Western Air Lines Annual Report 1946

Officers and Directors
Registrar
Stock Transfer Agent
Auditors
General Offices
Terrell C. Drinkwater, President and Director
Leo H. Dwerlkotte, Executive Vice President and Director
Charlie N. James, Vice President
in Charge of Flight Operations, Engineering and Maintenance
Marvin W. Landes, Vice President
in Charge of Customer and Station Service
Richard A. Dick, Vice President
in Charge of Traffic and Advertising
Paul E. Sullivan, Vice President and Secretary
Ronald C. Kinsey, Vice President
J. J. Taylor, Treasurer
Robert K. Light, Assistant Secretary
William A. Coulter, Director
Stanley W. Guthrie, Director
George Albert Smith, Director
Chase National Bank, New York, New York
Citizens National Trust & Savings Bank, Los Angeles, California
New York Trust Company, New York, New York
Security-First National Bank of Los Angeles, California
Peat, Marwick, Mitchell & Co.
135 South Doheny Drive, Beverly Hills, California
T 0 T H E STOCKHOLDERS 0 F
MARCH 21 , 1947
* Submitted herewith is the
Consolidated Balance Sheet of your Company
and its subsidiary (Inland Air Lines, Inc.) as
of December 31, 1946, together with a state-
ment of Consolidated Profit and Loss for the
calendar year 1946 to which is appended the
report of Messrs. Peat, Marwick, Mitchell &
Co., Accountants and Auditors.
Operations of the company and its subsid-
iary for the year 1946 resulted in a loss of
$943,238.36 after all taxes and charges includ-
ing provision of $1,368,595.68 for deprecia-
tion and credits resulting from the "carry
back" provisions of the Federal Internal Rev-
enue Code of $278,036.16 and net profit of
$107,211.77 derived from the disposition of
equipment. In comparison, the year 1945 re-
sulted in a net profit of $208,102.24 after a11
taxes and charges, including provision of
554,724.00 for depreciation and $150,900.00
for estimated Federal taxes on income.
The loss for the year 1946 may be attributed
to the following:
(a) Added costs resulting from the upward
trend of prices and wages. On January
1, 1946 the working hours for ground
employees in the entire airline indus-
try were decreased from 48 to 40 hours
per week without reduction in "take
home" pay. Further wage increases
were granted generally throughout the
company during the year.
(b) Decrease in mail loads and a severe
drop in passenger loads beginning in
October 1946.
( c) Delayed deliveries of new and con-
verted four-engine airplanes. 1 cchnical
personnel, such as pilots, mechanics,
etc., must be employed and trained
weeks in advance and the delay of sev-
eral months in the delivery of the air-
planes which they were employed to
operate and maintain, caused the com-
pany to absorb an abnormal salary bur-
den, without benefit of the revenue
anticipated, during the period the de-
livery of the airplanes was delayed.
( d) Training of pilots for operation of four-
engine Douglas DC-4' s.
( e) Decrease in personnel efficiency occa-
sioned b; a high rate of turnover and
rapidly augmented personnel during a
period of labor shortages.
( f) Expenses incidental to the inaugura-
tion of service on April 1, 1946 on the
Los Angeles-Denver route.
REVENUES
* Substantial percentage increases
in all types of revenue, except mail, were re-
corded in the year 1946 as compared with
1945. During the first nine months of the year,
*EXPRESS POUNDS CARRIED
1943 957,291
1944 943,415
1945 1,508,847
1946 3,262,751
your company experienced a demand for air-
plane passenger accommodations in excess of
the mun her of scats available, but in the last
three months a reverse condition existed as a
result of the added number of planes in opera-
tion and the severe decline in load factors
which started in October. The latter decline is
attributed to a general decrease in travel and
the adverse publicity directed at the airline
industry and inadequate service.
A total of 1 o, 594,182 revenue miles were
flown in 1946 as compared with 7,279,009 in
1945, an increase of 45 % . 31 % of the 1946
mileage was flown with four-engine equip-
ment. Passenger revenue for 1946 amounted
to $ 10,473,695.18 as compared vvith $5,653,
829.86 in 1945 or an increase of 84 % . Mail
revenue amounted to 981,676.78 as com-
pared to 1,239,396.6o for 1945. Express and
freight revenue amounted to 2_p,400.25 m
1946 as against 205,980.94 in 1945.
OPERATING EXPENSES* A fair comparison of
expenses per revenue mile for 1946 ,, ith those
of the previous year cannot be obtained due
to the substantial mileage flown in 1946 with
the larger four-engine airplanes, while onl,
twin-engine airplanes were operated in 1945.
However, basic costs, such as materials and
wages, increased materially during 1946. The
*MAIL POUNDS CARRIED
1943 1,914,391
1944 4,534,732
1945 6,694,856
1946 3,704,185
BREAKDOWN OF WESTERN AIR LINES' REVENUE DOLLAR
PASSENGER REVENUE ... $0.87
MAIL REVENUE. ........ .08
EXPRESS, FREIGHT &
EXCESS BAGGAGE . . . . .03
OTHER .. . .. .. .. .. . .. .. .02
$1.00
WAGES & SALARIES ..... $0.50
DEPRECIATION . . . . . . . . .11
TAXES . . . . . . . . . . . . . . . . .02
EQUIPMENT
MAINTENANCE . . . . . . .12
GASOLINE & OIL. ...... .08
INSURANCE . . . . . . . . . . . .04
OTHER . . . . . . . . . . . . . . . . .21
$1.08
CHARGE
TO SURPLUS ........... . .08
$1.00
factors contributing to increased costs have
been hereinbefore outlined. In the summer of
1946, engineering surveys to reduce costs and
increase personnel efficiency were undertaken.
Considerable improvement was made but the
program has been seriously handicapped be-
cause of the lack of adequate shop and hangar
facilities at Lockheed Air Terminal, Burbank,
California, where your company's principal
operations base is located. A new building is
now under construction at Los Angeles Air
Terminal and will be fully occupied by July 1,
1947
FINANCIAL POSITION
* The financing
program previously arranged with commercial
banking institutions could not be completed
in 1946.
Due to adverse market conditions, the oper-
ating losses sustained by a majority of the air-
lines during the last quarter of 1946, and the
adverse publicity occasioned by accidents, a
proposed sale of new common stock could not
be consummated during 1946. Consequently
your management has been obliged to defer
\Vestern Air Lines major financing program
until later in the year 1947. During the interim
your company will operate with temporary
financing and will curtail costs and capital ex-
penditures in every possible way.
Generally the necessary deferment of the
major financing program, coupled with heavy
operating losses, have seriously impaired your
company's working capital and financial posi-
tion. Both must be remedied in 1947.
The attached Consolidated Balance Sheet
as of December 31, 1946 shows current assets
of 3,770,964.46, including cash of $1,137,-
094.22 as against current liabilities of 8, 328,-
313.35 The latter includes substantial
amounts which should be converted to long
term financing, or paid from the proceeds of
sale of additional stock. As of December 31,
1945 current assets amounted to 2,534,-
865.61, including cash of 1,407,813.89 as
against current liabilities of $1,770,717.66.
EQUIPMENT AND FACILITIES
* As of December
31, 1946 your company, and its subsidiary,
operated eleven Douglas DC-3 twenty-one
passenger airplanes, two Douglas C-4 7 cargo
airplanes, four Douglas DC-4 forty-four pas-
senger airplanes, seven Douglas C-54 fifty-four
passenger airplanes, one Douglas C-54 cargo
airplane and two single engine airplanes.
On October 30, 1946 your company noti-
fied the Douglas Aircraft Company of its in-
tention to cancel its order for five Douglas
DC-6 airplanes contracted for on November
30, 1945, leaving a balance of five on order
which were contracted for on December 12,
1944. On November 7, 1946 notice was given
Consolidated-Vultee Aircraft Corporation of
the company's intention to reduce by one-half
the mun ber of Convair 240 airplanes con-
tracted for on March 2 5, 1946. Ten Convair
240 airplanes remain on order and these are
scheduled for delivery to your company in the
last six months of 1947. Such cancellations,
together with decreases in related equipment
orders, reduced outstanding commitments ap-
proximately $7,500,000.00.
Under date of October 2 5, 1945 your com-
pany entered into a standard commission con-
tract with The Austin Company for the con-
struction of a combination hangar, shop and
operations office building on ground leased by
80,907
-
147,854
-
303,931
602,302
1943
1944
1945
1946
32,589,240
-
63,073,101
-
117,105,887
214,022,511
your company at the Los Angeles Airport. This
building, which will cost approximately
$2,000,000.00, is about 90% completed and
partially occupied and should have a marked
effect on the efficiency and costs of operation
of your company because of the inadequacy
of facilities presently used at the Lockheed Air
Terminal.
NEW ROUTES * On May 17, 1946, the Civil
Aeronautics Board awarded your company a
route from Los Angeles, California to Mexico
City via San Diego, California and La Paz,
Mexico, and on August 1, 1946 a route from
Lethbridge, Canada to Edmonton, Canada
via Calgary, Canada. These franchises are
subject to the approval of the Mexican and
Canadian Governments, respectively, and no
information has been received as to whether
and when such approval may be obtained by
our government.
In addition to these international routes,
your company's subsidiary, Inland Air Lines,
Inc., was awarded a route from Huron, South
Dakota to Minneapolis, Minnesota via Brook-
ings, South Dakota and Rochester and Man-
kato, Minnesota on December 19, 1946, and
a route from Sheridan, Wyoming to Rapid
City, South Dakota on March 28, 1946. Serv-
ice on these routes will be inaugurated April 1,
1947
SALE OF LOS ANGELES-DENVER ROUTE
* On
March 6, 1947, your company entered i11to an
agreement to sell its Los Angeles-Denver route
and certain ground facilities, airplanes, parts
and other equipment necessary to operate the
route to United Air Lines for 3,750,000.00.
The sale is subject to approval by the Civil
Aeronautics Board. As a part of the sales agree-
ment your company borrowed $1,000,000.00
in cash from U nitecl Air Lines, evidenced by
a note clue September 1, 1947 secured by a
chattel mortgage on four-Douglas four-engine
airplanes. This amount was used to meet cur-
rent obligations and will be applied on the
purchase price of $3,750,000.00 if the sale is
approved by the Civil Aeronautics Board.
In addition, your company's contract with
the Douglas Aircraft Company for the pur-
chase of five Douglas DC-6 airplanes at a total
cost of approximately $3,265,000.00 is ex-
pected to be assigned to U nitecl Air Lines.
T
egotiations are in process to cancel previous
commitments for spare parts, engines, etc.,
ordered for these airplanes.
RATES* On 1arch 10, 1947 the domestic air-
lines, including your company, filed an agree-
ment with the Civil Aeronautics Board pro-
viding for a 10% increase in passenger fares.
Early approval of this increase is expected. A
petition for a permanent air mail rate revision
was filed by your company with the Civil Aero-
nautics Board on May 1, 1944 and on February
24, 1947, a second petition was filed with the
Civil Aeronautics Board for an emergency
temporary mail rate adjustment. A hearing
regarding the latter petition was held by the
CAB on March 1 7, 194 7 and an early decision
is anticipated.
We wish to express our appreciation to our
employees who have so loyally and energeti-
cally devoted their efforts to overcoming the
problems which have presented themselves
during this post war readjustment period. Mr.
vVilliam A. Coulter resigned as President of
your Company on December 31, 1946. Mr.
1 errell C. Drinkwater was elected President
and a Director on January 1, 1947.
l ~ C - ~
President
Current Assets:
Cash in banks and on hand (Note 1)
Accounts receivable:
ASSETS
United States Post Office Department . . . . .
United States and State Government Departments
Interline and agents' traffic balances . . . . .
Customers' accounts receivable . . . . . .
Other (including $16,035.25 due from officers and
en1ployees) . . . . . . . . . . . .
Federal taxe on income refundable
(Note 2) . . . . . . . . .
Inventory of parts and supplies at the lower of cost ( first-in,
first-out) or replacement market ( otc 1) . . . . . .
Sundry securities . . . . . . . . . .
Propertie and Equipment, at cost ( ote 1) :
Land . . . . . . . . . . . . .
Buildings and leasehold improvements
Airplanes, engines, propellers, and flying equipment .
Radio stations, furniture, fixtures, shop and
other equipment . . . . .
Property not used in operations
Less Reserve for depreciation .
Construction work in progress ote 3)
Deposits on equipment purchase contract
( ote 3) . . . . . . .
Routes, contract and lea es . . .
Prepaid insurance, rent, taxes, etc ..
[ 6 I
OF DECEMBER 31, 1946
$ 1,137,094.22
$ 251,624.93
166,026.91
602,864.06
85,887.09
140,161.51 1,246,564.50
60,999.85
429,801.20
7,466,601.94
989,042.65
49,263.49
8,995,709.13
2,625,324.66
6,370,384.47
344,615.95
1,042,689.79
3,770,964.46
10,737.71
1,211,072.57 7,581,457.04
652,902.86
183,963.32
404,199.47
$12,604,224.86
l
J
L I AB I L I T I J ,, S
Current Liabilities:
otcs payable ( Note 1):
Bank
War Assets Administration, portion clue in 194 7 .
3% equipment notes payable to bank, portion clue in 1947
Other . ,
Accounts payable-trade:
Douglas Aircraft Company, Inc. ( ote 1)
Other
Air Travel Plan deposits
Accrued salaries, wages, taxes, insurance, etc.
Deferred income ( unused portion of tickets sold)
Long Term Debt (Note 1):
3% equipment notes payable to bank, clue 1ay 15, 1948
\Var Assets Administration, portion due after 1947
Reserve for overhaul of equipment
Minority tockholder ' intere tin ubsidiary
Capital Stock-$1.00 par value per share.
uthorized 2,000,000 shares (105,918 hares re erved for
management and employees stock purchase plans and for
option to officer)
Issued 525,164 shares
Surplu :
Capital urplu
Earned urp]u from December 31, 1934
Contingent lia bilitie ( ote 5)
See pages 9, 10 and 11 for Notes to Financial Statements
$ 3,000,000.00
134,785.36
96,000.00
600,000.00 $ 3,830,785.36
915,664.40
2,554,783.18
40,000.00
247,106.60
2,768,247.10
27,381.46
3,470,447.58
240,273.76
786,806.65
8,328,313.35
308,092.24
287,106.60
339,263.84
20,656.27
525,164.00
2,795 628.56
$12,604,224.86
~
FOR THE YEAR ENDED DECEMBER 31, 1946
Opera ting Revenue:
Passenger
Mail . . . .
Express and freight
Excess baggage
Incidental revenue-net
Total Opera ting Revenue
Operating Expenses:
Flying operations . . . . .
Ground operations . . . .
Flight equipment maintenance-direct
Ground equipment maintenance-direct .
Equipment maintenance-indirect .
Passenger service . . . .
Traffic and sales . . . .
Advertising and publicity .
Extension and development
General and administrative
Depreciation (Note 4)
Opera ting Loss . . .
Non-operating Income:
Gain on disposition of equipment-net
Discounts received . . . . . . .
Adjustment of over provision for insurance .
Other . . . . . . . . . . . . .
Non-opera ting Charges:
Interest . . . .
Provision for financing expense
Other . . . . . . . .
Deduct:
Loss before credits resulting from "carry-back" provisions of
Federal Internal Revenue Code . . . . . . . . .
Federal taxes on income of prior years recoverable under "carry-back"
provisions of Internal Revenue Code (Note 2)
Loss . . . . . . . . . . . . . . . . . . .
$ 2,514,097.13
2,507,437.74
1,962,248.48
156,627.75
767,442.67
1,022,919.97
1,178,502.83
510,286.43
80,878.69
1,043,633.25
1,368,595.68
107,211.77
8,541.23
22,690.66
2,456.92
65,067.33
75,000.00
735.00
See pages 9, 10 and 11 /01' Notes to Financial Statements
[ 8 ]
$10,473,695.18
981,676.78
242,400.25
75,738.21
11,773,510.42
117,787.43
11,891,297.85
13,112,670.62
1,221,372.77
140,900.58
1,080,472.] 9
140,802.33
1,221,274.52
278,036.16
$ 943,238.36
STATEMENT OF CONSOLIDATED SURPLUS
FOR THE YEAR ENDED DECEMBER 31, 1946
Capital Surplus:
Amount at December 31, 1945 . .
Excess of proceeds from sale of ] 15,210 hares of capital stock
over par value thereof . . . . .
Less-Expenses re offering of capital stock
Amount at December 31, 1946 . . . . .
Earned Surplus:
Amount at December 31, 1945
Loss for the year . . . . .
Amount at December 31, 1946
$ 628,249.68
$ 2,148,477.50
8,480.08 2,139,997.42
$ 2,768,247.10
$ 970,619.82
943,238.36
$ 27,381.46
NOTES TO FINANCIAL STATEM EN TS
1. Cash in bank in the amount of $402,000.00 deposited from the proceeds of sale of one Douglas DC-4 air-
plane, together with certain airplanes, engines, propellers and other flying equipment, having a gross
book cost of approximately $2,375,000.00, are pledged as security for note payable to bank in the sum of
$3,000,000.00. Also two converted C-54B airplanes and related equipment having a gross book cost of
approximately $725,000.00 are subject to chattel mortgages executed to secure the note payable-other
in the amount of $6oo,ooo.oo. These notes matured on January 10, 1947, but were extended to February
10, 1947, and negotiations for a further extension to May 1, 1947, are pending. In addition, flying equip-
ment consisting of six converted Douglas C-54B airplanes, four Douglas DC-3 airplanes, engines, pro-
pellers, etc., having a gross book cost of approximately 2,550,000.00 is subject to chattel mortgages to
secure the notes payable to the War Assets Administration aggregating $381,891.36 and the 3 % equip-
ment notes payable amounting to $136,000.00.
Subsequent to December 31, 1946, the accounts payable to Douglas Aircraft Company, Inc., were evidenced
by non-interest bearing notes secured by second chattel mortgages on two Douglas C-54B airplanes and
related equipment. The e note matured on February 10, 1947, and negotiations for the extension thereof
to May 1, 1947 are pending.
On March 6, 1947, the Company entered into an agreement to ell to United Air Line , Inc., subject to the
approval of the Civil Aeronautics Board, its Los Angeles-Denver route together with certain airport
facilities, airplanes, parts and other equipment nece sary to the operation therof for a con ideration of
$3,750,000.00. Pending approval of thi sale United Air Lines, Inc., advanced 1,000,000.00 to the Com-
pany on notes payable which mature on September 1, 1947, and ~hich are ecured by second chattel
mortgages on four Douglas C-54B airplanes and related equipment.
In the event the Civil Aeronautics Board approve and the ale of the Lo ngeles-Denver route i con-
summated within the next few months the Company's inventory of part and upplies and certain other
flying equipment may be exce ive. o e timate can be made at thi time by the Management as to the
extent of such excessive inventories and flying equipment, if any, or of the loss which may re ult from
the disposition thereof.
2. Federal income tax refundable results primarily from the loss carry-back provision of the Internal Revenue
Code and the adjustment of charges to Army Air Forces contracts agreed upon as a result of renegotiation
proceedings consummated during February, 1946. Of the amount refundable 305,952.66 wa received by
the Company during March, 1947.
3. TI1c deposits on equipment purchase contracts and purchase commitments as of December 31, 1946, may
be summarized as follows:
Description
5 DC-6 airplanes including engines under contract with
Contract
or Estimated
Purclrnse price
Douglas Aircraft Company, Inc. . . . . . . . . 3,000,000.00 (a ) ( b )
l 0 Convair Model airplanes including engines under contract
with Consolidated Vultee Aircraft Corporation . . . 2,300,000.00 (a) ( c)
30 R-2800 airplane engines under contract with Pratt & Whit-
ney Aircraft Division of United Aircraft Corporation . . 697, 500.00 (c)
Spare engine parts on order with Pratt & Whitney Division of
United Aircraft Corporation and Aviation Activities . . 1,012,500.00 (cl )
Spare airplane parts on order with Douglas Aircraft Company,
Inc., and others . . . . . . . . . . . . . . 400,000.00 (cl )
Radio equipment on order with Aeronautical Radio, Inc. and
Bendix Aviation Corporation . . . . . . . . . .
Other parts and equipment on order with various suppliers .
Hangar, shop and operations building under construction by
118,000.00
310,000.00 (cl )
7,8 38,000.00
The Austin Company . . . . . . . . . . . . 2,000,000.00
9,838,000.00
Notes:
Deposits and
Progress
Payments
50,046.86
353,033.40
139,512.60
93,960.00
_ l~,.?l_
0.00
652,902.86
597,062.06 ( e)
1,249,964.92
Balance of
Commitment
2,949,953.14
l ,946,966.60
557,987.40
1,012,500.00
400,000.00
24,040.00
- ~-93,650.Q_0
7,185,097.14
1,402,93 7.94
8,588,035.08
(a) Subject to increase under escalator provisions of contract in amounts which it is estimated will not
exceed $400,000.00 in the aggregate.
(b) Negotiations are in progress with United Air Lines, Inc., whereby it will be assigned the contract to
purchase these airplanes and Douglas Aircraft Company, Inc. will apply the deposits and progress
payments made, less $25,000.00 for the prior cancellation of a contract to purchase five additional
DC-6 airplanes, as a credit to the Company's liability thereto.
. ( c) Progress payments in the amount of $86,675.00 were due Consolidated Vultee Aircraft Corporation on
March 1, 1947, and a note payable due May 1, 1947, was accepted from the Company in lieu thereof.
In addition 16 of the R-2800 airplane engines contracted for with Pratt & Whitney Aircraft Division
of United Aircraft Corporation are to be assigned to Consolidated Vultee Aircraft Corporation and
the related deposits and progress payments of approximately $70,000.00 refunded to the Company.
( d ) It is expected that deliveries of certain equipment on order will be extended into the year 1948 and that
orders placed for equipment relating to Douglas DC-6 airplanes will be cancelled or transferred to
United Air Lines, Inc.
( e) On October 25, 1945, the Company entered into a contract with The Austin Company for the
construction of a hangar, shop, and operations building on leased ground at Los Angeles Airport at a
cost presently estimated at $2,000,000.00. At December 31, 1946, the Company had recorded as
construction work in progress the accumulated charges to that date of $1,106,035-40 and payments on
account thereof aggregating $597,062.06 had been made. The balance of $508,973.34 is included in
accounts payable and The Austin Company has agreed to defer until February 10, 1947, any further
payment due under the contract in consideration of Mr. William A. Coulter's pledge of 70,000 shares
of the Company' capital stock owned by him. Negotiations for the deferment of such further pay-
ments to May 1, 1947 are pending. The Company has agreed with Mr. Coulter that in the event
his pledged shares shall be sold or otherwise disposed of by The Austin Company to satisfy that com-
pany's claims against the Company, or if Mr. Coulter shall be required to pay the amount secured, in
order to relea e his stock, the amount paid upon the Company's obligation shall be a valid claim
against the Company. To secure any uch claim, the Company has executed second chattel mort-
[ 10]
gages on two converted C-54B airplanes. Subsequently on March 5, 1947, Mr. Coulter voluntarily
released these chattel mortgages to make this collateral available as security to the United Air Lines,
Inc. note payable described in Note 1 hereof.
4. A of December 1, 1945, the Company redetermined the estimated remaining useful life of its Douglas DC-3
airplanes and related equipment so as to fully depreciate the co t thereof les residual value by December
31, 1947, instead of by December 31, 1946. Had the useful life of uch equipment as so redetermined been
adopted from the respective dates such equipment was placed in service, the provision for depreciation
for the three years ended December 31, 1945, would have been reduced approximately $16i,ooo.oo,
whereas for the year ended December 31, 1946, the provision would have been increased approximately
$90,000.00.
5. The Company and its subsidiary were contingently liable as of December 31, 1946, on certain damage claims
and lawsuits in which they are or may be defendants but the Management believes that any liability,
resulting therefrom, in excess of insurance coverage, will not be material in amount. The compensation
of pilots of four-engine airplanes is in process of negotiation and may be subject to retroactive adjustment
to the respective dates commencing in 1946 when the pilots started to operate four-engine airplanes. The
amount of such adjustment, if any, cannot now be determined.
ACCOU TANTS ' REPORT
To the Board of Director ,
WESTER AIR LI ES, I C.
We have examined the Consolidated Balance Sheet of Western ir Lines, Inc.,
and its subsidiary Inland Air Lines, Inc., as of December 31, 1946, 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 procedure , 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,
1946, and the results of their operations for the year, in conformity with generally
accepted accounting principles applied on a basi consistent with that of the
preceding year, except for the change in the ba i of providing for depreciation
as set forth in Note 4 of "Notes to Financial tatements."
Los Angeles, California,
March 17, 1947.
[ ll
I
PEAT, MARWICK, MITCHELL & CO.
Revenue:
Passenger .......... ..... .
Mail ................... .
Express, Freight and Excess
Baggage ............... .
Other .................. .
Total ................. .
Revenue Miles Flown ....... .
Revenue Passengers ......... .
Average No. Passengers per
Revenue Mile ........... .
Average Revenue per Passenger
Mile ................... .
Passenger Seat Miles Flown .. .
Revenue Passenger Miles .... .
Load Factor ............... .
Mail Pounds Carried ........ .
Express and Freight Pounds
Carried ..... .. . ......... .
( ) Denotes Decrease
1943 1944 1945
$ 1,709,402 $ 3,168,828 $ 5,653,830
260,906 836,556 1,239,397
148,473 154,991 205,981
42,672 97,280 58,721
$ 2,161,453 $ 4,257,655 $ 7,157,929
- - - - - -- ---
2,057,028
80,907
15.84
.0525
38,498,693
32,589,240
84.65
1,914,391
957,291
4,057,495
147,854
15.54
.0502
73,101,222
63,073,101
86.28
4,534,732
943,415
7,279,009
303,931
16.09
.0483
138,852,497
117,105,887
84.34
6,694,856
1,508,847
a~
Expense: 1943 1944 1945
Depreciation ............ . $ 203,886 $ 321,322 $ 554,724
Other Operating and
General Expense ....... . 1,850,699 3,701,527 6,297,890
Total ............. . $ 2,054,585 $ 4,022,849 $ 6,852,614
Operating Expenses per
Revenue Mile ............ $ .9988 $ .9915 $ .9414
Percent of Scheduled
Service Performed ......... 94.44 95.43 98.41
No. of Employees-end of year 817 1,120 1,674
( ) Denotes Decrease
[ 12]
Printed in U.S. A
Percent of
Increase Increase
1946 1946
1946 over 1945 over 1945
$ 10,473,695 $ 4,819,865 85.25%
981,677 (257,720) (20.79%)
318,139 112,158 54.45%
117,787 59,066 100.59%
$ 11,891,298 $ 4,733,369 66.13%
10,594,182 3,315,173 45.54%
602,302 298,371 98.17%
20.20 4.11 25.5Hr
.0489 .0006 1.24%
301.855,694 163,003,197 117.39%
214,022,511 96,916,624 82.76%
70.90 (13.44) (15.94%)
3,704,185 (2,990,671) (44.67%)
3,262,751 1,753,904 116.24%
Percent of
Increase Increase
1946 1946
1946 over 1945 over 1945
$ 1,368,596 $ 813,872 146.72%
11,744,075 5,446,185 86.48%
$ 13,112,671 $ 6,260,057 91.35%
$ 1.2377 $ .2963 31.47%
96.59 (1.82) (1.85%)
2,396 722 43.13%