Western Air Express Annual Report 1928

January 28, 1929.
Stockholders,
WESTERN AIR EXPRESS, Inc.
Gentlemen:
Herewith is submitted the
annual report on affairs of your company
for the year ending December 31, 1928.
HARRIS M. HANSHUE,
President.
HMH/GAR
Your company has progressed very materially during
the past year. Both in earning3 and in the relationship it
hears to the air transport industry, Western Air Express, Inc.,
has improved its condition and enters its fourth year of opera
tions prosperous, profitable and prepared for expansions that
should still further enhance its value.
At the time of our last Stockholders* meeting we had
just taken over the Cheyenne, Denver, Pueblo air mail route.
On May E6, 1928, in cooperation with the Daniel Guggenheim Pund
for the Promotion of Aeronautics, we opened the model passen
ger airway between Los Angeles and San Prancisco. On June 15,
we acquired the Pacific Marine Airways operating flying boats
between Wilmington and Avalon and negotiated a ten-year con
tract for that service with the Santa Catalina Island Company;
and, in October, we improved that service with the addition of
an amphibian airplane operating directly between Vail Pield and
Avalon. Also, during 1928, we laid plans for a de luxe passen
ger service between Los Angeles and Kansas City via Albuquerque
in planes similar to those used on our Los Angeles-San Prancisco
route and placed orders for this equipment together with an ad
ditional number sufficient to re-equip our Los Angeles to Salt
Lake City line.
Our air mail contract between Los Angeles and Salt
Lake City continues to be our source of greatest revenue, the
monthly return on this line more than doubling during 1928.
But, the other operations are rapidly approaching a profitable
basis and we expect during 1929 to show a very substantial earn
ing on each division. The return on our exclusive passenger
services between Los Angeles and San Prancisco and Los Angeles
and Avalon, except for mid-winter months, and the percentages of
surface travel we have been able to divert to airplanes even
during the off-season periods warrant the belief that the pres
ent year will see exclusively passenger operations earning
healthy profits. But, even should this no`t immediately prove
to be, it was and is necessary for Western Air Express to main
tain its prestige as the foremost air transport system of the
nation by rendering such service as the public now demands at
prices the public can afford deferring profits till such time
as air travel volume shall develop.
Despite the increased service on old lines and the
extension of flying to new and untried routes, our company
continued its high on-time performance record of better than 99
percent throughout the past year. Por the year, the airplanes
of Western Air Express flew an aggregate of 9,738 hours, 41
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minutes for a total of 946,660 miles. These flights were at
all altitudes, in all sorts of weather with equipment ranging
from the small biplanes used on our Colorado division along the
backbone of the continent to the huge, fast passenger cabin
planes of our Los Angeles-San Francisco service and the slow,
heavy flying boats operating between Wilmington and Avalon -
the most diversified air transport operation in the world.
For the twelve months a total of 6,794 persons took
passage with Western Air Express. An aggregrate of 458,231
pounds of air mail and 13,502 pounds 6 ounces of air express
was dispatched on these planes. There were no serious mishaps
and none but nominal damages sustained by any equipment. No
passenger or employe was injured and no cargo lost or damaged
throughout the entire year.
The industry, during 1928, began to take on new as
pects. Huge holding companies were formed to acquire and com
bine groups of independent operators, aircraft manufacturers
and engine builders. In many instances these mergers were
necessary to save weak companies from failure; and, in others,
desirable to consolidate the positions of substantial groups.
Your Board of Directors were frequently approached with propos
als of one sort or another, but to date nothing has been submit
ted of sufficient attractiveness to pass on to you for decision.
Meanwhile, with operators and manufacturers joining forces, it
became imperative that Western Air Express protect itself by
securing a definite and unassailable source of equipment.
The policy of your company has been from inception
to purchase the best equipment available from whatever aircraft
manufacturer is in ascendancy at the time. Such a policy hardly
permits of interlocking an operator and manufacturer. Your
Board of Directors decided, therefore, that Western Air Express
although desiring close affiliation with some builder should be
left free to buy its equipment anywhere without injury to its
own pocketbook.
Proposals that your company combine with one or an
other manufacturing concern were, consequently, declined. But,
in order to protect their - and your - investment in this operation
from possible equipment shortage at critical times, certain of
your larger stockholders acquired control in the Fokker Aircraft
Corporation of America. The result is, that, while Western Air
Express is free to buy equipment in the market from any aircraft
builder, it can never be rendered unable to secure satisfactory
equipment by any combination that might oppose it.
There have been many erroneous statements made as to
the relationship between Western Air Express and Fokker, and
this detailed explanation is made so that you will understand
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precisely the nature of their contact. Neither owns a single
share of the other. Each is free to pursue its own destiny.
But the control and management of the Fokker company are in the
hands of those who by personal serivce and through investment
have an abiding friendly interest in Western Air Express.
Selection of Fokker Airoraft as the manufacturer best
suited to this purpose was predicated on the fact that Western
Air Express had already proven Fokker equipment to be the best
performing and most economical from a transport standpoint.
Development of the MF-10W, tri-motored, Wasp-engined, Fokker mo
noplane was in response to an advertisement for bids, sent out
by Western Air Express and the Daniel Guggenheim Fund, for
equipment to be used on the Los Angeles-San Francisco line. All
American builders of aircraft were invited to submit proposals on
equipment which they must guarantee would meet our requirements.
Eokker was the only one who would make such guaran
tee; and, at a prioe considerably below that asked by other
manufacturers for planes which we considered entirely unsatis
factory to our purpose. The result, the wF-10n, in actual
service for eight months has exceeded the guarantee at every
point and actually produces unit transportation at a lower
cost than that of any other airplane flown. This combination
of economy and performance assures Western Air Express the
ability of earning profits while rendering superior service
at lower rates than will be necessary to any present competitor.
Recently you have been invited to exchange your hold
ing in Western Air Express, Inc. of California for stock in
Western Air Express Corporation of Delaware on a basis of twen
ty-five shares of the latter having a par value of $10 for each
$100 par share of the former. The reasons for this transaction
are: to give greater facility in the matter of expansions and
extensions of service to the east; to break the stock down into
more easily marketable units and, through listing on exchange,
to secure a wider distribution of holding. This also will have
a certain advertising value through daily mention on the finan
cial pages. The exchange date has been set as February 1. Ap
proximately seventy-five percent of the old stock has already
been presented for exchange.
Refer now to the financial statement which is made a
part of this report. The combined operating statement for 1928
shows gross revenues of $1,417,504.23 divided as to disposition;
expenses, $696,726.43, and, profit, $720,777.80 an earning of
$168.28 per share on the old stock or of $6.73 on the new.
The balance sheet and combined operating statement are
submitted in detail that you may be thoroughly informed as to the
present condition of your company and the nature of its assets.
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BALANCE SHEET
ASSETS:
DECEMBER 31, 1920,
CURRENT:
Cash
On Hand
In Banks
Accounts Reoeivable-U .S. Gov't.
Accounts Receivable-Miscellaneous
Inventories:
Gasoline
Oil
Stockroom Parts & Supplies
Miscellaneous
Notes Receivable
Gasoline Tax Receivable
Accrued Interest
TOTAL CURRENT ASSETS
OTHER ASSETS:
U. S. Liberty Bonds (Cost)
Other Bonds (Cost)
FIXED:
Airplanes (Under construction)
Airplanes
Engines
Hangars & Buildings
Machinery, Tools & Misc. Field
and Shop Equipment
Autos- Trucks
Purniture & Fixtures- Gen'l Offices
Furniture & Fixtures- Field M
Radio
Radio Sets- Aircraft
1,735.00
585,775.59
203,642.26
11,895.10
1,455.92
914.94
40,734.88
1,888.72
312.50
2,205.82
2,566.00
$852,926.73
37,596.87
101,100.00
395,789.42
451,414.23
187,656.82
106,983.32
38,468.00
4,701.00
5,891.12
4,377.68
6,888.20
675.00
1,202,844.79
224,029.02
TOTAL FIXED ASSETS
Less Reserves for Depreciation
978,815.77
DEFERRED CHARGES:
Prepaid Insurance-Deposit Premiums 9,306.00
Prepaid Insurance-Unearned Premiums 4,454.94
Deposit- Public Utilities 616.25 14,377.19
TOTAL $ 1,984,816.56
BALANCE SHEET
*
LIABILITIES':
CURRENT:
Accounts Payable- Trade
Accounts Payable- Miscellaneous
Insurance Premiums Payable
Vail Co.
Dividends Payable
^Contracts Payable
Accrued Interest
TOTAL CURRENT LIABILITIES 391,766.47
RESERVES:
Crash Insurance
Por Obsolescence
113,231.54
48,231.54
65,000.00
41,406.76
1,203.68
4,130.53
150.00
8,566.00
335,372.00
937.50
TOTAL LIABILITIES & RESERVES 504,998.01
NET WORTH
CAPITAL STOCK:
Authorized: $500,000.00
Issued: 4,283 shares of $100 Par 428,300.00
SURPLUS:
Capital Surplus 112,180.00
Undivided Profits 939,338.55
' 1,051,518.55
TOTAL NET WORTH 1,479,818.55
TOTAL $1,984,816.56
* Undelivered Equipment
OPERATING STATEMENT
POR YEAR ENDING DECEMBER 31, 1928.
OPERATING REVENUE:
Mail
Express
Passenger Service
Baggage - Excess
Special Service
Airplane Rental
$1,208,866.05
5,757.25
133,859.80
177.00
37,590.84
450.00
1,386,700.94 $1,386,700.94
EXPENSES:
Overhead
Traffic
Maintenance of Pields
Maintenance of Equipment
Transportation
Communication
Depreciation
Insurance & Obsolescence
101,108.97
100,733.56
35,032.54
106,183.22
145,100.08
13,997.54
146,570.52
48,000.00
NET PROPIT PROM OPERATIONS:
696,726.43 696,726.43
$ 689,974.51
Add: Miscellaneous Revenues:
Interest -
Gov't. Bonds
Interest -
Bank Balances, etc
Discount earned
Misc. Income
Sales -
Gas & Oil (Net)
Total Misc. Revenue
1,090.86
24,605.73
758.52
3,193.45'
1,254.73
30,803.29 30,803.29
CARRIED TO SURPLUS $ 720,777.80
*