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%