
17,922,737
3,339,289
4,285,354
10,547,380
( $ 7,391,767)
NORTHWEST AffiLINES INC. AND SUBSIDIARIES
Balance January 1 1971 . . . . . .................. .
t amings for th year .......... .
Cash dividends - $.45 a har . . . . . . . . . . . . . . . .
Balance December 31 1971 .......... .
Shares issued pursuant to:
Employe Stock Purchas Plan ............. .
Emplo. Stock Option Plan ............... .
et arnings for th ar . . . . . ....... .
Cash divid nds - $.45 a shar
Balance December 31, 1972 ...
S e not s to financial tat m nt .
Period
1962-1971
1972 ...... . . .. .. .
Total ..... . . . .
To Net Earnings
To Be Amortized ....
Availabl *
$70,699,600
3 897,700
Reflect din
Net Earning t
$59,716,300
7 682,800
$67,399,100
$74,597,300
67,399,100 - - -
$ 7,198,200
===------=-
* Investm nt credit not appli d on tax r turns but
offset against deferr d taxes through 1972 amount
to $20 909,900. Se Note E to financial statern nts.
t Income benefits of investm nt er dit g n rated in
1962-68 ar amortiz d ov r an ight y ar p riod. Th
flow-through method of accounting was adopt d for
investment credit gen rat d after 1968 and the
incom benefits have b n r fl cted in the year
generated.
Common to k apital R tain d
Sh,u Amow1t urplu~
:..,1,149,756 26.437 195 $116 9 7,969
21361 .;.,62
9 517,530)
- - - - - -
:..,1,149 756 26 437 195 116 987 969 333 62 ,758
45:.-,59 56574 7 0 9 26
1 78::.. ::..~7 63 039
17 68::.. 391
i 9,619 967
-'-'1,604136 .;.,7 005170 $124,140 '4 341 691,l 2
Dec mb r 31
Aircraft Typ 1971 1972 On Ord r
JET:
707-320B & 320C 33 30
720B .... 13 6
727 & 727C-100 ........ 3"" 32
727-200 .. ' ..... . . . . 24 24
747 . . .. '
.. 15 15
DC 10-40 2 '....0
Total J t . ... . . . . . . . . . . . 117 109 20
16
NORTHWEST AIRLINES, INC. AND SUBSIDIARIES
Years Ended December 31, 1972 Lmd 1971
Note A - Accom1ting Policies
A summary of certain accounting policies of the Company which have been consistently followed in preparing
the accompanying financial statements is set forth below:
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned domestic sub-
sidiaries after elimination of intercompany accounts and hansactions.
Flight Equipment and Property
Provision for depreciation is computed by the straight line method over the estimated useful lives of the assets.
For aircraft the calculation assumes ten year lives and 15% residual values, except as to 747 and DC 10 jet aircraft
as to which the lives are fifteen years and 10% residual values. Useful lives of buildings vary from 5-30 years
and other equipment 4-10 years.
Allowances for depreciation of flight equipment spare parts, rotables and assemblies are provided by the straight
line method at rates which allocate the cost of these assets, less residual value, over the estimated useful lives of
the related aircraft.
The Company charges to operating expense when incurred, all expenditures for maintenance and repairs and minor
renewals and betterments. Expenditures which materially increase values or extend useful lives are generally
capitalized. Carrying amounts of assets sold or otherwise disposed of are eliminated from the accounts in the
year of disposal and the resulting gain or loss reflected in operations.
The Company capitalizes interest on borrowings related to the acquisition of aircraft until such time as the aircraft
is delivered. The capitalized interest is amortized over the useful life of the aircraft.
For income tax purposes, accelerated depreciation methods are used and interest is not capitalized.
Training and Development Costs
The Company defers preoperating expenses of new aircraft fleets ( principally training) and amortizes such costs
over future periods to be benefited, generally five years.
Pension Plans
The Company has several pension plans covering substantially all of its employees. The policy is to fund pension
costs accrued which. includes the amortization of prior service costs over a period of forty years.
Taxes on Earnings
Taxes are provided for all items included in the statement of earnings regardless of the years when such items
are reported for tax purposes. Deferred income taxes result primarily from accelerated depreciation methods and
non-capitalization of interest costs related to aircraft acquisitions for tax purposes.
Since 1969, the Company has used the flow-through method of accounting for the investment credit. Investment
credits not applied on tax returns are offset against deferred income taxes to the extent they are applicable to
deferred taxes becoming payable in the carryover periods. o change has been made in accounting for investment
credits arising prior to 1969 which are amortized over eight years from the dates the credits arose.
Earnings Per Share
Earnings per share are ba ed on the average number of shares of Common Stock outstanding during each year.
Share issuable upon exercise of stock options and under the Employee Stock Purchase Plan are excluded from
th computation since their effect is not significant.
December 31
Note B - Long-Term Debt 1972 1971
1972 Revolving Credit Agreement with banks provides for revolving credit of $250
million reducing $20 million quarterly beginning July 1, 1976 and terminates
April 1, 1979. Interest on funds borrowed is at J~% above prime commercial loan
rate prior to July 1, 1976 and
% above thereafter (interest rate currently 67i%
) $ 32,000,000
1972 Term Credit with banks is payable $12.5 million quarterly beginning April
1, 1981 and terminates January 1, 1983. Interest is based on a formula related to
prime commercial loan rates and is currently 7.15%
; however, total interest paid
shall not exceed TJ~% per annum on borrowings over the term of the loan 100,000,000
1968 Revolving Credit Agreement with banks paid during 1972; interest at ;i%
above prime commercial loan rate _ ......... .
Note purchase agreements with twelve insurance companies are payable $3,000,000
annually and terminate on October 1, 1978. Interest is at 6% per annum. Certain
optional prepayments at par are permitted. The agreements contain certain other
provisions with respect to redemption as a whole, but not from borrowed funds,
at premiums not to exceed 2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000,000
Credit agreements with aircraft and aircraft engine manufacturers provide for
financing of purchases from those manufacturers through the issuance of five-
year notes to aggregate not more than $60,000,000 . . . . ...... .
Less amounts due within one year included in current liabilities
60,000,000
211,000,000
3,000,000
$208,000,000
$
175,000,000
22,000,000
58,500,000
255,500,000
3,000,000
$252,500,000
The Company had complied with the covenants of tl1e debt agreements at the end of botl1 years. The payment
of dividends is limited to $50,000,000 plus 75% of net earnings ( as defined ) from January 1, 1973.
The aggregate repayment of the outstanding long-term debt over the years 1974 tl1rough 1977 is $3,000,000,
$26,915,000, $37,585,000 and $4,500,000, respectively.
Note C - Stockholders' Equity
Cumulative Preferred Stock, $25 par value:
Authorized ....
Issued December 31
Common Stock options for officers and employees at prices ranging from $32.375/
36.625 a share which were not less than 100% of market at date of grant:
Outstanding . . . . . . . . . . . . . . ....... .
Became exercisable during year . . . . . . . . . . .. . ....... .
Exercised . ...... .
Exercisable at end of year ( options for 55,752 shares lapsed January 29,
1973)
Common shares reserved for additional stock options and/ or the Employee Stock
Purchase Plan at December 31 . . . .....
1972
1,000,000
None
69,986
4,300
1,782
69,986
340,150
Shares
1971
1,000,000
one
71,768
24,167
None
67,468
792,748
17
1 '
I
Note C - Stockholders' Equity (Cont'd)
The Northwest Airlines' 1968 Employee Stock Purchase Plan provides for the sale of Common Stock to eligible
employees through payroll deductions of up to 10% of their salary not to exceed $3,000 a year. The sale price is
90% of the highest price of the stock on the New York Stock Exchange on specified annual dates. The plan
terminates May 19, 1973.
Note D - Commitments
At December 31, 1972 the Company has contracted to purchase jet aircraft for delivery in 1973 through 1975
which, with spare engines, will require expenditures of $422,120,000 ($290,060,000 at December 31, 1971). Of this
amount, $74,117,000 has been deposited with manufacturers at December 31, 1972 and approximately $221,000,000,
$94,000,000 and $33,003,000 become payable during the next three years, respectively.
As of December 31, 1972 annual rental payments of approximately $8,100,000 were required under various lease
agreements for periods up to thirty-seven years covering airport facilities; ticket offices, etc.
Note E - Taxes on Earnings
The provision for taxes on earnings consists of the following:
Year Ended December 31
Current: 1972 1971
Operating loss carryback for tax purposes ($11,643,500) ($18,192,100)
Reduction of refund for limitation of investment credits utilized in prior years . 5,469,900 2,797,700
Deferred:
6,173,600) 15,394,400)
Provision 18,897,000 21,765,700
Unapplied investment credit:
Flow-through 3,897,700) 8,744,600)
Arising from operating loss carryback . 5,469,900) 2,797,700)
9,529,400 10,223,400
Deferred investment credit being amortized over eight years 3,785,100) 4,390,000)
($ 429,300) ( $ 9,561,000)
Investment credits not applied on tax returns but offset against deferred income taxes at December 31, 1972 will
expire $8,939,200 - 1978, $6,225,800 - 1979 and $5,744,900 - 1980.
Note F - Pension Plans
Total pension expense was $8,397,778 ( 1971- $8,557,205). As of the latest valuation date, the total amount of
fund assets was sufficient to cover vested benefits.
Note G - Depreciation and Amortization
Provision for depreciation of aircraft and related flight equipment approximated $72,874,000 (1971- $73,424,000).
Upon abandonment of the SST aircraft development project by the United States Government during 1971, the
Company's prior year costs of $3,300,000 were refunded and were credited to reduce amortization expense for
1971 in accordance with Civil Aeronautics Board accounting requirements.
Note H - Mutual Aid Agreement
On February 27, 1973 the Civil Aeronautics Board reaffirmed the Mutual Aid Agreement among the airlines.
To the Stockholders and Board of Directors
Northwest Airlines, Inc.
Saint Paul, Minnesota
We have examined the financial statements of Northwest Airlines, Inc. and subsidiaries for the years ended
December 31, 1972 and 1971. Our examinations were made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and such other auditing procedures as
we considered necessary in the circumstances.
In our opinion, the accompanying statements 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, 1972 and 1971 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 27, 1973
Any person who either owns, as of December 31 of the year preceding issuance of this annual report, or
subsequently acquires, beneficially or as hustee, more than 5 per centum, in the aggregate, of any class of the
capital stock or capital of the air carrier, shall file with the Civil Aeronautics Board (CAB) a report containing
the information required by Section 245.12 of the CAB's Economic Regulations on or before April 1, as to capital
stock or capital owned as of December 31 of the preceding year, and, in the case of stock subsequently acquired,
a report under Section 245.13 of such Economic Regulations, within 10 days after such acquisition, unless such
person has otherwise filed with the CAB a report covering such acquisition or ownership.
A bank or broker which holds, as trustee, more tl1an 5 per centum of any class of the capital stock or capital of an
air carrier to the extent that it holds shares on the last day of any quarter of a calendar year, shall file with
the CAB, within 30 days after the end of the quarter, a report in accordance with the provisions of Section
245.14 of the CAB's Economic Regulations. Any person required to report under the CAB's regulations who
grants a security interest in more than 5 per centum of any class of the capital stock or capital of tl1e air carrier
shall, within 30 days after granting such security interest, file with the CAB a report containing tl1e information
required in Section 245.15 of the CAB's Economic Regulations.
Any stockholder who believes that he may be required to file such a report may obtain further information by
writing to the Director, Bureau of Operating Rights, Civil Aeronautic Board, Washington, D. C. 20428.
l9
NORTHWE;ST AIRLINES, INC. AND SUBSIDIARIES
( Dollars in thou ands except per share figures)
Operating Revenues 1972t 1971 t 1970t 1969 1968 1967 1966 1965 1964 1963
Passenger $ 277,891 $ 331,966 $ 260,335 $ 350,504 $ 301,277 $ 275,873 $ 216,239 $ 198,457 $ 163,807 $ 135,222
Cargo . . . . . . . 34,694 39,641 30,053 51,006 43,902 38,118 29,515 24,779 18,402 13,745
fail 13,309 19,443 18,958 29,386 28,605 26,898 22,557 17,421 15,313 14,233
Charter and Other Transportation . .... . . . 20,009 31,588 20,800 35,090 41,060 41,799 39,205 21,851 12,965 6,442
1utual Aid Agreement . 4.
3,629 (462) 46,325 (509) 2,491 (717) (21) (12)
Non transport . ...... . . ... . 2,969 3,343 2,569 2,461 1,446 1,291 1,312 1,207 1,144 (842)
Total Operating Revenues $ 392,501 $ 425,519 $ 379,040 $ 467,938 $ 416,290 $ 383,979 $ 311,319 $ 262,998 $ 211,610 $ 168,788
Operating Expenses
Depreciation ::md Amortization . ..... .. ... . $ 81,054 $ 77,245 $ 69,173 $ 60,833 $ 49,817 $ 41,252 $ 33,195 $ 24,011 $ 22,852 $ 19,159
Other 296,348 330,108 258,784 324,979 268,529 229,969 177,469 153,140 135,627 123,713
- - -- - - -
Total Operating Expenses $ 377,402 $ 407,353 $ 327,957 $ 385,812 $ 318,346 $ 271,221 $ 210,664 $ 177,151 $ 158,479 $ 142,872
Operating Income . . . . . . . . .
$ 15,099 $ 18,166 $ 51,083 $ 82,126 $ 97,944 $ 112,758 $ 100,655 $ 85,847 $ 53,131 $ 25,916
Other Income and (Deductions) - Net . . . . . . .
. . . . . . . . . 2,154 (6,366) (6,523) (1,153) (3,220) (2,391) (1,243) 224 (1,125) (4,166)
- - - - - -
Earnings Before Taxes . . . ..... $ 17,253 $ 11,800 $ 44,560 $ 80,973 $ 94,724 $ 110,367 $ 99,412 $ 86,071 $ 52,006 $ 21,750
Income Taxes (429 ) (9,561) 121 29,507 $ 44,673 51,651 46,276 40,377 25,220 11,297
- - -
Net Earnings
Io o
$ 17,682 $ 21,361 $ 44,439 $ 51,466 $ 50,051 $ 58,716 $ 53,136 $ 45,694 $ 26,786 $ 10,453
Earnings per Average Share As Reported Each Year c 1 J $ .83 $ 1.01 $ 2.11 $ 2.55 $ 5.47 $ 6.42 $ 5.81 $ 9.99 $ 5.86 $ 5.73
Cash Dividends . . . . . . . . 9,620 9,518 9,465 9,117 7,320 6,405 5,490 3,657 2,602 1,823
Dividends per Share As Paid Each Year ... . .45 .45 .45 .45 .80 .70 .60 .80 .60 1.00
Stockholders' Equity 492,837 477,054 465,210 426,797 306,717 263,986 212,727 165,081 122,960 68,436
1 umber of Shares Outstanding at End of Year 21,604,136 21,149,756 21,149,756 20,914,272 9,149,628 9,149,626 9,149,626 4,574,813 4,568,634 1,824,452
Book Value per Share at End of Year , 1 J ... $ 22.81 $ 22.56 $ 22.00 $ 20.41 $ 33.52 $ 28.85 $ 23.25 $ 36.08 $ 26.91 $ 37.51
Recomputed per Share Figures After Stock Splits: <2 J
Earnings per Average Share czi .
. . . . . . . . . .83 1.01 2.11 2.55 2.74 3.21 2.90 2.50 1.47 .72
Dividends per Share (2)
.45 .45 .45 .45 .40 .35 .30 .20 .15 .12
Book Value per Share at End of Year c2 J ... . . . . . . . . 22.81 22.56 22.00 20.41 16.76 14.43 11.62 9.02 6.73 4.69
Assets and Long-Term Debt
Flight Property at Cost $ 1,008,041 $ 1,012,568 $ 929,181 $ 697,938 $ 582,646 $ 467,859 $ 401,476 $ 304,072 $ 219,523 $ 176,655
Flight Property at et Book Value 682,020 709,433 668,129 492,241 424,522 346,029 311,803 233,858 160,925 127,074
Total Assets 920,418 944,302 923,126 742,7.32 627,538 481,206 422,040 333,311 237,226 196,765
Long-Term Debt .. ...... 208,000 252,500 260,915 112,000 160,000 85,000 96,000 72,000 45,000 64,996
Unit Expenses
Per Available Ton-Mile .. 16.9 14.5 18.0 15.2 14.6 14.5 15.6 16.4 18.5 21.7
Per Revenue Ton-Mile .. . . . . . 49.6 42.1 43.5 34.5 30.8 ,30.3 30.1 33.0 39.7 46.8
Per Cent of Operating Revenues 96.2% 95.7% 86.5% 82.4% 76.5% 70.6% 67.7% 67.4% 74.9% 84.6%
Statistics - Scheduled Services
Revenue Plane-Miles ( 000) 79,025 100,992 83,177 123,966 107,646 93,395 67,780 61,653 52,157 45,356
vaila ble Seat-Miles ( 000) . . . . .... 12,963,054 15,614,614 10,234,060 13,504,111 10,840,758 9,198,150 6,773,257 6,140,717 5,129,944 4,305,147
Revenue Passenger- files ( 000 ) 4,565,618 5,553,043 4,506,256 6,208,725 5,458,128 4,901,520 3,699,851 3,303,809 2,668,812 2,179,208
Passenger Load Factor 35.2% 35.6% 44.0% 46.0% 50.3% 53.3% 54.6% 53.8% 52.0% 50.6%
Revenue Passengers Carried .. 5,150,636 6,089,273 4,682,812 7,517,780 7,173,805 6,489,295 4,963,275 4,593,462 3,663,077 2,911,914
Freight and Express Ton-Miles ( 000) 150,973 161,345 110,215 198,494 169,416 141,175 108,914 82,715 55,100 39,417
Total Revenue Ton-Miles ( 000) 672,035 813,403 655,339
~
942,050 836,085 709,165 533,556 452,553 351,886 284,732
Statistics - Total Operations
Revenue Plane-. liles ( 000) ... . . . . . . 84,098 110,045 89,938 135,563 121,077 106,197 77,715 67,125 55,477 47,207
Available Ton-Miles (000) 2,236,069 2,806,407 1,819,439 2,535,137 2,186,234 1,864,128 1,348,983 1,079,832 856,612 657,761
t Sbikcs adversely affected 1970 and 1972 and the strike recovery period of 1971.
'
11 Per share figures reflect the increase in outstanding shares resulting from stock issues in 1964, 1969, 1970 and 1972.
(Z)The stock was split "two-for-one" in 1964, 1966 and 1969. The recomputations in this section are shown to provide
comparability 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.
20
21
3a.m.
22
NON-STOP TO THE ORIENT
SOUTH
CHINA
SEA
PACIFIC
BONIN
ISLANDS
VOLCANO ISLANDS
OCEAN
- - ROUTES OPERATED
MARIANA
ISLANDS
MARCUS
ISLAND
- - - CHINESE MAINlANO,ROUTES SUSPENDED
CAROLINE
ISLANDS
n
ROUTE MAP OF
NORTI-IWEST ORIENT
NATIONAL PARK SYSTEM
NORTHWEST ORIENT AIRLINES ROUTES
0. CITIES SERVED BY NORTHWEST ORIENT AIRLINES
* STATE CAPITALS, CITIES
D NATIONAL MONUMENTS
PACIFIC
OCEAN
saskatche-kt--an
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~ Reg ina
Med icine Hat 5 am
C
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---- - ....
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Puen . ...
Vall . a
M an
n
pe Cod
CONNECT ING SERVICE
Lakelan
St. Petersburg:
Tampa i
Clearwat~r
Bradentop
Saraso'r-t
Fort rii4\ er
Gulf Of Mexico EVERG~ AoEs
: N p
KeyWer
~ ban
---...,,,,,,
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BEAUFORT SEA
.......
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,
.....
_ .....
______
__._
__________ ,_
_______ _
NWA INVOLVED IN FOUR ROUTE CASES IN '72
During 1972, the Civil Aeronautics Board continued to
view new route case investigations cautiously.
Four proceedings in which orthwest Airlines has a
substantial interest did move forward late in the year,
however. They are:
Service to Saipan and Guam from Tokyo is involved
in one important route case. WA proposes unique
group excursion fares and the regular use of wide-
bodied jet equipment among the applicants.
Award of this authority to Northwest Airlines could
help compensate the Company for the loss of local
traffic rights between Tokyo and Okinawa which
occurred when Okinawa reverted to the Japanese early
in 1972.
An investigation to add a second carrier in the Miami-
Los Angeles non-stop market began in late December.
In this case, we have stressed WA's ability to com-
pete well in the Miami-California market and to link
Miami to the Orient.
Atlanta-Detroit/ Cleveland/ Cincinnati ervice is being
considered currently, with competitive non-stop service
to be authorized in each of the markets which are
currently served on a monopoly basis.
orthwest Airline has concentrated its presentation on
the Atlanta-Detroit and Atlanta-Clevelan l market
noting our prior presence in these cities and citing
the advantages which would follow from closing the
gap b tween the three cities.
orthwest is also an applicant in a reopened route
proceeding centered mainly on Omaha-Chicago and
Omaha-California authority. We are seeking the
opportunity to serve both Omaha and Des foines on
east-west routings. 23