PACIFIC NORTHERN AIRLINES 
 FINANCIAL 
Operating Revenues : 
Passenger 
Mail .. 
Property 
0th r . 
Total Operating Revenues 
Operating Expense : 
Other than Depreciation 
D preciation . . . . . 
Total Operating Expenses 
Operating Profit 
Other Expenses . 
Income Taxes . . 
Net Income. 
Net Income P r Share 
Stockholder Equity- et. 
TRAFFIC 
Number of Revenue Passengers Carried 
Revenue Ton-Miles of Traffic: 
Passenger 
Mail. 
Property 
Total Reven ue Ton-Miles 
HIGHLIGHTS 
1958 
$ 6,262,000 
2,890,000 
1,054,000 
162,000 
$10,368,000 
$ 
$ 
$ 
$ 
$ 
8,849,000 
714,000 
9,563,000 
805,000 
11,000 
400,000 
394,000 
374 
2,934,000 
132,000 
11,302,000 
1,248,000 
3,387,000 
15,937,000 
1957 
$ 5,920,000 
2,997,000 
965,000 
148,000 
$10,030,000 
$ 
$ 
$ 
$ 
$ 
8,713,000 
644,000 
9,357,000 
673,000 
152,000 
260,000 
261,000 
24 
2,584,000 
126,000 
11,323,000 
1,121,000 
3,120,000 
15,564,000 
 PRESIDENT'S REPORT 
To the Stockholders of Pacific Northern Airlines: 
1958 was one of the best years in the Company's history. The steady and 
substantial growth of prior years was continued, and during the year total 
revenues reached an all-time high of almost ten and one-half million dollars. 
New records were established in all classes of traffic which greatly strengthened 
Pacific Northern's position as the leading airline of the nation's largest state. 
The number of passengers carried showed an increase of 5% over last year. 
Cargo and express ton-miles were up 9% over 1957 and the volume of mail 
increased 11 % . The improved efficiency with which the Company handled 
this additional volume of traffic is reflected in the 4% increase in revenue 
ton-miles of traffic per employee. 
Operating profit in 1958 amounted to $805,218 after depreciation of $714,003. 
Deductions for non-operating expenses and income taxes of $411,402 resulted 
in net income for the year of $393,816, the equivalent of 37 a share. This 
level of earnings represents a gain of 51 % over last year's net income of 24 
per share. 
Statehood for Alaska was one of the most noteworthy events of 1958. 
Although the significance of statehood is essentially political rather than 
economic, it nevertheless has far-reaching implications with respect to the 
accelerated growth of air traffic. The sustained publicity attending the creation 
of the 49th State has focused nationwide interest on Alaska's vast resources 
and opportunities. Business and industrial representatives are now visiting 
Alaska in unprecedented numbers to appraise these resources and opportunities, 
and they are being accompanied by an influx of tourists who are exploring the 
new state's exceptional recreation facilities. This widespread interest has 
created a surge of new air traffic which gained impetus in the closing months 
of 1958 and no doubt will have significant growth impact for years to come. 
Because of these factors, Pacific Northern's traffic during the first quarter of 
1 
 2 
1959 refl cts a gain of more than 13 0 
over the same period in 1958. This 
sub tantial growth r suited in the Company' decision to place two additional 
Lockheed onstellations in servi e during 1959, pursuant to the financing 
arran r ments des ribed in the section of this report entitled, "Financial 
omments.'' 
l\Iany other noteworthy events occurred during the year. The Company 
again received the ational Safety ouncil award in re ognition of its un- 
broken r cord of 27 years of operation without a passenger fatality. An act of 
on -ress liminated th 3 0 
tax on air cargo eff ctiv August 1, 1958, an 
action which should ncourage further growth in the air cargo market. The 
Company adjusted its passenger fare during i\Iay and June of 1958, and these 
changes have result din an increased yield of approximately 10 0 
per revenue 
passenger mil . These tariff adjustments, which were also adopted by other 
airlines erving Alaska, apparently did not affect the continued growth of the 
Alaskan air traffic market. 
During the year, several orders of the Civil Aeronautics Board strengthened 
and extended the rout s served by Pacific Northern. The Board made effective 
on January 28, 1958, a permanent certificate for the Company's routes 
between the Pacific orthwest and Alaska. This action resulted from special 
legislation of the 85th ongress in 195 7 which directed the Board to award the 
permanent franchise. In another case, the C.A.B. on January 14, 1959, 
awarded Pacific orthern a new route direct from the Pacific orthwest to 
Kodiak, Alaska, which is the headquarters of the 17th Naval District and an 
important center of op rations for the canned salmon industry. Inauguration 
of service over this new route will commence May 1, 1959. The Board also 
made minor adjustments to the Company's certificate within Alaska, per- 
mitting the termination of service to several small communities whose traffic 
potential did not justify the use of multi-engine equipment. Since \Yorld 
\Var II, the Company had subcontracted service to these communities to 
op rators of small aircraft. 
In February 1959 the President of the United States directed the Civil 
Aeronautics Board to initiate a comprehensive review of all existing and 
prospective air routes in the Pacific Ocean area. On l\Iarch 27, 1959, the 
Company filed applications for extension of its routes from points in Alaska 
and the Pacific Northwest to Hawaii and to San Diego, California, via San 
Francisco and Los Angeles. The Company has petitioned the Board to con- 
solidate these applications in this Pacific route case if the case is to include 
interstate service to alifornia and Hawaii. 
Pacific Northern progressed during 1958 to the strongest position it has 
ever enjoyed and the prospects for 1959 appear to be even more favorable. 
The petroleum industry is currently investing $300 million in Alaska for 
 exploration and development, and the principal center of this act1v1ty are 
located on routes served by P A. Iililary sp nding is approximat ly $400 
million a year a nd will probably incr ase ub tantially und r a n w program 
for th construction of missile det ction center . A new pulp and timber 
enterpris entailing the outlay of morelhan \ 50 million is now und r onstruction 
near Juneau, th capital of Alaska a nd a principal point on P ' rout s. The 
vast hydroelectric pow r resources of Ala ka, a y t untapp d , Ii principally 
along the routes of Pa ifi orthern . T h ompany serv s th major centers 
of population of the n , state and the areas which offer the best potential for 
touri t, agricult ural, and mining development . Thu , to a far gr at r extent 
than any oth r airlin serving Alaska, Pacific orth rn will participate in the 
fu ture rowth of the 49th State at virtuall y all of the present and potential 
cent rs of major activily. 
A. G. W OODLEY 
President and General Manager 
3 
 6 
PACIFIC NORTHERN AIRLINES, INC. 
BALANCE SHEET, .DECEMBER 31, 1958 
Current : 
Cash 
Receivables: 
Traffic balances . 
United States Government . 
Other .. ... 
Less allowance for losses . . 
Maintenance and operating supplies, 
at average cost . . . 
Prepaid expenses, mainly insurance 
Total current assets . . . 
Investments, mainly cash surrender value 
of !if e insurance . . . . . . . . . 
Property and equipment, at cost: 
Flight equipment . 
Ground equipment 
Buildings and improvements 
to leased property 
Replacement parts for flight 
equipment . . . . . . 
Construction work in progress 
Def erre1 charges, net of amortization: 
ASSETS 
Property acquisition adjustment . 
Route extension and development 
Preoperating expenses-Constellations . 
Other .... . . . . . . . ... . 
Assets 
$6,889,109 
583,461 
509,867 
611,990 
29,100 
$8,623,527 
$ 628,264 
605,577 
62,070 
1,295,911 
38,210 
Allowance 
for 
Depreciation 
$2,578,520 
401,488 
240,353 
264,287 
$3,484,648 
43,340 
14,185 
54,433 
5,965 
$ 7S2,S4S 
1,257,701 
336,768 
126,206 
2,473,220 
34,379 
5,138,879 
117,923 
$7,764,401 
THE FINANCIAL COMMENTS ON PAGE 8 ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 
(AN ALASKA CORPORATION) 
Current: 
Current portion of long-term debt 
Accounts payable: 
Trade 
Airline traffic accounts 
LIABILITIES 
Collections, etc., as agents 
Accrued property taxes, compensation 
and other liabilities 
Accrued income taxes . 
Air travel plan deposits 
Unearned transportation revenue 
Total current liabilities 
Long-term debt: 
Chattel mortgage notes to bank, noncurrent portion. 
STOCKHOLDER EQUITY 
Common stock, authorized 2,000,000 shares, 
par value $1 each, issued and outstanding 
1,068,109 shares . . . . . . . 
Paid-in surplus-no change during 1958 
Retained earnings, all of which are restricted, 
statement annexed . . . . . . . 
$ 
$ 897,307 
550,508 
472,862 
105,668 1,129,038 
257,199 
262,300 
20,400 
142,452 
2,708,696 
2,121,360 
1,068,109 
584,905 
1,653,014 
1,281,331 2,934,345 
$7,764,401 
THE FINANCIAL COMMENTS ON PAGE 8 ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 
7 
 FINANCIAL 
COMMENTS 
8 
U. S. MAIL PAY: 
The Company is a certificated air carrier 
subject to regulation by the Civil Aeronau- 
tics Board. Under provisions of the Federal 
Aviation Act, the Company is entitled to a 
reasonable return on investment after in- 
come taxes. During 1957 the Board fixed 
future mail compensation under final rates 
which were in effect during 1958 and which 
will remain in effect until action is taken 
either by the Board or by the Company to 
revise them prospectively. 
LONG-TERM DEBT: 
In December 1958 the Company acquired 
an additional Lockheed Constellation air- 
craft and disposed of one Douglas DC-4. 
Early in 1959 the Company acquired an- 
other Lockheed Constellation aircraft and 
profitably disposed of one DC-3, its remain- 
ing Douglas DC-4 and substantially all DC-4 
parts. These acquisitions were financed in 
part by new bank loans, which, together 
with the borrowings previously made under 
a loan agreement dated February 27, 1956, 
are repayable in monthly installments with 
interest ranging from 5 % to 6 0 
(currently 
6%). Of the December 31, 1958 note bal- 
ances of $3,018,667 there has been shown as 
a urrent liability $897,307 representing 
principal payments due within one year. 
Substantially all of the Company's flight 
equipment is pledged as collateral under 
chattel mortgages. The loan agreement and 
amendments thereto contain certain restric- 
tions and limitations including, among other 
things, dividend payments. 
DEFERRED INCOME TAXES: 
In accordance with a requirement of the 
uniform syst m of a counts for air carriers 
prescribed by the Civil Aeronautics Board, 
the Company has included in income re- 
ported for 1958 gains aggregating about 
$145,000 on the trade-in of flight equip- 
ment. For income tax purposes, these gains 
must be applied as a reduction of the cost 
of flight equipment acquired in the related 
purchase transaction. The Company has 
adopted def erred tax accounting procedures 
to give recognition to the resulting difference 
between 1958 book and taxable income. 
Accordingly, deferred tax of approximately 
$36,000 at capital gains rates has been in- 
cluded in income taxes shown in the state- 
ment of income and an equivalent amount 
has been added to the allowance for depreci- 
ation on flight equipment, thus giving recog- 
nition to the reduction in the tax deductible 
value of the equipment acquired. 
There have been differences in prior years 
between book and taxable income as to 
which deferred tax accounting procedures 
were not required. Some of these differ- 
ences, which are not significant in effect, will 
carry into future years. 
RETIREMENT PLANS: 
The Company has two contributory re- 
tirement income plans covering (1) employ- 
ees whose employment is not subject to the 
terms of collective bargaining agreements 
and (2) flight officers. During 1958 the Com- 
pany charged to operating expenses and 
other accounts provisions totaling $144,729 
of which $33,335 was for past service bene- 
fits. The unfunded past service benefits of 
both plans have been estimated by the Com- 
pany's independent actuaries to aggregate 
$283,000 at December 31, 1958. 
CONTINGENT LIABILITIES: 
As of December 31, 1958 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 state- 
ments. 
 PACIFIC NORTHERN AIRLINES, INC. 
DIRECTORS 
G. P. O'GRADY 
JOHN A. CUNNINGHAM 
PAUL PORZELT 
R.A. ROWAN 
M. B. KIRKPATRICK 
C. W. NELSON 
A. G. WOODLEY 
OFFICERS 
A. G. WOODLEY 
H. A. OLSEN 
JOHN A. CUNNINGHAM 
J. H. FOSTER 
FELIX AUBUCHON 
C. W. NELSON 
M. E. DIAMOND 
DEAN B. HART 
GENERAL COUNSEL 
GENERAL OFFICES 
CITY TICKET OFFICES 
AUDITORS 
TRANSFER AGENT 
REGISTRAR 
COMMON STOCK LISTED 
Washington, D. C. 
Seattle, Washington 
New York, New York 
Los Angeles, California 
Anchorage, Alaska 
Seattle, Washington 
Seattle, Washington 
President and General Manager 
Vice President- Traffic and Sales 
Vice President- Operations 
Vice President- Engineering and Maintenance 
Vice President- Alaska Operations 
Secretary-Treasurer 
Assistant Secretary 
Assistant Secretary 
G. P. O1 
GRADY, 1625 EYE STREET, N. W., WASHINGTON, D.C. 
1626 EXCHANGE BUILDING, SEATTLE, WASHINGTON 
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