W E S T E R N A I R LINES, INC. Officers William A. Coulter, President Leo II. Dwerlkotte, Executive Vice-President Charlie N. James, Vice-President, Operations 'Plios. Wolfe, Vice-President, Traffic Paul E. Sullivan, Vice-President & Secretary J. J. Taylor, Treasurer Directors William A. Coulter Leo H. Dwerlkotte Stanley W. Guthrie Glenn C. Wharton George Albert Smith Registrar Chase National Bank, New York, New York Citizens National Trust & Savings Bank, Los Angeles, California Stock Transfer Agent New York Trust Company, New York, New York Security-First National Bank of Los Angeles, California Auditors Peat, Marwick, Mitchell & Co. General Offices 6331 Hollywood Boulevard, Los Angeles 28, California New Wings over the West FLASHING ACROSS THE SKIES, come the first of Western's postwar fleet, fulfilling the promise of a new era in air transportation. Already in operation is the war-tested DC-4, whose four mighty engines speed its 44 passengers through the air at 230 miles per hour. Now in pro duction is the still swifter and more luxurious DC-6 with its pressurized cabin, full-size sleeper berths and 300-mile-per-hour speed. Also on order is the sensational new Consolidated 240 which, sometime in 1947, will replace the faithful DC-3. This remarkable twin-engine transport will set new standards of speed, luxury and economy, bringing the benefits of air travel within reach of all. By late 1947, this entire fleet, totaling 43 airplanes and representing an investment of $17,350,000.00 will be in operation, serving the needs of travelers and shippers over the farflung airways of Western America. [2] March 23, 1946 There is submitted here with Consolidated Profit and Loss Statement of your Company for the calendar year 1945, including the operations of Inland Air Lines, Inc., a subsidiary, together with the Consoli dated Balance Sheet of the Company as of De cember 31, 1945, to which is appended the re port of Messrs. Peat, Marwick, Mitchell & Co., accountants and auditors. Operations of the Company for the year 1945, including the operations of Inland Air Lines, Inc., resulted in a net profit of $208,- 102.24 after all taxes and charges including provision of $554,724.00 for depreciation and $150,900.00 for estimated Federal taxes on income for the year 1945. In comparison, the year of 1944 including seven months opera tion of Inland Air Lines, Inc., resulted in a net profit of $135,827.54 after provision of $321,- 321.53 for depreciation and $165,876.48 for Federal taxes on income. Phe improvement in net income is largelv the result of 79% more revenue miles being flown in 1945, made possible by placing into operation additional airplanes leased or pur chased from the U. S. Government. Revenues 7,279,009 revenue miles were flown in 1945 as compared to 4,057,495 in 1944, an increase of 79%. Passenger load fac tors continued at a high level during 1945, being 84.34% as compared to 86.28% in [3] RELATION OF REVENUE TO EXPENSES (IN MILLIONS OF DOLLARS) 0 12345678 1944. The combination of increased miles flown and a high passenger load factor re sulted in an increase in passenger revenue of $2,485,001.57 or 78.42%. This increase was obtained in spite of a 7.68% reduction in passenger fares on July 1, 1945. The passenger revenue total of $5,653,829.86 represents 79% of all operating revenue. Mail revenue amounted to $1,239,396.60, as compared to $836,556.04, an increase of 48%. Express freight, and excess baggage reve nue amounted to $205,980.94 as compared to $ 154,990.69, an increase of 3 3 %. Operating Expenses Although operating expenses per revenue mile flown dropped from $.9915 in 1944 to $.9414 in 1945 as a result of the 79% increase in revenue miles flown, basic costs such as wages and materials have con- sistentlv followed a rising trend. Personnel training and turnover have been factors in in creasing costs. The expansion of services and facilities and the necessity of preparing for anticipated further expansion of services in 1946 has substantially increased the operating costs of your Company. Financial Position The attached consoli dated Balance Sheet of your Company as of INC< >ME DOLI LAR PASSENGER REVENUE $ .79 EXPRESS, FREIGHT, AND EXCESS BAGGAGE .03 MAIL REVENUE .17 OTHER .01 $ 1.00 1.00 EXPENSE DOILAR 0.44 WAGES AND SALARIES .07 DEPRECIATION .06 TAXES .11 EQUIPMENT MAINTENANCE .07 GASOLINE AND OIL .04 INSURANCE .18 OTHER .03 TRANSFER TO SURPLUS December 31, 1945 shows current assets of $2,534,865.61 including cash of $1,407,813.89 as against current liabilities of $1,770,717.66. As of December 31, 1944 current assets amounted to $1,827,911.31, including cash of $398,762.81 as against current liabilities of $1,145,823.09. planes, representing a combined total of 312 passenger scats, arc all owned except five Douglas DC-3's which are leased from the United States Government. O11 December 12, 1944, a contract was en tered into with the Douglas Aircraft Company for the purchase of five Douglas DC-4 and 100,000,000 80,000,000 60,000,000 To improve the working capital position of your Company and provide funds for the ex pansion of facilities and equipment, 102,488 shares of capital stock were offered to share holders on December 21, 1945, at $20.00 per share on the basis of one new share for each four held. The offering was not underwritten but 98.4% of the stock was subscribed for, re sulting in $2,017,280.00 proceeds to your Company. Of this amount, $961,060. was re ceived on or before December 31, 1945. Equipment and Facilities As of Decem ber 31,1945 your Company, and its subsidiary, Inland Air Lines, Inc., operated fourteen Douglas DC-3 twenty-one passenger airplanes, including one undergoing conversion, two Lockheed Lodestar 14-passcnger airplanes, two Douglas C-47 cargo airplanes and one Stinson single engine airplane. These air- five DC-6 airplanes involving a total cost of $5,025,000. On November 30, 1945, this con tract was amended to include five additional DC-6 airplanes at a cost of $2,975,000. Six Douglas DC-4 airplanes were received from the United States Government during 1945 and two additional DC-4's had been ar ranged for and subsequently received. These airplanes will either be purchased or leased and approximately six months will be required to accomplish the necessary conversion and overhaul of each of them. Your management has also placed an order for twenty Consolidated Model 240 twin- engine airplanes. These airplanes arc designed to carry 40 passengers at 300 miles per hour and will involve a total cost of approximately $4,500,000.00. The latter airplanes arc in tended to replace the Douglas DC-3's. These new twin-engined airplanes and the Douglas [5] DC-6's will be delivered to your Company in 1947, while all of the DC-4's will he delivered and in operation during 1946. In connection with the proposed transfer of the airline terminal in Los Angeles, a con tract was entered into on October 25, 1945, for the erection of a new hangar, shop and of fice building at the Los Angeles Airport. It is estimated this building which will cost approx imately $1,500,000.00, will be ready for occu pancy about November 1, 1946. Considerable expansion and improvement in ticket offices has been undertaken by your Company during 1945 and further work of this nature will occur in the coming year. Generally, it appears that the expansion pro gram of equipment and facilities which was started during 1945 will continue for the next two years. New Routes Applications are pending be fore the Civil Aeronautics Board for the fol lowing additional routes: (a)Between Los Angeles, California and Rio de Janeiro, Brazil and Buenos Aires, Ar gentina via La Paz and Mexico City, Mexico; Guatemala City, Guatemala; San Jose, Costa Rica; Balboa, Canal Zone; Bogota, Colombia; Iquitos, Peru; Cobija and Santa Cruz, Bolivia; Asun cion, Paraguay; Curitiba, Sao Paulo and Porto Alegre, Brazil; and Montevideo, Uruguay. (b) Between Salt Lake City, U&dTTnTcLAIbin" querque, New Mexico, (via Provo and Price, Utah; Grand Iuncti^H^funtfeso- and Durango, Colorado. (c) Between Sheridan, Wyoming and Rapid City, South Dakota. (d) Between Cheyenne, Wyoming and Den ver, Colorado. (e) Between Los Angeles, California and Honolulu, T. H. and between San Fran cisco, California and Llonolulu, T. II. (f) Between San Francisco, California and Seattle, Washington via Sacramento and Chico, California; Klamath Falls, Bend, The Dalles and Portland, Oregon; As toria, Aberdeen-Hoquiam and Olympia, Washington. Also, between San Fran y 0 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1942 1943 1944 ?AS 1942 1943 1944 1945 1942 1943 1944 1945 cisco, California and Seattle, Washing ton via Oakland, Santa Rosa and Eureka, California; North Bend, Marshfield, Al bany, Corvallis and Portland, Oregon. (g)Between Seattle, Washington and Great Falls, Montana via Spokane, Washing ton, Coeur D' Alene, Idaho and Kalispell, Montana. (h)Between San Francisco, California and Butte, Montana via Oakland and Sacra mento, California; Reno, Nevada and Boise, Idaho. (i) Between Las Vegas, Nevada and San Francisco, California. (j) Between Los Angeles, California and San Francisco, California via Ventura, Santa Barbara, Santa Maria, San Luis Obispo, Paso Robles, Coalinga, King City, Mon terey, Santa Cruz, San Jose and Palo Alto, California. (k) Between Lethbridge, Canada and Nome, Alaska via Calgary, Edmonton and Grand Prairie, Canada; and Juneau, An chorage and McGrath, Alaska, with sup plementary service between Anchorage and Fairbanks, Alaska. (l) Between Seattle, Washington and Nome, Alaska via Ketchikan, Juneau, Anchorage and McGrath, Alaska with supplemen tary service between Anchorage and Fair banks, Alaska. (m) Between Denver, Colorado and Minne- apolis-St. Paul, Minnesota via Ft. Morgan, and Sterling, Colorado; North Platte and Norfolk, Nebraska; Sioux City, Iowa and Mankato, Minnesota. (n) Between Huron, South Dakota and Chi cago, Illinois via Mitchell and Yankton, South Dakota; Sioux City, Ft. Dodge, Waterloo and Dubuque, Iowa and Rock ford, Illinois. (o) Between El Centro, California and Dal las, Texas via various intermediate cities. (p) Between Salt Lake City, Utah and Dallas, Texas via various intermediate cities. (q) Between Reno, Nevada and El Paso, [8] fa POCATLi OGDEN T lake 'SCOTTSBUFF LAS VEGAS ch'CAgo To Edmonton and Alaska A To Alaska LETHBRIDGE SPOKANE yj . a/rpk CUT BANK THE DALLES great FALLS LW 1ST OWN \,s y\W !!V* * s'*- SAN BERNARDINO palm y springs* ^ALBUQUERQUE ' ''xA 1% Fr Po LOS ANGELES ,,o^ 6 0\V> PAZ MEXICO \ WESTERN AIR LINES, INC. route certificates NOW HELD mm ROUTES APPLIED FOR CONNECTING AIR LINES \ GUATEMALA ^ CITY \ SAN JOSE PANAMA CANAL ZONE M 'it ip111 \ To South America ^ k ASSETS Current Assets: Cash in banks and on hand Accounts receivable: United States Post Office Department . . $ 167,034.39 United States Army Air Forces (Note 1 ) 253,974.63 Interline and agents' traffic balances 188,393.80 Customers' accounts receivable 148,375.92 Sundry (including $18,106.11 due from employees) .... 70,254.22 Inventory of parts and supplies at the lower of cost (first-in, first-out) or replacement market Subscriptions to capital stock (7,320 shares @ $16.50 and 49,833 shares @ $20.00) (Note 2) 1,117,440.00 Less payments received 1,113,560.00 Investments: Sundry securities 4,337.34 Propcrtv not used in operations at cost--less reserve for deprecia tion of $2,108.81 16,877.82 Properties and Equipment, at cost: Land 8,921.40 Buildings and leasehold improvements 174,328.25 Airplanes, propellers, engines and flying equipment (Note 3) . 2,1 50,541.54 Radio stations, furniture, fixtures, shop and other equipment . . 876,106.68 3,209,897.87 Less reserve for depreciation 1,579,354.99 Deposits on equipment purchase contracts (Note 4) Routes, Contracts and Leases: As recorded on books of subsidiary company 108,557.06 Represented bv excess of cost of stock of subsidiary over net assets thereof 44,993.51 Prepaid rent on airplanes leased from the United States Government . Prepaid insurance, rent, taxes, etc $1,407,813.89 828,032.98 299,018.74 2,534,865.61 3,880.00 21,215.16 1,630,542.88 586,404.00 1 53,550.57 264,174.51 179,640.22 $5,374,272.95 AS OF DECEMBER 3 1 , 19 4 5 LIABILITIES Current Liabilities: Notes payable to bank 3% equipment notes payable to bank, portion due in 1946 (Note 3) Accounts payable--trade Interline and agents' traffic balances payable Accrued salaries, wages, taxes, insurance, etc Provision for Federal taxes on income Unused portion of tickets sold 3% equipment notes payable to bank, due after 1946 (Note 3) . . . Reserve for aircraft and engine overhaul Minority stockholders interest in subsidiary company Capital stock subscribed ( 57,153 shares) (Note 2) Capital stock of $1.00 par value per share. Authorized 1,000,000 shares; issued and outstanding 409,954 shares $ 300,000.00 142,000.00 696,328.15 4,506.91 484,766.92 143,115.68 1,770,717.66 129,671.80 170,000.00 147,492.11 30,127.88 1,117,440.00 409,954.00 Surplus: Capital surplus $ 628,249.68 Earned surplus 970,619.82 1,598,869.50 Contingent Liabilities: Damage claims, if any, in excess of insurance coverage which is carried in substantial amounts $5,374,272.95 NOTES TO FINANCIAL STATEMENTS 1. The Accounts receivable from the United States Army Air Forces is stated after adjustments for renegotiation of charges to Army contracts for the years 1942 to 1945 inclusive and adjustments of charges to terminated contracts as agreed upon with the Termination Con tracting Officer. Such adjustments aggregated approximately $175,000.00 and the reserve for contingencies previously provided therefor together with the reduction in Federal taxes on income resulting from disallowed charges to Army contracts were adequate to meet the amount of the adjustments agreed upon. 2. On December 28, 1945 the Company offered its shareholders the right to purchase at $20.00 per share, 102,488'/2 shares of its capital stock of $1.00 par value on the basis of one share for each four shares owned. In addition an offering of options to purchase 25,436 2/3 shares of the Company's capital stock of $1.00 par value at a price of $16.50 per share at any time from December 1, 1945 to December 1. 1947 was made to certain of its officers and employees and the officers and employees who exercise their options will be offered the right to purchase at $20.00 per share, not to exceed 6,359 1/6 shares, on the basis of one share for each four shares purchased under such options. It is contemplated that the Company will offer 63,591 2/3 additional shares of its capital stock of $1.00 par value at future dates under and in compliance with the provisions of the Employees' Stock Purchase Plan and the Management Stock Purchase Plan approved by the shareholders on January 3, 1945. At December 31, 1945 options were exercised and subscriptions received for 57,153 shares. 3. Title to two Douglas DC-3 airplanes is registered in the name of a bank as security for a loan covering a portion of the purchase price of said airplanes. As of December 31, 1945 a balance of $22,000.00 remains unpaid. Five other Douglas DC-3 airplanes are subject to chattel mortgages in favor of a bank as security for a promissory note dated May 15, 1945, on which $290,000.00 remains unpaid on December 31, 1945. 4. In December 1944 and November 1945 Western Air Lines, Inc. entered into contracts with Douglas Aircraft Company for the purchase of fifteen airplanes at a cost of $8,000,000.00. In accordance with the terms of these contracts, deposit payments of $50,000.00 and $25,000.00 were made in January 1945 and January 1946, respectively. Progress payments totaling $512,500.00 were made in September and November 1945. A final payment of $302,500.00 was made on January 18. 1946 upon delivery of one airplane and it is contemplated that further payments totaling $1,210,000.00 will be made in March and April 1946 upon delivery of four airplanes. A progress payment of $743,750.00 will be payable on or before January 1, 1947 and it is contemplated that payments totaling $5,156,250.00 will be made during 1947 upon delivery of the other airplanes. On September 24, 1945 the Company purchased 16 engines at a total cost of $239,040.00 and a deposit payment of $23,904.00 was made on December 31, 1945. FOR THE YEAR ENDED DECEMBER 31, 1945 Operating Revenue: Passenger Mail Commercial express, freight and excess baggage Equipment rentals and incidental services . . Operating expenses $5,624,543.58 General and administrative expenses 673,346.39 Depreciation 5 54,724.00 Other Income: Profit from fixed fee United States Army Air Forces contract . . . . Net income from concession operations: Operating revenue $317,442.85 Less operating expenses 259,831.20 Income from property not used in operations (net) Interest and discounts received Sundry Operating Profit Other Charges: Interest paid 13,196.69 Loss on disposition of property 665.12 Sundry 12,656.48 Profit before Taxes on Income . . . Provision for Federal normal income and surtax 15,781.00 57,611.65 780.07 5,834.70 1,220.69 Minority stockholders' interest in net income of subsidiary . Net Income STATEMENT OF CONSOLIDATED SURPLUS Consolidated Capital Surplus: Amount at December 31, 1944 Expenses re offering of Capital Stock (Note 2) Amount at December 31, 1945 Consolidated Earned Surplus: Amount at December 31, 1944 . . . . . Net income for the year Amount at December 31, 1945 $5,653,829.86 1,239,396.60 205,980.94 58,721.42 7,157,928.82 6,852,613.97 305,314.85 81,228.11 386,542.96 26,518.29 360,024.67 150,900.00 209,124.67 1,022.43 $"208,102.24 $ 648,214.12 19,964.44 $ 628,249.68 $ 762,517.58 208,102.24 $ 970,619.82 [ 12 } Texas via various intermediate cities. (r) Between Albuquerque, New Mexico and El Paso, Texas via various intermediate cities. (s) A number of secondary routes and addi tional cities as intermediate stops on ex isting routes. Legal proceedings on all of the applications, excepting items (m) to (r) inclusive have been completed and a final decision from the Civil Aeronautics Board is expected in the near future. No prediction can be made as to what such decisions may be. Your Company expects to inaugurate service over the Los Angelcs-Dcnver route about April 1, 1946. Service to Palm Springs was started on November 16,1945, which was extended to El Centro and from El Centro to San Diego on January 13, 1946. Operations to Alaska for the Air Transport Command were terminated on September 1, 1945. During three years a total of 7,721,059 miles were flown without injury to person or damage to aircraft and at the same time setting a record for economy of operation and utiliza tion of aircraft. The Organization At the close of a year in which the pressure of work has been particu larly heavy, our gratitude and commendation are due each of the 1,674 employees of the Company for their continued loyalty and co operation. We are fortunate in having the services of so fine a group of men and women. On January 3,1945, the corporation's share holders approved and adopted an Employees' Stock Purchase Plan and a Management Stock Purchase Plan and allocated 33,010 shares and 43,300 shares, respectively, of the corpora- tion's unissued capital stock to the two plans. The purchase price was fixed at $16.50 per share, the market price of the stock on the dav the plans were approved. Outlook for the Future A substantial ex pansion in mileage to be flown and gross rev enues to be derived may be reasonably antici pated during the year 1946. A11 increase in number of airplanes in service will make it possible for your Company to be of service to the many persons whose travel desires have been denied during the postwar period and to improve its service to the thirty cities on your Company's system. However, several clouds loom to dim the otherwise bright prospects for the future, in cluding (a)The rising trend in wages and materials. (b) Large capital expenditures for new equip ment, buildings and facilities. (c) Lower passenger load factors as all air lines expand their schedules and services. (d) The trend toward lower passenger and cargo rates in spite of increasing costs. (e) Heavy training costs arising from in creased personnel and rapid turnover. (f) The possibility of increased taxation and regulation by the various states. On April 17, 1946 your Company will cele brate the 20th anniversary of its inauguration of service. We feel that the pioneering spirit which has enabled it to withstand the shocks of the past twenty years will insure its con tinued growth and progress. PRESIDENT Sectional view of Western Air Lines new DC-6. Carries 52 passengers by day, 26 in full size berths at night. 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 1926 First flight between Salt Lake City, Las Vegas and Los Angeles, April 17, 1926. Western is sole sur vivor of early air mail contractors. First airline to carry passengers on scheduled air mail flights, May 23, 1926. 1927 Cheyenne - Denver - Pueblo air mail contract awarded. Service started December 10, 1927. 1928 Established "Model Airway" be tween Los Angeles and San Fran cisco under grant from Guggenheim Foundation, May 26, 1928. This was the nation's first deluxe multi- engine transport service, featuring such innovations as free meals to pas sengers in flight, limousine service to and from airports, weather fore casting system and flight logs to pas sengers. Acquired Pacific Marine Airways, op erating amphibious run from Los Angeles to Santa Catalina Island, June, 1928. 1929 West Coast Air Transport, San Francisco to Seattle, acquired as af filiated company--January, 1929. Night mail flights to Salt Lake City --May, 1929, Los Angeles to Kansas City via Albu querque in operation--June, 1929. Also Standard Air Lines began oper ation, Los Angeles-El Paso; legal formalities for acquisition completed May, 1930. 1930 First airline to use four-motored passenger transports; Fokkcr F-32's make debut. First two-way radios installed under direction of Herbert Hoover, Jr. Million dollar Alhambra Airport dedicated, April 17, 1930. Forced by Post Office Department to merge some of its operations with Trans continental Air Transport to form Transcontinental and Western Air, Inc., (TWA); service over central coast-to-coast mail route inaugu rated, October 1, 1930. 1931 General Motors Corp. acquires WAE control--March 3, 1931. Western takes over Mid-Continent Air Express--October 1, 1931. (Pu eblo to Amarillo; Pueblo to El Paso). 1932 Irving Krick joins Western; air mass analysis system of weather fore casting tested and proved; since has been universally adopted. 1933 Despite depression and general uncertainty of air transport business, Western showed net profit of $ 186,- 250.48 for the year. 1934 Air Mail Cancellations--April. Merger with TWA broken by new Government ruling, leaving Western with only its route between San Diego-Los Angeles-Las Vegas, Salt Lake City after new bids were awarded. 1935 On March 11, 1935 second mail flight daily granted by Post Office for Los Angeles-Salt Lake City. 1936 Fifty thousand dollars spent to survey direct air route, Los Angeles to Denver via Las Vegas and Grand Junction, Colorado. Awarded safety plaque as first airline to operate continuously for 10 years without passenger fatality--April, 1936- 1937 Western Air purchased National Parks Airways extending service from Salt Lake City to Great Falls, Mon tana, via Pocatello, Idaho Falls, Butte and Helena. 1938 Applied to newly created gov ernment body for airline regulations (Civil Aeronautics Authority), for an extension of Salt Lake-Great Falls route to Lethbridge, Canada--No vember 18, 1938. 1939 Year nets profit of $74,555.90, largely due to intensive passenger selling and promotion of all-expense vacation tours. 1940 William A. Coulter, owner of largest block of Western stock, be comes President--March 11, 1940. Lethbridge extension granted and interchange of equipment inaugu- ated with United Air Lines. 1941 Name changed from Western Air Express to Western Air Lines. 1942 Western Air Lines in midst of war assignment; 2,000 mile route for Air Transport Command from Great Falls to Fairbanks and Nome, Alaska; established perfect safety record in nearly 50,500 hours of fly ing for A.T.C. ending August, 1945. 1943 Awarded route from Los An geles through San Bernardino, Palm Springs, and El Centro; service be gan in 1945, bringing rich resort and agricultural area into Western Air network. Inland Air Lines purchased, adding 1,200 route miles in Montana, South Dakota, Wyoming and Ne braska. 1944 Granted right to fly direct from Los Angeles to Denver, establishing shortest coast-to-coast route; service to start in April, 1946. Returned to San Francisco with award of Los Angeles San Francisco route by CAB; service inaugurated May, 1944. 1945 Western Air Lines now is oper ating 4,016 miles of air routes, an increase of 460 per cent since 1936. Western's blueprint for the future encompasses a tremendous expansion with requests before the Civil Aero nautics Board for 24,385 additional miles of routes in the United States, Alaska, Hawaii, Mexico, Central and South America. 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 1946 Plane preview for 1946-1947 The tremendous technological developments of the war years are reflected in the vastly improved performance of the new transport planes now coming on the market. Greater speed and range and lower operating costs have hastened the obsolescence of prewar equipment to the point where it is no longer economical to operate. Keep ing pace with the industry, Western Air Lines has signed contracts for a complete new fleet of transport planes totaling $17,350,000. Carefully selected to meet the varied operating conditions along Western's net work of air routes, these planes will be delivered during 1946 and 1947, gradually replacing the faithful DC-3's which have served so well. DOUGLAS DC-4 As the C 54 Army Transport, this 42- ton plane made history on the world's hattlefronts, setting standards for sc ice and dependability that have never been surpassed. Western Air Lines has purchased 13 of these giant craft, all of which will be in service by September, 1946. STATISTICS Passengers 44-54 Length overall 93 ft. 11 in. Wingspan 117 ft. 6 in. Horsepower (4 engines) 5800 lip. Fuel Capacity. 2877 ga^s- Cruising Speed 239 m.p.h. Absolute range 4680 miles Cost $450,000 DOUGLAS DC-6 Postwar successor to the DC-4 *s ^1C DC-6, now in volume production at the Douglas Aircraft Company. Larger and faster than the model it replaces, the DC-6 incorporates all the latest sci entific improvements and conveniences, such as pressurized cabin, full-sized sleeper berths, luxury interiors and many others. Western has ordered 10 of these long-range luxury planes which will be delivered sometime in 1947. STATISTICS Passengers 52 day plane WEWP 26 sleeper plane 1 .ength overall . . . 100 ft. 7 in. Wingspan . . . 117 ft. 6 in. Horsepower (4 engines) Fuel Capacity ... .25-7 gals. Top cruising speed. . . . ....315 m.p.h. Absolute Range . . . .4100 miles Cost $650,000 CONSOLIDATED 240 This sensational design is the first high speed twin-engine transport with pres surized cabin to be offered for airline use. Featuring utmost luxury, combined with low operating cost, this model offers the advantage of jet power re covery from the engine exhaust, giving added speed and greater reserve powc Western has contracted for 20 Cc idated 240's for delivery in 1947, plus an option for an additional 30 if needed. STATISTICS Passengers 40 Length overall 73 ft. 4 in. Wingspan 91ft. 9 in. Horsepower (2 engines) 4800 lip. Fuel Capacity 1000 gals. Cruising Speed 302 m.p.h. Absolute Range 800 miles Cost $250,000 Revenue: 1942 1943 1944 1945 Increase 1945 over 1944 Percent of Increase 1945 over 1944 Passenger $ 1,242,541 $ 1,709,402 $ 3,168,828 $ 5,653,830 $ 2,485,002 78.42% Mail 760,573 260,906 836,556 1,239,397 402,841 48.15% Express, Freight and Excess Baggage 191,051 148,473 154,991 205,981 50,990 32.25% Other 180,892 42,672 97,280 58,721 (38,559) (39.64%) Total $ 2,375,057 $ 2,161,453 $ 4,257,655 $ 7,157,929 $ 2,900,274 68.12% Revenue Miles Flown 2,318,305 2,057,028 4,057,495 7,279,009 3,221,514 79.40% Revenue Passengers Average No. Passengers per 77,801 80,907 147,854 303,931 156,077 105.56% Revenue Mile Average Revenue per Passenger 10.52 15.84 15.54 16.09 .55 3.54% Mile .0509 .0525 .0502 .0483 (.0019) (3.78%) Passenger Seat Miles Flown.... 39,348,869 38,498,693 73,101,222 138,852,497 65,751,275 89.95% Revenue Passenger Miles 24,393,816 32,589,240 63,073,101 117,105,887 54,032,786 85.67% Load Factor 61.99 84.65 86.28 84.34 (1.94) (2.25%) Mail Pounds Carried Express and Freight Pounds 1,547,984 1,914,391 4,534,732 6,694,856 2,160,124 47.64% Carried ( ) Denotes Decrease 1,258,368 957,291 943,415 1,508,847 565,432 59.93% 1945 1945 Expense: Depreciation Other Operating & General Expense Operating Expenses per Revenue Mile Percent of Scheduled Service Performed No. of Employees (Average). ( ) Denotes Decrease 1942 1943 1944 1945 over 1944 over 1944 $ 215,707 $ 203,886 $ 321,322 $ 554,724 $ 233,402 72.64% 1,582,160 1,850,699 3,701,527 6,297,890 2,596,363 70.14% 1,797,867 $ 2,054,585 $ 4,022,849 $ 6,852,614 $ 2,829,762 70.34% .7755 96.17 485 .9988 94.44 807 [18] .9915 95.43 1,120 .9414 98.41 1,641 (6.52) (6.58%) 2.98 521 3.12% 46.51% ACCOUNTANTS' REPORT lb the Board of Directors, WESTERN AIR LINES, INC. We have examined the Consolidated Balance Sheet of Western Air Lines, Inc., and its subsidiary Inland Air Lines, Inc., as of December 31, 1945, and the statements of Consolidated Profit and Loss and Surplus for the year then ended, have reviewed the system of internal control and the accounting procedures of the Companies and, without making a detailed audit of the transactions, have examined or tested accounting records of the Companies and other supporting evidence, by methods and to the extent we deemed appropriate. Except that it was not practicable to confirm the accounts receivable from United States Government departments and agencies, as to which we have satisfied ourselves by means of other auditing procedures, our examination was made in accordance with generally accepted auditing standards applicable in the circumstances and included all procedures which we considered necessary. In our opinion, the accompanying Consolidated Balance Sheet and related statements of Consolidated Profit and Loss and Surplus present fairly the consolidated position of Western Air Lines, Inc., and subsidiary at December 31, 1945, and the results of their operations for the year, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. PEAT, MARWICK, MITCHELL & CO. Los Angeles, California, March 19, 1946. [ 19 ] Printed in U.S.A.