M P A N Y 
 General Offices San Francisco Airport So. San Francisco, Calif. 
OFFI S LELAND HAYWARD . . Chairman of the Board of Director.r 
JOHN H. CONNELLY.  President and General Manager 
BOARD OF 
DI ECTORS 
T. R. MITCHELL  Vice President 
HARRY S. WHITE  .  Vice President 
ALWIN W. JOHNSON . Treasurer 
WALTER ROCHE . . Secretary 
FLOYD HENDRICKSON  Assistant Secretary 
Bert Allenber g 
John H. Connelly 
Leland Hayward 
Floyd Hendrickson 
Alwin W. Johnson 
Daniel O'Shea 
Walter Roche 
HarryS. White 
AUDITORS Price, Waterhouse&Co. 
3 51 California Street, San Francisco, California 
EGIST R Walter Roche 
TRA SFE 
309 First National Bank Building, Phoenix, Arizona 
NT 
 We are pleased to present here for your 
consideration the eleventh annual report 
of Southwest Airways Company covering 
the calendar year 1951. The Company has 
now been operating for over five full years 
under a Certificate of Public Convenience 
and Necessity issued by the Civil Aeronau- 
tics Board for the transportation by air of 
passengers, U. S. Mail, express and freight 
Operating Revenues: 1951 
Passenger, express, 
freight, charter, etc. __________ $1,601,833 
Mail _________ 
___________ 
____________________ 789,131 
Total operating revenues $2,390,964 
Operating Expenses __________________ 2,352,265 
Operating Profit ________________________ $ 38,699 
Non-operating income 
(expense) -------------------------- 56,932 
Net Profit Before Federal 
Income Taxes------------------------ $ 95,631 
Federal income taxes ____________ 22,400 
Net Profit After Taxes ______________ $ 73,231 
to the stockholders and employees of 
Southwest Airways Company 
over three route segments serving 3 3 cities 
in California and Oregon. 
Net profit for the year 1951, after Federal 
income taxes, amounted to $73,230.79. The 
following table shows the financial history 
of Southwest's operations since the Com- 
pany's inception as a certificated air carrier 
on December 2, 1946: 
1950 1949 1948 1947 
$1,269,857 $1,148,588 $ 962,421 $ 710,451 
943,888 1,249,992 1,401,332 1,504,510 
$2,213,745 $2,398,580 $2,363,753 $2,214,961 
1,968,883 2,263,878 2,283,989 2,172,077 
$ 244,862 $ 134,702 $ 79,764 $ 42,884 
(16,856) (481) (15,602) (37,403) 
$ 228,006 $ 134,221 $ 64,162 $ 5,481 
92,533 53,078 36,100 
$ 135,473 $ 81,143 $ 28,062 $ 5,481 
2 
 3 
Analysis of the summary of earnings will reveal that 
for the year 1951 the Company's revenue from non- 
mail sources (passengers, express, freight and char- 
ter) increased $331,976, or 26.14% over the year 
1950; compensation for carrying U. S. mail reflected 
a (avorable decrease of $154,757 or 16.40%. Due to 
the inflationary spiral, operating expenses increased 
$383,382 or 19.47% over the year 1950. The trend 
of inueased operating expenses was first felt by the 
Company in the early summer of 1951, and rising 
prices coupled with the impact of the renegotiation 
of labor contracts at the year end, has continued this 
trend into 1952. The problem of rising costs, which 
is common to all industries in the present economy, is 
receiving constant attention from the management 
and every effort is being made to keep costs to a mini- 
mum consistent with safe and sound operating proce- 
dures. Although it is one of the Company's major 
efforts to achieve self-sufficiency and independence 
from government support in the form of mail pay, the 
inflationary conditions mentioned above are beyond 
the control of management. For this reason the Com- 
pany felt compelled to file a petition with the Civil 
Aeronautics Board for an increased mail rate to be- 
come effective February 1, 1952. The following sum- 
mary shows the Company's break-even point before 
mail pay for the past five years: 
PER REVENUE MILE FLOWN 
1951 1950 1949 1948 1947 
Operating revenues ( exclusive 
of mail pay)------------------------------- $ .6340 $ .5346 $ .4747 $ .4071 $ .3832 
Operating expenses ______________________ .9309 .8289 .9356 .9662 1.1715 
Amount of mail pay needed 
to break even ______________________________ $ .2969 $ .2943 $ .4609 $ .5591 $ .7883 
  
1951 1950 1949 ).948 1947 
Revenue miles flown .................... 2,526,630 2,375,224 2,419,695 2,363,827 1,854,117 
Revenue passenger miles 
Flown in scheduled service ...... 26,332,303 22,236,008 20,947,484 18,046,778 15,348,113 
Passenger load factors 
(21 seat basis)-........................... 51.41% 
Number of passengers carried: 
Scheduled service--- 135,158 
Charter service .......................... 2,663 
Total passengers carried ...... 137,821 
Mail ton miles ................................ 62,909 
Express ton miles .......................... 46,480 
Freight ton miles .......................... 125,243 
Excess baggage ton miles .............. 8,660 
It will be apparent from the above summary of opera- 
tions that the efforts of Southwest Airways have a 
significance not only in financial terms, but in the 
ever-widening range of the Company's services to 
people. In 1951 the Company transported 135,158 
persons in scheduled air carrier service, a gain of ap- 
proximately 14% over the previous year. Revenue 
45.S0o/o 41.56% 36.06% 39.23o/o 
118,860 114,573 97,424 83,994 
3,111 1,345 530 1,082 
121,971 115,918 97,954 85,076 
46,406 51,136 45,892 35,146 
49,394 34,199 31,856 32,177 
126,773 90,177 75,064 10,431 
7,495 6,746 6,142 5,142 
passenger miles flown increased by over 18o/o, indicat- 
ing not only an increase in the number of passengers 
carried, but reflecting a growth in the length of aver- 
age passenger trip. The amount of mail carried by 
Southwest increased from 46,406 ton-miles in 1950 
to 62,909 ton-miles in 1951-an increase of 35.56o/o. 
4 
 S-,,,,,,,.,,.bwap 
Simplified Comparative Statement of 
INCOME and EXPENSES 
Amount Received From: 
Revenue Doller Passengers ...................................... 
Express .......................................... 
Freight ........................................... 
Excess baggage .............................. 
Pessengers 61 % 
Charter ........................................... 
Incidental revenues ........................ 
Profit on disposition of property .... 
Interest earned ............................... 
Air Mail 32% Other income ................................. 
Mail ............................................... 
All Other, 4% Gross Income ....................... 
Disposition of Gross Income: 
Wages and salaries ........................ 
Where It Went 
Gasoline and oil ............................. 
Telephone, telegraph, teletype ...... 
0 ther materials, parts and 
services ....................................... 
Rentals and landing fees ................ 
Insurance ....................................... 
Travel and incidental ..................... 
Advertising and publicity ............. 
Depreciation .................................. 
Taxes other than Federal 
income taxes .............................. 
Amortization of route 
development expenses ............... 
Federal income taxes ..................... 
Retained for Use Depreciation, 4% Total Expenses ..................... 
in the Business, 
3% 
Balance Retained for Use in the 
Development of the Business ........ 
Amount 
$1,452,523 
16,857 
47,803 
5,671 
55,829 
23,150 
84,998 
7,288 
1,682 
$1,695,801 
789,131 
$2,484,932 
$1,161,636 
291,419 
85,733 
303,555 
104,166 
86,689 
63,650 
69,168 
103,727 
90,174 
29,384 
22,400 
$2,411,701 
$ 73,231 
1951 
Per $1.00 
of Revenue Amount 
$ .5845 $1,139,969 
.0068 18,877 
.0192 43,925 
.0023 4,056 
.0225 41,898 
.0093 21,132 
.0342 1,563 
.0029 3,612 
.0007 7,032 
$ .6824 $1,282,064 
.3176 943,888 
$1.0000 $2,225,952 
$ .4675 $1,013,610 
.1173 243.729 
.0345 78,106 
.1222 215,050 
.0419 65,323 
.0349 69,994 
.0256 52,320 
.0278 83,572 
.0417 82,256 
.0363 72,054 
.0118 21,932 
.0090 92,533 
$.9705 $2,090,479 
$ .0295 $ 135,473 
1950 
Per$l.OO 
of Revenue 
$ .5121 
.0085 
.0198 
.0018 
.0188 
.0095 
.0007 
.0016 
.0032 
$ .5760 
.4240 
$1.0000 
$ .4554 
.1095 
.0351 
.0966 
.0293 
.0314 
.0235 
.0375 
.0369 
.0324 
.0099 
.0416 
$ .9391 
$ .0609 
 Airline operations are conducted with a modern fleet of 10 Douglas DC3 aircraft, eight of 
which are equipped with 28 new seats each and two with 27 seats each. At the year end this 
flight equipment, exclusive of spare engines, radios, propellers, parts and assemblies, was stated 
on the records at an amortized value of $271,179. While the market value of these 10 aircraft 
is subject to fluctuation, the management maintains hull insurance coverage on the fleet of 
$850,000. The Company also operates complete aircraft maintenance, repair and overhaul fa- 
cilities at the San Francisco Airport for its own fleet and for the aircraft of others. 
Several of the Company's route development cases before the Civil Aeronautics Board were 
resolved recently. Most important to the continued success of the Company was the action of 
the Board in extending Southwest's Certificate of Public Convenience and Necessity to Septem- 
1:-er 30, 1954, and suspending United Air Lines, Inc., from serving Santa Barbara, Monterey, 
Eureka and Red Bluff. United has appealed the issue of their suspension to the Seventh U. S. 
Circuit Court of Appeals, and a decision will probably be rendered early this summer. Other deci- 
sions by the Civil Aeronautics Board involving Southwest included the denial of a contemplated 
merger with West Coast Airlines, Inc., and the award of a route between Los Angeles, Cali- 
fornia, and Phoenix, Arizona, to Bonanza Air Lines, Inc. This latter decision was followed with 
a Board order of investigation "to determine whether the integration of the routes of Southwest 
and Bonanza into a single unified system by means of merger, consolidation, acquisition of con- 
trol, route transfer or in any other lawful manner would be in the public interest and in accord- 
ance with the public convenience and necessity as defined in Section 2 of said Civil Aeronautics 
Act." Preliminary and exploratory discussions have already been held in accordance with the 
Board's order. 
The Ninth U.S. Circuit Court of Appeals is now considering whether or not the Civil Aero- 
nautics Board has the authority to suspend the service of Western Air Lines at El Centro, 
California, and Yuma, Arizona, and to substitute Bonanza Air Lines. Southwest has also peti- 
tioned the Circuit Court of Appeals in this case to rule on the Civil Aeronautics Board's au- 
thority to rescind the Certificate of Public Convenience and Necessity which was issued to 
Southwest in December, 1949, to operate between Los Angeles, California, and Phoenix, Arizona. 
The outlook for 1952 in the local service airline industry is one of widening opportunities and 
especially so for Southwest Airways which serves an area that still continues to grow in popu- 
lation and industry. 
No annual report is complete without acknowledging the splendid work and cooperation of 
Southwest's employees, whose constant efforts are so important to the success of our Company. 
President 
6 
 7 
ASSETS 
CURRENT ASSETS: 
Cash in banks and on hand _____________________________________ _ 
U. S. Government securities, at cost .. ---- 
Accounts receivable: 
U. S. Government-mail, passengers and other 
Traffic and agents _ 
______________________________________________ _ 
Miscellaneous, less allowances for possible 
losses in collection ( 1951-$704. 70; 
1950-$1,248. 58)-------------------------------------------- 
Employees ------------------------------------------------------ 
Inventories of materials and supplies, motor 
fuel, and customers' work in process, at 
approximate cost------------------------------------------------ 
INVESTMENTS IN STOCKS OF SERVICE 
ORGANIZATIONS, at cost--------------------- 
PROPERTY AND EQUIPMENT, at cost: 
Flight equipment .. --------------------------------------- 
Ground and shop equipment-------------- 
Leasehold improvements----------------- 
Other ------------------------------------------------------ 
Less-Accumulated depreciation-- 
DEFERRED CHARGES: 
Prepaid insurance and taxes .. --- 
Extension and development expense ................... . 
Engine overhaul in process, etc ............................ . 
BA LAN U E 
December 31 
1951 
$ 87,474.18 
500,022.79 
188,786.63 
114,113.22 
30,216.02 
3,669.19 
102,753.55 
$1,027,035.58 
$4,321.00 
$1,188,517.33 
135,915.58 
124,697.63 
156,696.73 
$1,605,827.27 
1,119,485.48 
$486,341.79 
$18,838.96 
55,073.49 
14,403.31 
$88,315.76 
$1,606,014.13 
1950 
$ 299,569.43 
299,473.84 
194,013.37 
97,086.46 
30,183.33 
1,323.08 
80,424.77 
$1,002,074.28 
$511.00 
$1,183,974.30 
107,652.49 
120,697.22 
94,064.48 
$1,506,388.49 
1,136,448.33 
$369,940.16 
$ 33,027.23 
72,597.78 
25,437.21 
$131,062.22 
$1,503,587.66 
S D E E T 
LIABILITIES 
CURRENT LIABILITIES: 
Accounts payable ...... ----- ... 
Taxes collected or withheld from others---~--------- 
Accrued expenses.---------------- 
Transportation sold, not yet used or refunded ______ . _____ 
Federal taxes on income (estimated)- 
RESERVE FOR AIRCRAFT ENGINE OVERHAUL.-. 
CAPITAL STOCK AND SURPLUS: 
Common stock: 
Authorized, 10,000,000 shares of 50c par 
value per share (Note B) 
Issued: 
December 31, 1950-651,610 shares---- 
December 31, 1951-655,985 shares-------- 
Paid-in surplus (Note B)---------------------------- 
Earnings retained for use in the business, 
per accompanying statement--.. ~~ 
1951 
$ 274,456.04 
47,523.27 
60,137.64 
9,058.54 
22,400.00 
$ 413,575.49 
$ 42,743.07 
$ 327,992.50 
234,600.50 
. 587,102.57 
$1,149,695.57 
$1,606,014.13 
December 31 
1950 
$ 196,825.63 
37,424.94 
41,966.09 
13,305.27 
94,013.51 
$ 383,535.44 
$ 49,099.94 
$ 325,805.00 
231,275.50 
513,871.78 
$1,070,952.28 
$1,503,587.66 
8 
 9 
of INCOME and EARNINGS 
RETAINED FOR USE in the BUSINESS 
Operating revenues: Year ended December 31 
Passenger ........................................................................... _ 
Mail. ...... - 
Express ............................................................................... . 
Freight ................................................................................ . 
Charter ............................................................................... . 
Excess baggage .................................................................. . 
Other .................................................................................. . 
Total operating revenue ........................................... . 
Operating expense: 
Flying operations .............................................................. . 
Flight ~q~ipmen~ mainte?ance-direct ........................... . 
Deprec1atton-fl1ght equipment ...................................... . 
Ground operations ............................................................ . 
Ground and indirect maintenance .................................... . 
Passenger service ............................................................... . 
Traffic and sales ................................................................. . 
Advertising and publicity ................................................. . 
General and administrative ......................................... a  
Depreciation-ground equipment ................................... . 
Total operating expense ........................................... . 
Operating profit ........................................................ . 
Other income: 
Discounts earned ............................................................... 
Interest ............................................................................... . 
Net gain on disposition of equipment ............................. . 
Other .................................................................................. . 
Other deductions: 
Interest ............................................................................... . 
Extension and development .............................................. . 
Other .................................................................................. . 
Provision for estimated federal taxes on income ................ . 
Net income for year .................................................. . 
Earnings retained for use in the business, 
beginning of year .............................................................. . 
Earnings retained for use in the 
business, end of year .............................. , .............. . 
1951 
$1,452,522.93 
789,131.36 
16,857.02 
47,802.59 
55,828.51 
5,671.23 
23,149.98 
$2,390,963.62 
$ 735,296.34 
198,509.33 
78,776.99 
$1,012,582.66 
$ 429,086.70 
165,655.26 
107,868.49 
314,708.48 
70,742.23 
226,670.67 
24,949.95 
$1,339,681.78 
$2,352,264.44 
$ 38,699.18 
$ 1,682.02 
7,287.76 
84,998.48 
$ 93,968.26 
$ 1,645.37 
29,384.35 
6,006.93 
$ 37,036.65 
$ 95,630.79 
22,400.00 
.$ 73,230.79 
513,871.78 
$ 587_ 
,102.57 
1950 
$1,139,969.14 
943,888.17 
18,876.53 
43,925.17 
41,897.99 
4,056.36 
21,132.04 
$2,213,745.40 
$ 609,883.90 
173,418.87 
56,928.45 
$ 840,231.22 
$ 333,900.90 
142,953.25 
90,807.50 
261,842.13 
86,954.44 
186,866.23 
25,327.30 
$1,128,651.75 
$1,968,882.97 
$ 244,862.43 
$ 1,603.14 
3,612.44 
1,562.67 
5,429.31 
$ 12,207.56 
$ 1,272.82 
21,932.32 
5,859.30 
$ 29,064.44 
$ 228,005.55 
92,532.50 
$ 135,473.05 
378,398.73 
$ 513,871.78 
 TO FINANCIAL STATEMENTS 
NOTE On January 29, 1952, 
the Company's cer- 
tificate of public convenience and neces- 
sity, issued by the Civil Aeronautics 
Board, was amended so as to continue 
in effect up to and including September 
30, 1954. Also, on January 29, 1952, 
the Civil Aeronautics Board suspended 
the certificate of United Air Lines, Inc., 
up to and including September 30, 
1954, in so far as it authorizes service 
to Santa Barbara, Monterey, Eureka and 
Red Bluff, California; this would result 
in Southwest Airways Company having 
the exclusive right to furnish air trans- 
portation service to these points. United 
Air Lines, Inc., has filed an appeal in 
the 7th Circuit Court of Appeals to pre- 
vent the Civil Aeronautics Board from 
suspending United's authority to serve 
these points. 
NOTE Stock options have 
been granted to cer- 
tain officers and employees of the Com- 
pany; these options, which entitle the 
holders to purchase 15,425 shares of 
unissued common stock of the Company 
PRICE,WATERHOUSE & Co. 
To the Board of Directors of 
Southwest Airways Company 
351. CALIFORNIA STREET 
SAN" FRANCISCO 4 
March 14. 1952. 
In our opinion, the accompanying financial 
statements, together with the explanatory notes thereto, 
present fairly the position ~f Southwest Airways Company 
as of December 31, 1951, and the results of its operations 
for the year then ended, in conformity with generally 
accepted accounting principles applied on a basis consist- 
ent with that of the preceding year. Our examination of 
such financial statements was made in accordance with gen- 
erally accepted auditing standards and accordingly included 
such tests of the accounting records and such other 
auditing procedures as we considered necessary in the 
circumstances. 
Price, Waterhouse & Co. 
at $1.26 per share, expire on December 31, 1952. Similar 
options on 4,375 shares were exercised during 1951 and the 
proceeds of $5,512.50 was credited $2,187.50 to capital 
stock account and $3,325 to paid-in surplus. 
N O T E Because of increased operating costs, the. 
Company has petitioned the Civil Aero 
nautics Board for an increase in mail pay, effective February 
1, 1952. 
10 
 CRESCENT 
CITY 
ARCATA- 
EUREKA 
FT. BRAGG 
MENDOCINO 
UKIAH 
SANTA 
ROSA 
YREKA 
REDDING 
RED BLUFF 
CHICO 
OROVILLE 
MARYSVILLE 
YUBA CITY 
SACRAMENTO 
VALLEJO-NAPA 
OAKLAND 
SAN FRANCISCO 
WATSONVILLE 
SANTA CRUZ 
MONTEREY-CARMEL 
COALINGA 
ROUTE MAP OF