W escern Air Express Corporation 
WESTERN AIR LINES, INC. 
RESEARCH DEPT. 
Burbank, California 
ANNUAL REPORT 
1 939 
 WESTERN AIR EXPRESS CORPORATION 
OFFICERS 
ALVIN P. ADAMS - - - - - - President 
L. H. DwERLKOTTE - - First Vice-President; 
Secretary & Treasurer 
CHARLIE N. JAMES - 
THOS. WOLFE 
- - - Vice-President 
Operations 
Vice-President 
Traffic 
E. H. BROWN - - - - - Asst. Secretary 
DIRECTORS 
Chairman: CHARLES BOETTCHER II 
ALVIN P. ADAMS STANLEY w. GUTHRIE 
SERGE F. BALLIF, JR. CHARLIE N. JAMES 
L. H. DWERLKOTTE JAMES Q. NEWTON, JR. 
HAROLD P. FABIAN w. F. NICHOLSON 
ALFRED FRANK 
REGISTRAR 
RALPH WAYCOTT 
THOS. WOLFE 
Citizens National Trust & Savings Bank, Los Angeles, California 
STOCK TRANSFER AGENT 
Security-First National Bank of Los Angeles, California 
AUDITORS 
Peat, Marwick, Mitchell & Co. 
GENERAL OFFICES 
Union Air Terminal, Burbank, California 
 March 1, 1940 
TO THE STOCKHOLDERS: 
There is submitted herewith Profit and Loss Statement of your company 
for the calendar year 1939, together with the Balance Sheet of the company as 
of December 31, 1939, to which is appended the report of Messrs. Peat, Mar-- 
wick, Mitchell & Co., accountants and auditors. 
Operations of the company for the year 1939 resulted in a net profit of 
$74,555.90 after all taxes and charges, including provision of $142,843.97 for 
depreciation and $12,500.00 for estimated Federal Income Taxes for the year 
1939. For the year 1938 a net loss of $12,531.72 was sustained after depre-- 
ciation charges of $162,567.44. 
The improvement in earnings is attributed largely to increased passenger 
business and mail revenues. The latter resulted from an air mail rate increase 
received from the Civil Aeronautics Authority on August 8, 1939 retroactive in 
its application to October 28, 1938. The decision increased the rate for the 
Salt Lake--San Diego route from 33--1 /3c to 37c per mile flown with mail and 
for the Salt Lake--Great Falls route from 33--1 /3c to 40c. In establishing the 
new rates which added approximately $40,000.00 annually to the company's 
mail revenue the Civil Aeronautics Authority reduced the authorized mileages 
between airports approximately 9% thereby partially offsetting the benefits 
which otherwise would have been obtained from the increased rates. Mail 
revenue for the year 1939 amounted to $809,979.57 as compared with $754,650.51 
for 1938 or an increase of 7.3%. 
Cash passenger revenue during 1939 amounted to $502,817.56 an increase 
of 28.7% over the $390,671.60 received in the previous year. Cash passenger 
revenue over the San Diego--Salt Lake route increased 26.6 % over the previous 
year, while the Salt Lake--Great Falls route increased 38.6%. 
Operating expenses in 1939, including $1,180.78 in Trade Exchange 
Advertising, were $1,301,074.96 as compared with $1,285,584.27 in 1938 which 
included $60,485.11 in similar advertising. Factors contributing toward in-- 
creased operating expenses were increased taxes and wages, expenses of par-- 
ticipating in hearings before the Civil Aeronautics Authority in Washington, 
D. C. and expenses of improving safety of operation. 
The following table shows revenue and expense comparisons for the past 
four years, together with certain operating statistics: 
 1939 1938 1937 1936 
Passenger Revenue-Cash ....... $ 502,817 $ 390,672 $ 325,920 $ 352,947 
Passenger Revenue- 
Trade Exchange ..................... 1,181 60,485 29,588 10,608 
Mail Revenue .............................. 809,980 754,650 469,511 330,198 
Express ....................................... 45,249 39,651 39,620 37,038 
Other Revenue ........................... 28,020 34,145 22,074 10,193 
GROSS REVENUE .............. $1,387,247 $1,279,603 $ 886,713 $ 740,984 
Operating and 
General Expenses .................. 1,157,050 1,062,532 834,991 546,069 
Trade Exchange Advertising .. 1,181 60,485 29,588 10,608 
Depreciation ............................... 142,844 162,567 94,508 95,639 
TOTAL OPERATING EXP $1,301,075 $1,285,584 $ 959,087 $ 652,316 
Net Operating Income .............. 86,172 (5,981) (72,374) 88,668 
Miscellaneous Charges ............. (884) 6,551 (37,434) 30,370 
Net Income before Provision 
for Federal Income Tax ......... 87,056 (12,532) (34,940) 58,298 
Provision for 
Federal Income Tax .............. 12,500 7,600 
NET INCOME. ..................... 74,556 (12,532) (34,940) 50,698 
Revenue Miles Flown ................ 2,277,161 2,309,938 1,898,520 1,533,356 
Cash Revenue 
Passengers Carried ............... 30,005 25,004 19,872 20,017 
Trade Exchange 
Passengers Carried ............... 70 3,734 1,904 225 
Cash Revenue 
Seat Miles .............................. 11,011,742 9,262,832 7,074,581 7,411,721 
Trade Exchange 
Seat Miles .............................. 23,799 1,288,929 579,593 62,053 
Mail Poundage ........................... 957,884 893,920 707,873 506,448 
Express Poundage ..................... 361,017 312,209 386,400 475,274 
( ) DENOTES RED FIGURES, 
NOTE :-Above statistics compiled using Post Office Department airway mileage to 8-1-99 and Civil 
Aeronautics Authority authorized "airport to airport" mileage thereafter, which represent an approximate 
9% decrease. 
The Balance Sheet of the Company as at December 31, 1939 shows current 
assets of $512,973.65, including cash of $249,337.20 as against current liabilities 
of $258,246.45. As of December 31 , 1938, current assets amounted to $341,442.10, 
including cash of $139,654.40, as against current liabilities of $85,837.31. The 
current liabilities as at December 31, 1939 include $115,484.05 for the purchase 
of new type and replacement engines for the company's Douglas and Boeing 
airplanes. These airplanes were also given a major overhaul in the last quarter 
of 1939 at a cost of approximately $46,000.00. 
A hearing was held on June 19, 1939 before the Civil Aeronautics Authority 
on the matter of your company's application to extend its route northward from 
Great Falls, Montana to Lethbridge, Canada. A hearing was also held before 
the Authority for approval of a contract between this company and United Air 
Lines Transport Corporation, providing for interchange of sleeper equipment 
over the lines of the two companies, thereby eliminating the necessity of 
passengers changing airplanes at Salt Lake City, Utah. The latter matter was 
recommended in the report of the trial examiner and a final decision on both 
matters is expected at an early date. 
 Pursuant to an option agreement between the holders of a majority of the 
outstanding stock of your corporation and United Air Lines Transport Corpor..- 
ation, the latter on July 8, 1939 filed an application with the Civil Aeronautics 
Authority captioned as follows: "Application of United Air Lines Transport 
Corporation under Section 408 ( b) of the Civil Aeronautics Act of 1938, for 
approval of the acquisition of control by United Air Lines Transport Corporation 
of Wes tern Air Express Corporation and approval of the merger of Western 
Air Express Corporation into United Air Lines Transport Corporation or the 
purchase by United Air Lines Transport Corporation of all of the assets of 
Western Air Express Corporation." This matter was designated as Docket 
No. 270 and was heard before the Authority on January 8, 1940 and it is 
expected that a decision will be released by the Authority in the near future. 
A very encouraging factor during the past year has been the improvement 
in passenger travel resulting from increased public confidence in the safety of 
airline operations. The industry have flown over 700 million passenger miles 
since the last fatality nearly a year ago. On this basis one could have flown 
226,000 times across the continent safely. This enviable safety record was 
brought about by the intelligent regulation and assistance of the Civil Aero..- 
nautics Authority and the efficient work and cooperation of the personnel of 
the airlines, including the personnel of your company. All who participated in 
achieving this record are entitled to our sincere appreciation. 
In order that your company may in 1940 increase its business to the fullest 
extent we ask the aid of each of you in encouraging your associates and friends 
to use our services. 
It is gratifying to note that the rising trend of passenger business which 
began in 1939 still continues. It is believed we may look forward to the coming 
year with cautious optimism. 
By order of the Board of Directors. 
LEo H. DwERLKOTTE, 
First Vice..-President 
 ASSETS 
Current Assets: 
Cash on Hand and in Banks ......................... . 
Accounts Receivable: 
Accounts Receivable from United States 
Post Office Department ........................ . 
Customers' Accounts Receivable .............. . 
Interline and Agents' Traffic Balances ..... . 
Sundry ( including $1,518.89 due from 
Officers and Employees) ...................... . 
Less Reserve for Doubtful Accounts ........ . 
Inventory of Parts and Supplies, at the 
lower of Cost or Market ............................ . 
Total Current Assets ...................... . 
Note Receivable-Secured by Deed of Trust 
($1 ,800.00 due in 1940) .................................. . 
Investments: 
Securities of Other Corporations .................. . 
Property not used in Operations-at Cost- 
less Reserves of $5,791.58 .......................... . 
Properties and Equipment: 
Land and Land Improvements ...................... . 
Buildings and Leasehold Improvements ....... . 
Airplanes, Propellers and Engines ................ . 
Radio Communication, Shop and Other 
Equipment and Furniture and Fixtures .... . 
Less Reserve for Depreciation ...................... . 
Def erred Charges: 
Prepaid Insurance, Rent, Taxes, etc ............. . 
Repair Parts to be removed from Airplane 
Engines Traded in (Estimated) .............. . 
Development of Air Routes .......................... . 
Total. ............................................... . 
$ 
WESTERN AIR EXPRESS CORPORATION 
144,594.91 
13,958.58 
38,877.71 
17,013.41 
214,444.61 
5,098.17 
1,724.34 
4,854.69 
24,206.94 
95,764.98 
659,272.59 
156,616.85 
935,861.36 
418,073.32 
42,799.16 
17,000.00 
6,820.89 
BALANCE SHEET 
As at Decemfer 31, 1939 
$ 249,337.20 
209,346.44 
54,290.01 
512,973.65 
5,827.20 
6,579.03 
517,788.04 
66,620.05 
$1,109,787.97 
LIABILITIES 
Current Liabilities: 
Accounts Payable-Trade ............................ . 
Interline and Agents' Traffic Balances ........ . 
Accrued Liabilities: 
Salaries, Wages and Commissions................ $ 
Insurance ......................................................... . 
Taxes, including Social Security Taxes ........ . 
Other ................................................................ . 
Reserve for Federal Income Tax ( Subject to 
Review by United States Treasury Dept.) .... . 
Total Current Liabilities ................ . 
Unused Portion of Tickets Sold .......................... . 
Reserve for Contingencies .................................... . 
Capital Stock and Surplus: 
Capital Stock: 
Authorized, 500,000 Shares of $1.00 each 
(Note 1) 
Outstanding 404,000 Shares ..................... . 
Capital Surplus ............................................... . 
Operating Deficit .............  
.............................. . 
Contingent Liabilities ( Note 2 ) 
Total. ............................................... . 
Notes constituting a part of the foregoing Balance Sheet are submitted on the following page. 
9,939.47 
8,125.06 
9,345.42 
$ 208,894.97 
562.09 
8,879.44 36,289.39 
404,000.00 
629,466.47 
1,033,466.47 
12,500.00 
258,246.45 
7,664.18 
3,113.79 
192,702.92 840,763.55 
$1,109,787.97 
 WESTERN AIR EXPRESS CORPORATION 
Balance Sheet, Continued 
NOTES CONSTITUTING A PART OF THE 
FOREGOING BALANCE SHEET 
Note 1, Capital Stock: 
In accordance with an employees' stock purchase plan, 7,691 
shares of capital stock were issued to the employees and manage ... 
ment of the Company during the year ended December 31, 1939, 
and additional subscriptions ( which may be cancelled at the option 
of the subscriber in whole or in part prior to issuance and delivery 
of the stock) for 5,969 shares have been received therefrom. 
Note 2, Contingent Liabilities: 
The Company is the defendant in two lawsuits aggregating 
in excess of $710,000.00 for damages arising out of an accident 
involving one of its airplanes on January 12, 1937. These two 
lawsuits were consolidated for trial and a verdict in favor of the 
Company was returned on December 29, 1938, and appeals have 
been taken by the plaintiff. Liability insurance in substantial 
amounts was carried by the Company, but should final judgment 
exceed the limits of insurance coverage, the Company will be 
liable for the excess amounts. 
In addition to the foregoing, sundry suits have been filed 
against the Company aggregating approximately $50,000.00, a 
substantial portion of which is covered by liability insurance. 
 WESTERN AIR EXPRESS CORPORATION 
PROFIT AND LOSS ACCOUNT 
For the Year ended December 31, 1939 
Operating Revenue: 
Mail. _________________________________________________ _ 
Passenger _________________________________________ _ 
Express, Freight and 
Excess Baggage __________________________ _ 
Other ______ ------------------------------------------- 
Total Operating Revenue __ _ 
Operating and General Expenses _ 
_____ _ 
Depreciation _________________________________________ _ 
Operating Profit __________________ _ 
Miscellaneous Income: 
Interest and Discounts Received ____ _ 
Sundry ______________________________________________ _ 
Less Miscellaneous Charges: 
Losses on Disposal of Equipment 
Expense of Property Not used 
in Operations - Net ______________ _ 
Sundry ______ . ______________________________________ 
_ 
_ 
Miscellaneous Income (Net)----- 
Net Income before Provision 
for Federal Income Tax __________ _ 
Provision for Federal Income Tax ____ _ 
Net Income __________________________ _ 
$ 192.93 
450.36 
1,784.09 
$1,158,230.99 
142,843.97 
1,509.35 
1,801.78 
3,311.13 
2,427.38 
SURPLUS (DEFICIT) ACCOUNTS 
Capital 
Surplus 
Balance as at December 31, 1938 .... - $ 621,775.47 
Excess of Accrual of Additional Air Mail 
Revenue at December 31, 1938, over 
Payment received in 1939--- 
Additional Legal Fees and Expenses, in 
connection with the above Air Mail Rev-- 
enue, not accrued at December 31, 1938 ......... 
Balance as at December 31, 1938, as adjusted--- 621,775.47 
Net Income for Year ended December 31 , 1939 .. 
One--Half Proceeds from Sale of Capital Stock.. 7,691.00 
Balance as at December 31, 1939 ................. _ 
....... $ 629,466.47 
$' 809,979.57 
503,998.34 
$ 
45,248.92 
28,020.28 
1,387,247.11 
1,301,074.96 
86,172.15 
883.75 
87,055.90 
12,500.00 
74,555.90 
Operating 
Deficit 
256,360.38 
4,663.82 
6,234.62 
267,258.82 
74,555.90 
192,702.92 
 To the Board of Directors of 
WESTERN AIR EXPRESS CORPORATION 
We have examined the Balance Sheet of Western Air 
Express Corporation as at December 31, 1939, and the Profit and 
Loss and Surplus (Deficit) Accounts for the year ended on that 
date, have reviewed the system of internal control and the account..- 
ing procedures of the Company and, without making a detailed 
audit of the transactions, have examined or tested accounting 
records and other supporting evidence, by methods and to the 
extent we deemed appropriate. 
As at January 1, 1939, the Company changed the basis pre..- 
viously used in providing for depreciation of airplanes by extending 
the estimated remaining useful life thereof and as a result the 
depreciation provision for the year ended December 31, 1939, is 
approximately $32,000.00 less than would have been provided had 
the basis previously used been continued. 
In our opinion, the accompanying Balance Sheet and related 
Profit and Loss and Surplus (Deficit) Accounts present fairly 
the position qf Western Air Express Corporation at December 
31, 1939, and the results of the operations for the year, in conform..- 
ity with generally accepted accounting principles which, except 
as indicated in the preceding paragraph, have been applied for 
the year on a basis consistent with that of the preceding year. 
Los Angeles, California, 
February 20, 1940. 
PEAT, MARWICK, MITCHELL & Co. 
  I 
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