Annual 
Report 
1956 
 PACIFIC NORTHERN AIRLINES, INC. 
DIRECTORS 
G. P. O'GRADY, WASHINGTON, D. C. 
JOHN A. CUNNINGHAM, SEATTLE, WASHINGTON 
PAUL PORZELT, NEW YORK, NEW YORK 
R. A. ROWAN, LOS ANGELES, CALIFORNIA 
M. B. KIRKPATRICK, ANCHORAGE, ALASKA 
C. W. NELSON, SEATTLE, WASHINGTON 
A.G. WOODLEY, SEATTLE, WASHINGTON 
OFFICERS 
A. G. WOODLEY 
PRESIDENT AND GENERAL MANAGER 
H. A. OLSEN 
VICE PRESIDENT- TRAFFIC AND SALES 
JOHN A. CUNNINGHAM 
VICE PRESIDENT- OPERATIONS 
J. H. FOSTER 
VICE PRESIDENT 
ENGINEERING AND MAINTENANCE 
C. W. NELSON 
SECRETARY-TREASURER 
M. E. DIAMOND 
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 
HOMER CORDOVA 
KETCHIKAN KENAI 
AUDITORS: 
JUNEAU 
PORTLAND 
SEATTLE 
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 
 Mt. McKinley 
AN INVESTMENT IN PROGRESS 
This year marks the Company's 25th Anniversary of service 
to Alaska and the completion of its most successful year of 
operation. Net income amounted to $394,391 after deprecia- 
tion of $582,823 and taxes on income of $550,000. These 
earnings, together with special items of $450,410, amounted 
to $844,801 for the year or 79 per share. 
During 1956 Pacific Northern provided more service to 
Alaska than any other air carrier and achieved record revenues 
of $9,607,854, an increase of 27% over last year. 
In 1956 the Civil Aeronautics Board established final mail 
pay for the Company's operations during 1954 and 1955. The 
Company had operated under temporary mail rates since 
February 9, 1954 which were inadequate to provide a reason- 
able profit element. The Board's final action for those years 
resulted in an additional cash settlement to offset the losses 
previously reported. In the same proceeding, the Board fixed a 
final m~il rate for the Company's future operations beginning 
January 1, 1956. 
During the year the Company also reached final settlement of 
pending tax matters with the Treasury Department. The reserve 
for income tax contingencies which had been established in 
19 5 2 proved more than adequate for the liability which was 
finally determined, and the balance of $62,670 was restored 
to surplus. 
1956 has been a year of achievement and the progress we 
have realized has reflected the full support of the communities 
we are privileged 'to serve and the loyalty of our employees and 
stockholders. I have complete confidence that events in 19 5 7 
will further strengthen the position of the Company and will 
greatly enhance our role as the dominant airline serving Alaska. 
~~ 
President and General Manager 
 60,098 
GROWTH IN 
PASSENGER TRAFFIC 
92,458 
78,283 78,052 
1952 1953 1954 1955 
2 
117,231 
1956 
TRAFFIC AND SALES 
New traffic records were established during 1956. Total ton-miles 
of revenue traffic increased from 12,671,000 last year to 14,218,000 in 
1956, growth of over 12 per cent. 
Passenger traffic reflected the largest gains. 117,231 passengers 
used the Company's services during the year, a gain of almost 27 
per cent over the 92,458 passengers carried in 1955. This was the first 
time in Alaskan aviation history that an airline serving the Territory 
has passed the 100,000 passenger mark in any year. All routes of the 
Company shared in the greater volume of passenger traffic, but the 
greatest increases occurred in Southeastern Alaska where significant 
new commercial developments are taking place. 
The growth in air traffic between Portland, Oregon, and points in 
Alaska is especially noteworthy. Passenger traffic increased 26 per 
cent and air cargo increased 56 per cent over the preceding year. 
An expanded volume of tourist travel accounted for substantial 
traffic gains realized by the Company during 1956. This. same factor 
is expected to produce new all time records in 1957. Unsettled con- 
ditions in the Near East and io Europe have tended to discourage 
pleasure travel to Europe and vacationers are now discovering the 
vast recreational resources of Alaska. The Company has intensified 
its promotional advertising efforts to insure full participation and a 
position of leadership in the development of the growing tourist 
market. The number of tourists who visited Alaska during 1956 
reflected a 20 per cent increase over the preceding year. Advance 
bookings for 1957 indicate further gains of from 25 to 50 per cent. 
NEW TRAFFIC FACILITIES 
Increased passenger traffic has required further 
capital improvements. The new terminals 
completed this year at Homer and Cordova 
provide expanded facilities to meet growing 
business demands. 
Homer Terminal 
Cordova Terminal 
 PERSONNEL 
The Company is proud of its record of 25 years of operation without 
strike or work stoppage. This accomplishment attests the willingness of 
both management and employees to secure modification of working 
agreements through mutual understanding and negotiation. 
During 1956 wage and salary adjustments were made in line with 
industry trends, and all working agreements with organized employee 
groups were satisfactorily renegotiated . Expiration dates of currently 
effective working agreements will carry forward into 1958, with the ex- 
ception of the dispatchers agreement which will be subject to renegotia- 
tion in October 1957. 
On April 10, 1957, Pacific Northern 
completed 25 consecutive years of service 
SAFETY 
1956 
to the Territory, flying over 400 million 
passenger miles without a passenger fatality. 
This safety record stands as a monument 
AVlATlON 
SAFETY 
AWAJlD 
in world aviation history. The diligent care 
and sense of responsibility on the part of 
the Company's personnel are reflected in 
this achievement. 
OPERATIONS AND MAINTENANCE 
During the year the Company's entire fleet of aircraft was completely 
overhauled and modified to achieve greater payload capacity and more 
efficient utilization. The latest developments in ILS and VOR navigational 
equipment have been installed to insure the highest level of operational 
standards. Improvements in the airfield at Dillingham have enabled the 
Company to extend its scheduled services to that community, which is the 
center of important fishing industry operations in Western Alaska. 
During 1956, Pacific Northern achieved a scheduled performance factor 
of 96 %. In large measure this dependability of service is a tribute to the 
competence and care exercised by the Company's maintenance personnel. 
3 
 TRAVELAIRE 
CONSOLIDATED FLEETSTER 
STI NSON TRI -MOTOR 
BOEING 247D 
_ 
4 
Anchorage, 1932 
DOUGLAS DC-3 
DOUGLAS DC-4 
When Pacific Northern commenced air service 
in 1932, the Territory was an isolated wilderness 
frontier, sparsely populated, and dependent pri- 
marily upon fishing and trapping for livelihood . 
It was World War II and its aftermath which 
provided tremendous impetus to the present 
economic development of Alaska. 
Population has increased at a rate more rapid 
than in any other area under the American flag. 
In the present era of supersonic aircraft and guided 
missiles, Alaska's strategic location has made it 
the keyst0ne of hemispheric defense. World 
interest is now focussed upon developing the 
Territory's vast natural resources. The isolated 
villages of 25 years ago have been transformed into 
thriving cities, and the few remaining log cabins 
now stand in the shadows of modern steel sky- 
scrapers as mementoes of America's last frontier. 
The growth of Pacific Northern Airlines during 
the past 25 years has kept pace with the vigorous 
development of the Territ0ry and has reflected 
the rapid advances of modern aviation. The tiny 
single engine Travelaires of the early thirties 
soon gave way to a succession of larger and faster 
transport planes, and today the company operates 
a fleet of Lockheed Constellations. 
LOCKHEED CONSTELLATION 
The time required for travel between Alaska 
and the United Scates has been telescoped from 
several days to several hours. 
A review of past achievements would not be 
complete without a glance into the future. There 
can be no doubt that the very substantial pro- 
gress in Alaska's economic development during 
the past few decades is merely prologue to 
dynamic growth which lies ahead. Commercial 
aviation will soon move into the age of jet 
transports. As a hardy pioneer with a long 
history of service to the Territory, Pacific North- 
ern Airlines is confident of its ability to meet 
chis challenge of che future. 
QUARTER CENTURY OF GROWTH 
-- 
nc orage, Alaska's larges c1 , 
 Seattle, Washington 
Portland, Oregon 
6 
 PACIFIC NORTHERN AIRLINES, INC. 
: STATEMENT OF INCOME AND EARNED SURPLUS 
I. , 
: :  For the year ended December 3 - 
1, . 1956 
OPERATING REVENUES: 
Passenger 
Air mail 
Cargo 
Excess baggage 
Other transport service 
Incidental revenues, net 
Total . 
OPERATING EXPENSES: 
Flying operations 
Direct maintenance- flight equipment 
Ground operations 
Ground and indirect maintenance 
Passenger service . 
Traffic and sales 
Advertising and publicity 
General and administrative 
Depreciation 
Operating profit 
OTHER EXPENSES: 
Interest, net 
Miscellaneous, net 
Income before provision for taxes on income 
and special items . 
Provision for taxes on above income . 
Net income before special items 
SPECIAL hEMs relating to prior years : 
Additional air mail revenue, net 
Reductions of prior years ' expenses, net 
Excess reserve for income tax contingencies 
Provision for income taxes on special items- deduct* 
Net income and special items for the year 
DEFICIT, January 1, 1956 . 
EARNED SuRPLus, December 31, 1956 
$2,694,039 
l, l 01,097 
l, 186,796 
747,890 
559,343 
915,962 
l 08,568 
574,880 
582,823 
183,332 
8,733 
277,579 
184,271 
62,670 
7 4, 11 0* 
$5,236,658 
3,190,774 
$ 
949,995 
73,923 
72,741 
83,763 
9,607,854 
8,471,398 
l, 136,456 
192,065 
944,391 
550,000 
394,391 
450,410 
844,801 
131,731 
713,070 
The financial comments on page 10 are an integral part of the financial statements. 
7 
 8 
PACIFIC NORTHERN AIRLINES, INC. 
BALANCE SHEET December JI-' I!)J6 
Current : 
Cash . 
Receivables : 
Traffic balances 
United Sta tes Government 
Other . 
Less allowance for losses 
ASSETS 
Maintenance and operating supplies, at average cost 
Prepaid expenses, mainly insurance and rent deposits 
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 
$5,1 68,811 
534,297 
494,424 
411,064 
20,662 
$6,629,258 
Non-operating property and equipment, net of $76,188 depreciation 
Property Acquisition Adjustment, Unamortized 
Route Extension and Development, net of amortization 
Pre-operating Expenses- Constellations, net of amortization 
Other Deferred Charges 
$ 489,861 
687,685 
89,141 
1,266,687 
22,285 
23,944 
1,000 
Allowances 
for 
Depreciation 
$1,832,108 
317,596 
159,542 
189,199 
$2,498,445 
The .financial comments on pa[ 
,e 10 are an integral part of the .financial statements. 
$ 814,833 
1,244,402 
358,602 
279,257 
2,697,094 
24,944 
4,130,813 
15,313 
130,020 
31,206 
119,753 
20,140 
$7,169,283 
(AN ALASKA CORPORATION) 
LIABILITI ES 
Current : 
Current portion of long-term debt 
Accounts payable: 
Trade . 
Taxes withheld or collected for benefit of taxing authorities 
Accrued liabilities: 
Salaries and wages 
Other accrued expenses 
Provision for income taxes 
Air travel plan deposits 
Unearned transportation revenue 
To cal current liabilities 
Long-term debt : 
Chattel mortgage note to bank 
Less amount included in current liabilities 
Note payable officer, due January 1, 1961 
STOCKHOLDERS EQUITY 
Common Stock, authorized 2,000,000 shares, par value $1 each, issued and 
$ 750,249 
69,501 
126,354 
142,255 
3,008,000 
720,000 
outstanding 1,068,109 shares . 1,068,109 
Paid-in Surplus- no change during 1956 . 584,905 
1,653,014 
$ 720,000 
819,750 
268,609 
526,675 
13,175 
141,990 
2,490,199 
2,288,000 
25,000 
Earned Surplus, all of which is restricted, statement annexed 713,070 2,366,084 
$7,1 69,283 
The .financial comments on page 10 are an integral part of the .financial statements. 
~ 9 3 1 
 Financial Comments 
U. S. MAIL PAY 
The Company is a certificated air carrier subject to 
regulation by the Civil Aeronautics Board. Under pro- 
visions of the Civil Aeronautics Act, the Company is 
entitled to a reasonable return on investment after income 
taxes. During 19S6 the Board fixed final rates for the period 
February 10, 19S4 through December 31, 19S5 which 
provided additional mail compensation amounting to 
$277,579 and required certain adjustments to preceding 
years' expenses, mainly depreciation. In the same pro- 
ceeding the Board established final future rates effective 
January 1, 19S6 which will remain in effect until action 
is taken by either the Board or the Company to revise 
them prospectively. 
AMORTIZATION OF 
DEFERRED CHARGES 
In 195S the Company began amortizing (1) the extension 
and development costs incurred in connection with the 
States-Alaska route renewal proceedings, and (2) the 
rental, training and other preoperating expenses of the 
Lockheed Constellation equipment incurred prior to plac- 
ing these aircraft in regular service. These costs and ex- 
penses are being amortized over the five-year period 
covered by the renewed temporary Certificate of Public 
Convenience and Necessity granted by the Civil Aeronautics 
Board in 195S. 
LYBRAND, Ross BRos. c.. MONTGOMERY 
C ERTIFIED PUBLI C AC C OUNTANT S 
Pacific Northern Airlines, Inc. 
Seattle, Washington 
We have examined the balance sheet of 
PACIFIC NORTHERN AIRLINES, INC. 
LONG-TERM DEBT 
In March 19S6 the Company purchased the Constellation 
flight equipment which it had previously operated under 
lease. The purchase was financed in part by a bank loan, 
the December 31, 19S6 balance of which was $3,008,000 
and on which interest ranges from 5 to 5% (currently 
S%). Substantially all of the Company's flight equip- 
ment is pledged under a chattel mortgage as collateral for 
this loan. The loan agreement, which may be altered by 
agreement between the parties, contains certain restric- 
tions and limitations including, among other things, 
dividend payments. 
RETIREMENT PLAN 
Through contract negotiation, the Company has 
agreed to execute a contributory pension plan for flight 
officers which will become effective February 1, 19S7 
if the plan is approved by the United States Treasury 
Department. It is designed to provide monthly pensions 
for participants upon retirement. Past service benefits have 
been estimated to be under $200,000 and may be paid into 
the plan by the Company during succeeding years. 
CONTINGENT LIABILITIES 
As of December 31, 19S6, the Company was contingently 
liable for claims arising in the normal course of business 
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. 
....,,., . . .. c,sco 
l.OS ..,,.Olt\.CS 
CO OP ERS C. LYBRA ND 
,,.  u: s o, T .. r. woa1,.o 
OUTS,Dlt nu: UN!lt:O ., .. u:s 
as of December 31, 1956, and the related statement of income and 
earned surplus for the year then ended . It was not practicable to 
confirm the balances receivable from the United States Government. 
We satisfied ourselves as to these balances by means of other auditing 
procedures. Our examination was made in accordance with generally 
accepted auditing standards, and accordingly included such tests of 
the accounting records and such other auditing procedures as we con- 
sidered necessary in the circumstances. 
AUDITOR'S REPORT In our opinion, the accompanying balance sheet and statement 
of income and earned surplus present fairly the financial position 
10 
of Pacific Northern Airlines, Inc. at December 31, 1956, and the re- 
sults of its operations for the year then ended, in conformity with 
generally accepted accounting principles applied on a consistent 
basis. 
~:_:;~ 
1iA."~9~tt~ 
 1n 
 OFFJCJE OF THE GOVERNOR 
JUNEAU 
Mr. A. G. Woodley, President 
Pacific Northern Airlines , Inc. 
1626 Exchange Building 
Seattle 4, Washington 
Dear Mr. Woodley: 
April 2, 1957 
I am pleased to take this opportunity on the occasion 
of your Silver Anniversary to convey to you my personal 
regards and my congratulations to you and your associates 
for having attained this iitportant milestone. 
Alaska nov stands at the threshold of the most significant 
era in its economic and social development. Its population 
is groving more rapidly than in any other area under the 
.t..merican flag. Its strategic location astride the cross 
roads o! world air routes assures a dominant role in air 
commerce of the future. Important developments are nov 
taking place in the utilization of the Territory's vast 
resources of hydroelectric power, minerals, petroleum, 
and pulp and timber. The immediate future promises 
economic growth vhich vill far s urpass the very substantial 
progress that bas been achieved during the past fev decades, 
I look forward rith confidence to your continued success 
in keeping pace vith the future growth of Alaska. 
Sincerely yours, 
w ~ (: , ~ 
Waino E. Hendricks on 
Acting Governor 
STATE OF OREGON 
Mr. A. G. \loodley, President 
Pacific Northern Airlines, Inc. 
Dear Mr. \loodley: 
April J, 1957 
The State of Oregon congratulates Pacific Northern Airlines on 
its 25th Anniversary of service to the Territory of Alaska. The 
extension of PNA 1s routes to Portland in 1951 created an import- 
ant opportunity to expand the flov of c0011Derce betveen Oregon 
and Alaska, and it is most gra tifylng to note that the progress 
ve had hoped for is nov being achieved. 
As the result of significant industriel develonents now taking 
place, ~be opportunities for expanding Oregon 's c0011Dercial ties 
vith Alaska appear to be even greater in the future than they 
have been in the past, Accordingly, it seems appropriete that 
ve extend, in addition to our congratulations on your past 25 
years of distinguished service , our best v is bes for your con- 
tinued growth and develonent. 
Governor 
State of Washington 
..E CUTOv< 0 .. AOTM E["') 
AJ. EJIT 0 . Ro'CL..LINI 
ofyrnpia 
April 2, 1957 
Mr. A. G. Woodley, President 
Pacific Northern Airlines, Inc. 
Seattle, Washington 
Dear Mr. Woodley: 
I should like to extend to Pacific Northern 
Airlines my heartiest congratulations on the 25th 
anniversary of the inauguration of its air transport 
services to the Territory of Alaska. 
Pacific Northern is now well established 
as a vital link in the nation's air transport system , 
and I extend to you my best wishes in your continuing 
program to develop and expand the important c0111'1ercial 
relationships between the State of Washington and the 
Territory of Alaska. 
ADR:ceo 
EXECUTIVE 
" ~ 
' 
Governor 
COMMENDATIONS 
11 
  Point Barrow 
 Nome 
 Bethel 
ANCHORAGE* 
BRISTOL BAY * 
* 
ILIAMNA 
*  Seward 
HOMER 
* KENAI 
* CORDOVA 
YAKUTAT* 
 Skagway 
* KODIAK 
Sitka  
ALASKA  
12 
An Expanding Market 
A market of almost a quarter million customers would be important 
at any place, any time. The potential market of this size in Alaska 
is doubly important because it is backed by vastly improved 
transportation, permanent payrolls, new industries, and boundless 
natural resources. The burgeoning growth of Alaska is just the beginning. 
Goods and services of all kinds are in great demand and many 
suppliers are finding that the market can best be served at competitive 
prices by arranging for final assembly, or even fabrication, within 
Alaska. Federal government appropriations for all expenditures 
within Alaska during 195 7 approximate 200 million dollars. Three 
times that amount of private capital investment within the 
next few years is planned for the development of timber production, 
new pulp mills, minerals, hydroelectric power, tourist facilities, 
and agriculture. The great strength of the Territory is its 
diversification of resources. Man and nature have combined in this 
fabulous opportunity-land to make Alaska today the most promising 
growth investment in all America. 
JUNEAU 
KETCHIKAN* 
* 
 
SEATTLE * 
PORTLAND * 
* PNA Routes 
 Connecting Airlines 
 ,~ .. , i 
 I \,'4;,,.' -' 
1 '. ' . - ' }... - 
~ 
d 
' 
Ketchikan Pulp 
Company Mill ranks as 
a major industry 
Modern Alaska gold 
mining by hydraulic 
"giant" and dredge 
Mendenhall Glacier near 
Juneau is spectacular 
tourist attraction 
Fishing fleets 
headquarter in many 
Alaska ports 
Juneau, Alaska's 
capital city and major 
distribution center 
Matanuska Valley farm 
typical Western Alaska 
agricultural development