PACIFIC NORTHERN AIRLINES, INC. 
G. P. O'GRADY, Washington, D. C. 
JOHN A. Cu I GHAM, Seattle, Washington 
PAUL PoRZELT, ew York, ew York DIRECTORS 
R. A. Row A , Los Angeles, California 
M. B. KIRKPATRICK, Anchorage, Alaska 
C. W. NELSO , Seattle, Washington 
A. G. WOODLEY, Seattle, Washington 
A. G. WOODLEY, President and General Manager 
H. A. OLSEN, Vice President-Traffic and Sales OFFICERS 
JOHN A. CUNNINGHAM, Vice President-Operations 
J. H. FOSTER, Vice President-Engineering and Maintenance 
C. W. ELSO , Secretary-Treasurer 
M. E. DIAMO D, Assistant Secretary 
DEAN B. HART, Assistant Secretary 
GENERAL COUNSEL: G. P. O'Grady, 1625 Eye Street, Washington, D. C. 
GENERAL OFFICES: 1626 Exchange Building, Seattle, Washington 
CITY TICKET OFFICES: Anchorage Kodiak Juneau 
Homer Cordova Portland 
Ketchikan Kenai Seattle 
AUDITORS: Lybrand, Ross Bros. & Montgomery 
TRANSFER AGENT: Bankers Trust Company, New York, New York 
REGISTRAR: Manufacturers Trust Company, New York, New York 
COMMON STOCK LISTED ON THE AMERICAN STOCK EXCHANGE 
TO THE STOCKHOLDERS OF PACIFIC NORTHERN AIRLINES, 
ITS CUSTOMERS AND PERSONNEL: 
During 1955, the 24th year of the Company's Alaskan operation and the 5th year 
of its overseas service between the States and Alaska, Pacific orthern has ' 
realized the greate t volume of traffic and the highest revenue in it~ history. This 
was possible because in early 1955 the Company strengthened its competitive 
position in the States-Alaska market with the placing in service of fast, 
pressurized Lockheed Constellation aircraft which the Company had under lease. 
With the purchase of this equipment in March of this year, the Company's 
equipment problem is stabilized and its continued growth is assured. 
In August, 1955, the Civil Aeronautics Board renewed Pacific orthern's 
States-Alaska rpute for an additional five years, and authorized the Company to 
add service on this route to Ketchikan, an important center of fishing and 
lumbering in Alaska. During the year the new $55 million pulp plant of the 
Ketchikan Pulp & Paper Company started full production, making 
Ketchikan the pulp and timber capital of the Territory. 
Although the Constellation service was not fully implemented until May, 1955, 
total operating revenues for the year increased 21 per cent over 1954. While there 
has been a substantial increase in revenues, there has been a corresponding 
increase in expense levels due to the greater amount of service rendered and 
normal reequipment costs involving engineering and development, employee 
training, tooling and modification of ground facilities necessary to 
place new type aircraft in scheduled service. 
Although the statement of income indicates a net loss of $199,671 for the year, 
it must be noted that this figure is meaningless since the Company is operating 
under an open rate of mail pay established in 1954 for a level of service 
considerably less than that now being performed. For a carrier operating under 
an open rate, the earnings figure is preliminary and does not indicate the actual 
result of the year's operation. Final adjustments are expected to be made by 
the Board, in conference with the Company, within a month, and the 
actual profit element for the past period will be determined. 
In March, hearings were conducted by the Interstate and Foreign Commerce 
Committees of the Senate and the House of Representative in Washington, D. C., 
on legislation introduced by Senator Magnuson of Washington and Delegate 
Bartlett of Alaska, propo ing amendment of the Civil Aeronautics Act of 1938 to 
require the Civil Aeronautics Board to issue permanent certificates to all holders 
of temporary certificates in Alaska, Hawaii and in the States-Alaska service. It is 
noteworthy that the Civil Aeronautics Board in both hearings presented testimony 
enthusiastically supporting this legislation. While all the routes of the Company 
within Alaska are permanently certificated for ersons, property and mail, the 
 2 
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granting of permanent status on its States-Alaska route, which is now temporary, 
would be most beneficial to the Company to permit long-range planning and 
development. This legislation is now pending before both houses of Congress, and 
your help in gaining the support of your Congressional delegation for passage of this 
legislation would be most helpful to the future development of your company. 
The management wishes to express its appreciation of the loyal cooperation and 
support of its employees, its customers and friends in helping the Company 
to secure renewal of its overseas certificate and in making the past year 
the largest traffic year in the Company's history. 
17,634,000 
Respectfully submitted, 
~~ 
President 
20 40 60 80 
60 80 
In 1955 Pacific Northern again sold its service to more passengers 
than any other airline serving the Territory of Alaska. The 92,458 
passengers carried produced a system total of 76,110,000 revenue 
passenger miles-an increase of 27.6 per cent over the 59,610,000 
total for 1954. The greatest increase in passenger traffic was over the 
States-Alaska route, and as a result each passenger travelled an average 
of 823 miles compared to an average trip of 764 miles in 1954. 
19S5 TOUR SALES 
The year 1955 ushered another basic industry into the economy of 
Alaska when tourists spent an estimated $12,000;000 in transportation, 
accommodations, food, sightseeing and other services. Your Company 
played a leading role in the promotion and advertising of Alaska as a 
REVENUE 
PASSENGER 
MILES 
(In Millions) 
 16,140,000 
16,482,000 
18,930,000 
21,203,000 
vacation area on a national scale. Promotional low-cost ''Independent Air 
Tours" and "All Inclusive" 10 to 15 day air tours were merchandised and sold 
to vacationers from pra.ctically all of the 48 states and several foreign 
countries. The Company jointly promoted tours with Thos. Cook and Sons, 
Scenery Unlimited of California, Arctic Alaska Tours, and participated in the 
development of tourist travel to Alaska with numerous other tour operators. 
CONSTELLATIONS 
The Lockheed Constellations placed in service in May of 1955 made it 
possible for the Company to effectively advertise and promote the important 
States-Alaska route, and this promotion made it feasible for the Company 
to retain its dominant position in the Alaska market. The importance of 
competitive equipment can be best illustrated by noting that States-Alaska 
passeng~r traffic declined 23 per cent in the first quarter of 1955, when DC-4 
aircraft were used exclusively, as compared to the first quarter of 1954. 
States-Alaska passenger traffic for the first quarter of 1956 has registered 
an 88 per cent gain over 1955, again pointing up the ability of the Company 
to strengthen its position when competitive factors are somewhat equal. 
AIR CARGO AND U. S. MAIL 
Air cargo traffic and excess baggage of 3,637,000 ton miles registered an 8.8 
per cent increase over 1954. The volume of mail ton miles increased from 
881,000 in 1954 to 917,000 ton miles in 1955, a 4 per cent increase. 
The system revenue load factor in 1955 increased to 66.9 per cent from 
63 per cent in 1954, and again this percentage of available space utilized is 
unsurpassed by any domestic or international carrier. 
TOT AL SYSTEM TON MILES 
AVAILABLE AND UTILIZED 
TON MILES OF REVENUE TRAFFIC 
REVENUE TONS UTILIZED - 
TOT AL AVAILABLE 
LJ 
6 9 12 
3 
 I I 
NATIONAL 
SAFETY COUNCIL 
1955 
A VIATION 
8Al'ETY 
AWARD 
The policy of the Company and the dedication of its employees 
to conduct all operations with primary attention to safety has 
resulted in a perfect record for another year. This marks the 
Company's 24th year in achieving a perfect safety record, 
and entitles the Company to again receive the Aviation 
Safety Award of the National Safety Council. 
The Company provides group insurance and medical and hospital 
benefits, the cost of which is shared jointly by the Company 
and the employees. The Company sponsors an Employee's 
Credit Union, and provides sick leave, paid annual vacations 
and free or reduced-rate transportation. 
Employee productivity, measured by total revenue ton mi]es 
of traffic per employee, increased to 24,600, as compared to 23,000 
in the previous year. This reflects continued satisfactory employee 
relationship, for which management expresses its sincere appreciation. 
KETCHIKAN 
PNA service was inaugurated on October 15, 1955 to 
Ketchikan-known as the salmon capital of the world 
and Alaska's ''First City,'' where forest, mineral and fish 
products are extensively processed. The Company 
feels that a great potential for air transportation exists 
in the Ketchikan area. Above and at left are view 
Pacific Northern's new passenger ter 
Island. View of Ketchikan water 
 PACIFIC NORTHERN AIRLINES, INC. 
STATEMENT OF INCOME AND EARNED SURPLUS 
I 
FOR THE YEAR ENDED DECEMBER 31, 1955 
OPERATING REVENUES: 
Passenger . 
Air mail . . . 
Cargo . . . . 
Excess baggage . 
Other transport service 
Incidental revenues, net . 
Total. . . 
OPERA TING WENSES: 
Flying operations . 
Direct maintenance-flight equipment . 
Ground operations . . . . . . . 
Ground and indirect maintenance . 
Passenger service . . . 
Traffic and sales . . . . . 
Advertising and publicity . 
General and administrative 
Depreciation: 
Flight equipment. . 
Ground equipment . 
Operating loss . 
OTHER INCOME-EXPENSE*: 
Gain on disposal of purchase option and other assets, net. 
Interest, net. . . . . . . . . . . . . . . . . . . 
Amortization of route extension and development costs 
Miscellaneous, net . . . . . . . . . . . . . . 
Loss before refunds of Federal income taxes 
CLAIMS FOR refunds of prior years' Federal income taxes 
Net loss . . . . . . . 
EARNED SURPLUS, January 1, 1955 . 
DEFICIT, December 31, 1955 . . . 
$4,332,866 
2,044,760 
979,340 
59,287 
30,123 
91,859 
7,538,235 
$2,923,704 
1,044,823 
977,338 
627,631 
466,718 
788,960 
111,684 
503,128 
354,991 
83,338 7,882,315 
344,080 
144,104 
12,718* 
3,887* 
2,567* 124,932 
219,148 
19,477 
199,671 
67,940 
$ 131,731 
The financial comments on page 8 are an integral part of the financial statements. 
5 
 6 
PACIFIC NORTHERN 
BALANCE SHEET December 31, 1955 
ASSETS 
Current: 
Cash. 
Receivables: 
Traffic balances 
United States Government. 
Other . . . . . . . . . 
Less, Allowance for losses . 
Claims for refunds of prior years' Federal income taxes 
Maintenance and operating supplies, at average cost . 
Prepaid expenses, mainly insurance . 
Total current assets 
Investments: 
Cash surrender value of life insurance . 
Aeronautical Radio, Inc. stock, at cost . 
Property and Equipment (at cost to the Company or predecessor): 
Flight equipment. . . . . . . . . . . . . 
Ground equipment . . . . . . . . . . . . 
Buildings and improvements to leased property 
Replacement parts for flight equipment 
Construction work in progress . . . . . . . 
Cost 
$1,834,401 
499,419 
455,074 
372,547 
5,174 
$3,166,615 
Non-operating property and equipment, net of $30,443 depreciation 
Property Acquisition Adjustment, Unamortized . . . . . . 
Route Extension and Development, net of amortization . . 
Pre-operating Expenses-Constellations, net of amortization 
Other Deferred Charges . . . . . . . . . . . . . . . . 
$ 402,124 
382,718 
23,094 
807,936 
36,684 
----- 
19,670 
1,000 
Allowances 
for 
Depreciation 
$1,554,286 
266,394 
116,533 
173,699 
$2,110,912 
The financial comments on page 8 are an integral part of the financial statements. 
$ 343,333 
771,252 
19,884 
370,284 
123,144 
1,627,897 
20,670 
1,055,703 
27,290 
130,020 
42,754 
143,907 
17,108 
$3,065,349 
AIRLINES, INC. 
(AN ALASKA CORPORATION) 
Current: 
Notes and contracts payable 
Accounts payable: 
Trade .... ... . 
LIABILITIES 
Taxes withheld or collected for benefit of taxing authorities . 
Accrued liabilities: 
Salaries and wages 
Insurance and miscellaneous . 
Interest. . . . . . . . . . 
Taxes other than Federal income taxes 
Air travel plan deposits . . . . . 
Unearned transportation revenue . 
Total current liabilities . . 
Reserve for income tax contingencies . 
Other Deferred Credits . . . . . . . 
Commitments (See financial comments) 
CAPITAL AND SURPLUS 
Common Stock, authorized 2,000,000 shares, par value $1 each, issued and out- 
standing 1,068,109 shares . . . . . . . . . . . . . . . . . . . . . . 
Paid-in Surplus, excess of net proceeds from 401,665 shares of common stock 
over par value-no change during 1955 . . . . . . . . . . . . 
Deficit, statement annexed . . . . . . . . . . . . . . . . . . . . . . . 
$ 330,279 
$ 629,947 
85,314 715,261 
108,777 
72,837 
1,593 
25,513 
1,068,109 
584,905 
1,653,014 
208,720 
11,475 
126,688 
1,392,423 
142,000 
9,643 
131,731 1,521,283 
$3,065,349 
The financial comments on page 8 are an integral part of the financial statements. 
7 
 8 
LYBRAND. Ro BRos. & MONTGOMERY 
CERTIFIED PUBLIC ACCOUNTANTS 
Pacific No rthern Airlines, Inc. 
Sea Ct le, W 
ashington 
We have examined the balanc e sheet o f 
PACIFI C NORTHERN AIRLINES , INC. 
as of December 31 , 1955 , and the related statement o f income and 
earned surplus f or the year then ended. It was not practicable t o 
confi rm the balanc es receivable from the United States G 
overnment. 
We sat i sfied ourselves as t o these balances by means o f other audit- 
ing procedures. Our examination was m 
ade l n accordance with gen- 
erally accepted audi ting s tandards, and acco rd i ngly included such 
tests o f the accounting reco rds and such o ther auditing procedures 
as we considered necessary in the c i rcumstances. 
Since February 10 , 1954 the Company has been operating 
under tempo rary rates o f m 
ail pay whi ch are subject t o increases or 
decreases retroact ive l y to tha t date by the Civ i l Aeronaut i cs Board, 
as explained i n the accompanyi ng Financial Comments regarding U. S . 
Ma il Pay. 
In our opini on , subject t o the f i nal determina tion o f rates 
o f mail pay referred t o in the preceding paragraph, the accompany ing 
bal ance sheet and statement o f i ncome and earned surplus pre sent 
f a i rly the financial posit i on o f Pacifi c Northern Ai rl ines, Inc . at 
Decem 
ber 31, 1955 , and the results o f its operations f or the year 
t hen ended, i n conformi ty with gene rally accepted ac counting prin- 
ciples appl ied on a consistent basis. 
Seattl e , W 
ashi ngton 
March 27 , 1956 
FINANCIAL COMMENTS 
U. S. MAIL PAY 
The Company is a certificated air carrier sub- 
ject to regulation by the Civil Aeronautics 
Board. Under provisions of the Civil Aero- 
nautics Act, the Company is entitled to a reason- 
able return on investment after income taxes, 
and all mail pay received under temporary rates, 
i.e., during an open period, is subject to review 
and adjustment in conference between the Board 
and the Company. Since February 10, 1954, the 
Company has been operating under temporary 
rates of mail pay which are suhje~t to adjust- 
ment retroactively to that date. Until perma- 
nent mail rates have been established the results 
of the Company's annual operations can not be 
finally determined. 
PROPERTY, PLA 'T AND EQUIPMENT 
In 1955 the Company sold two Douglas DC-4 
aircraft, which it owned, and also sold an option 
to purchase a third DC-4 which it had on lease. 
These sales, which aggregated $950,000, pro- 
duced a profit to the Company of $143,000. 
In March, 1955, the Company leased three 
Lockheed Constellation aircraft, with spare en- 
gines and accessories, at a monthly rental of 
about $83,000 and purchased an inventory of 
spare parts, assemblies and accessories sufficient 
to maintain these aircraft. In March, 1956, the 
Company purchased the Constellation flight 
AUDITOR'S REPORT 
equipment, and in part, financed the tran action 
through bank loans which are referred to under 
Long-Term Debt. 
Included in non-operating property and equip- 
ment is a deposit of $23,833 made in 1951 in 
connection with the then planned construction 
of a hangar. The order, which was not filled, 
was modified by correspondence between the 
parties. Inasmuch as the Company considers 
that the modified agreement has been breached 
by the supplier, the matter has been referred to 
counsel and accordingly no forecast can he made 
regarding ultimate disposition of the matter. 
AMORTIZATIO OF DEFERRED CHARGES 
In 1955 the Company began amortizing (1) 
the extension and development costs incurred 
in connection with the States-Ala ka route re- 
newal proceedings, and (2) the rental, training 
and other pre-operating expenses of the Lock- 
heed Constellation equipment incurred prior 
to placing these aircraft in regular service. These 
costs and expenses are being amortized over the 
five-year period covered by the renewed tem- 
porary Certificate of Public Convenience and 
ecessity granted by th e Civil Aeronautic 
Board in 1955. 
LO GTERM DEBT 
Proceeds from the sales of the DC-4 aircraft 
and the purchase option were used to liquidate 
the bank loan balance in 1955, so that at 
December 31, 1955, the Company had no long- 
term debt. 
The purchase of the Constellation equipment 
in March, 1956, was financed in part through a 
bank loan of $3,608,000, to be repaid in 60 
monthly payments and pledged as collateral 
under a chattel mortgage substantially all of the 
Company's flight equipment. The loan agree- 
ment, which may be altered by agreement be- 
tween the parties, contains certain restrictions 
and limitations, including among other things, 
dividend payments. 
CONTI GE T LIABILITIES 
As of December 31, 1955, the Company was 
contingently liable for claims arising in the 
normal course of husi_ 
ness in which it is or may 
be a defendant, but in the opinion of legal 
counsel the ultimate liability, if any, will not 
materially affect the financial statements. 
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LEGEND 
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