Western Air Lines Annual Report 1957

highlights of 1957
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seat miles produced . 1,175,071,000
Seat miles sold .. . ..... . ... .
Passengers carried . . .... .. ... .
Total operating revenues .
Operating income .
Net incqme .
Dividends paid:
Cash .
Stock .
Common stock outstanding .... . .. .. . ..... . . .. .. .. .. .
Income per share .
Dividends per share:
Cash-annual rate ... . ... . . .
Stock .
Total shareholders' equity
Shareholders' equity per share .
Cash and U.S. Government securities ..... .
Working capital .
Investment in property and equipment .
Long-term debt.
Number of employees .
Wages and salaries paid ..
$
$
$
$
I
the cover
702,727,000
1,379,653
42,218,951
4,708,545
2,401,914
660,002
755,492
848,541
2.83
0.80
4%
17,469,192
20.59
7,332,034
4,688,158
38,412,441
16,827,000
2,773
14,334,769
The startling contrasts of Mexico are illustrated in the cover
photographs of the ancient Hacienda Vista Hermosa bell
tower and the modern skyscraper home of the new Western
Air Lines offices on Paseo de la Reforma in Mexico City.
Climaxing an 11-year campaign, the company in 1957 became
the first U.S. airline to link major cities of the West with
Mexico via the Los Ange les gateway.
(Photograph s by Kenneth Brown, Los An geles A irport Photographers)
the president's letter
To shareholders, employees, customers and friends:
The past year was one of the most rewarding in the history of Wes tern
Air Lines. Much progress was made on long-range objectives. Western's
system was lengthened by inauguration of major routes, new aircraft
increased its product-passenger seat-miles-at a record rate, and experienced
personnel maintained efficient operating conditions.
Shareholders received dividends for the seventh consecutive year and the
company closed 1957 in sound financial condition. However, despite the
management's adherence to a policy of economical operation, Western Air
Lines, along with all non-subsidized airlines, must cope with increasingly
strong pressures on profit margins caused by the constant cost spiral which
cannot be offset with pre-infiation fare levels. It is hoped that the Civil Aero-
nautics Board soon will allow a realistic increase in passenger fares to insure
adequate returns for planned future growth.
On the following pages is presented a detailed report of the company's
operations last year. Attention also is invited to the data showing Western's
record for the past decade.
In 1958 Western will become the first domestic airline to complete 32 years
of continuous operation. The year should be a period of consolidation of
major gains, additional progress, and development of new routes and services.
February 10, 1958
Western Air Lines Building
Los Angeles International Airport
Los Angeles 45, California
PRESIDENT
32nd annual report
. . . . . . . . . . . . . . . . . . . . . . .
EARNINGS
$2,401,914 for the year 1957
During 1957, Western Air Lines earned net
income of $2,401,914, or $2.83 a share based on
the 848,541 shares of stock outstanding at the
close of the year.
This earnings record compares with 1956
income of $3,044,458, equal to $3.76 a share
computed on shares outstanding on December
31, l956, adjusted for a 4 per cent stock dividend
declared in 1957. Earnings in 1957 represented
by profits realized from the sale of retired aircraft
were equal to $.62 a share, compared with $2.48
a share from similar sources in 1956.
Earnings before federal taxes on income were
$4,726,914, or $5.57 a share, while for 1956 the
total was $4,844,458, or $5.99 a share. Federal
taxes on income in 19 5 7 represented $2. 7 4 a
share, compared with $2.23 a share in 1956.
Operating income for 1957 amounted to
$4,708,545, compared with the prior year's total
of $2,513,250, a figure substantially depressed by
a 73-~ay _strike early in 1956. Comparison of
operatmg mcome for the first quarters is meaning-
less because of the strike. That of the second and
third quarters of 19 5 7 was 21 per cent above the
same 1956 periods, but the fourth quarter was
adversely affected by the abrupt traffic decline
related to the current business recession. Notwith-
standing this reaction, the company registered a
small profit in the last quarter of 1957.
DIVIDENDS
Seventh consecutive year
For the seventh consecutive year, Western Air
Lines in 1957 paid cash dividends to its share-
holders and, in addition, the board of directors
declared the second stock dividend in the com-
pany's history.
Regular quarterly dividends of $.20 a share
were paid on March 1, May 15, August 15 and
November 15, while the 4 per cent stock dividend
was distributed to shareholders on March 5.
On February 7, 1958, the board of directors
declared the first quarterly cash dividend of the
year and a 4 per cent stock dividend. The cash
dividend, in the amount of $.20 a share, is payable
on Mar~h 10 to shareh?l~ers of record on February
21 , while the stock d1v1dend will be distributed
on March 20 to shareholders of record on
February 21.
REVENUES
An all- time company record
Total operating revenues of Western Air Lines
for 1957 were $42,218,951, an all-time record in
the company's 32 years of continuous operation.
In 1956, total operating revenues were
$28,187,773.
In its established status as a subsidy-free trunk-
line carrier Western derived 93 per cent of oper-
ating revenues from passenger traffic, while
express, freight and other revenues accounted for
4.5 per cent of the total. Revenues received for
mail service accounted for only 2.5 per cent of
1957 receipts.
During the previous year, 93.1 per cent of total
operating revenues was derived from passenger
service, 4.1 from express, freight and other reve-
nues, and 2.8 from mail receipts.
One of the most critical problems of the airline
industry today is the low level of passenger fares.
brief balance sheet
Western owns:
Cash and U.S. Government
securities . . .. . .. .. . . .... ..
Owed by others . . ... . ... . . .
Expendable parts and
supplies .. . ... . . .... . . ... .
Buildings and improvements,
net .... .. ... . .. ......... . ..
Flight and other equipment,
net .........................
Deposits on new equipment
Prepaid expenses . .........
Deferred charges and other.
Western owes :
Owed to vendors and others
Federal income taxes -
current and deferred . . , .. .
Tickets sold but not yet used
Notes payable-
current and long-term . .. . .
Debentures .... . .......... .
Excess of what is owned
over what is owed, or
shareholders' equity .... ... .
1957
$ 7,332,034
3,462,603
922,432
2,249,539
22,402,940
6,476,711
834,973
335,844
44,017,076
4,267,780
3,147,672
1,105,432
13,905,000
4,122,000
26,547,884
$17,469,192
1956
6,609,264
3,267,448
386,543
2,140,645
15,074,931
3,360,213
735,138
500,898
32,075,080
3,138,518
2,249,956
818,371
6,000,000
4,877,000
17,083,845
14,991,235
Champagne Flights, setting new standards
of airline service, provide travelers with
maximum of personalized in-flight comfort.
Completed in 1957, Western Air Lines
Training Center at Los Angeles Airport
headquarters now is in full operation.
Based on a winning theme, the company's
sales effort is being directed at the develop-
ment oi new markets and special services.
statement of source and
disposition of funds for 1957
Caught between nsmg cost and a 20-year-old
fare structure, many of the nation's major sched-
uled airlines, including Western, have appealed
to the Civil Aeronautics Board for a realistic fare
increase.
While prices generally have risen nearly 100
per cent in the past 20 years, the average U.S.
airline passenger of 1957 actually paid less for
his transportation than he did in 1938.
Source of funds:
Net income . . . . . . . .. .... . . .. .
Depreciation and other
non-cash charges . .. ..... .
Deferred federal taxes on
income . . ... . . ..... . .... .. .
Sale of capital stock .... . . . . .
Bank loans ......... . . . .... .
Insurance company notes . . .
Less: reductions in
long-term bank loans ..... .
Disposition of funds:
Planes and other equipment
including contract deposits
Dividends:
Cash . .. . ..... . .... . ...... .
Payments in lieu of
fractional shares -
1957 stock dividend . ... .
Decrease in working capital,
excluding cash and U.S.
Government securities ....
Increase in cash and U.S.
Government securities . . ... .
$1,000,000
8,005,000
9,005,000
1,100,000
660,002
29,396
$ 2,401,914
3,330,041
849,000
36,605
~ 905,000
14,522,560
13,744,552
689,398
_ (634,160)
13,799,790
$ 722,770
Western's management, which first called
attention to the need for fare adjustments in 1951,
is committed to a policy of improving and
expanding the company's services. In order to
discharge that responsibility in the face of steadily
rising co ts, the company is vioorously pressing its
petition for more economically sound fare levels.
In accordance with the ivil Aeronautic
Board's action approving petitions for a 4 per cent
fare increa e, plus $1 per ticket, Western was
granted an int rim increa e effective February 10,
1958, pendino completion of th General Fare
Inv tioation Case now before the C B. While
the interim adjustment is con idered inadequate,
th company applied for the temporary assistance
while hor,efully looking toward award of a for-
mula which will permit airlines to charge equi-
table price for their service .
EXPENSES
Expansion brings sharp rise
Total opera ting expense of W es tern ir Lines
for the year 1957 wer $37,510,406; in 1956, th
total was $25,674,523.
This substantial rise in the cost of doing busi-
ness was, primarily, a re8ection of the company's
marked expansion during the year. Portions of
the increase are attributable to first-quarter oper-
ations, contrasted to the 1956 period when a
73-day strike shut down the company, and, in
major measure, to additional seat-miles generated
by new aircraft added to the Western 8eet during
1957.
Depreciation expense was $3,010,894, up
$716,680 over 1956. This element of the expense
complex, which, in effect, represents a pro rata
recovery out of revenues of funds invested in
properties and equipment, was equivalent to $3.55
a share in 1957.
The new series of Douglas DC-6B planes,
operated during the year in both first-class and
aircoach configurations, contributed to a record
marketing of the company's principal product-
passenger seat-miles. In 1957, for the first time,
Western passed the "one-billion mark" in seat-mile
production, offering 1,175,071,000 seat-miles to
the traveling public. This represented a 59 per
cent increase over the 1956 total of 740,174,000.
Although the cost of wages and materials con-
tinued to exact major economic pressures, the
company has been able to hold the line on seat-
mile and ton-mile production costs with some
success. Operating expenses expressed in "cents
per seat-mile produced" were $.032 in 1957, com-
pared with $.035 in 1956 and $.031 in 1955 and
1954. Expressed in "cents per ton-mile produced,"
operating expenses were $.273 in 1957, compared
with $.298 in 1956, $.270 in 1955 and $.280 in
1954.
FINANCES
Funds for planned growth
Following the 1956 program which improved
and expanded the financial structure of Wes tern
Air Lines, the company in 1957 signed contracts
for the delivery of five additional DC-6B aircraft
and completed plans for other plant improvements.
Arrangements were made in June for borrowing,
on a long-term basis, an additional $9,000,000
required to finance the program, over and above
the $23,000,000 arranged for in the previous year.
Working capital at the close of 1957 totaled
$4,688,158, almost identical with the closing 1956
figure. The ratio of current assets to current
liabilities was $1.60 to $1, down slightly from the
1956 ratio of $1. 72 to $1.
Cash and U.S. Government securities on hand
at the end of the year were valued at $7,332,034,
up $722,770 over the level which existed at the
close of 1956. The company's investment in
aircraft and other properties was increased by
$8,840,536 to $38,412,441 during 1957. Deposits
on equipment-purchase con tracts totaled
$6.476,711, an increase of $3,116,498 in 1957.
WESTERN'S income dollar
from U.S. mail 2.5
from express,
freight and 3. 7
excess baggage
from aircoach
passenger
,. services
ftom all other
sources,
including
roperty gains
from deluxe
passenger
services
22.9
2.6
68.3
Western's long-term debt was increased to
$16,827,000 during the year, up $7,150,000 from
1956 final figures. The 1957 figures include
$6,000,000 borrowed under the 1956 loan agree-
ments and $3,005,000 under the new 1957 pro-
gram. The 4 per cent convertible subordinated
debentures were reduced to $4,122,000, a decrease
of $755,000 during the year, re8ecting debentures
converted into shares of the company's capital
stock.
SHAREHOLDERS AND STOCK
7,500 investors own Western
At the close of 1957, there were issued and
outstanding 848,541 shares of Western Air Lines
capital stock, an increase of 69,410 shares over the
total of 779,131 shares outstanding at the end
of 1956.
The increase included 30,254 shares issued as a
4 per cent stock dividend, 36,806 shares distributed
upon conversion of debentures, and 2,350 shares
issued through exercise of stock options.
Residing in the 48 states and several foreign
nations, the company's shareholders numbered
approximately 7,500 at the end of the year, an
increase of about 6.5 per cent over 1956.
The e{}Uity of Western shareholders reached a
record $17,469,192, or $20.59 a share, in 1957, an
increase over the previous year of $2,477,957.
WESTERN'S expense dollar
for gasoline
and oil
for materials,
8.2 supplies and
parts
9.2
7.4 for depre
of equip
for wages and
salaries
Shareholders' equity at the close of 1956 was
$14,991,235, equivalent to a book value per share
of $18.53 adjusted for the 1957 stock dividend.
During the year, 275,700 shares of Western
stock were traded on the New York Stock
Exchange at prices ranging from a low of 17 to
a high of 25, with a closing price of 20. On
the Pacific Coast Stock Exchange, 16,233 shares
were traded. Low for the year was 18, high was
25, and the closing price was 20.
EQUIPMENT
Preparation for a fast future
With passenger revenues up 49.5 per cent over
1956, and authorized route mileage extended
substantially beyond the previous year's limits,
Western Air Lines in 1957 expanded and modified
its fleet to keep pace with record demands for new
and improved service.
Seven DC-6B aircraft were received during
1957, and nine additional planes are scheduled
for 1958 delivery by the Douglas Aircraft Com-
pany. By the fall of 1958, Western expects to have
in operation over its system a fleet of 30 DC-6Bs,
in both first-class configuration and the new 87-
passenger aircoach design introduced in 1957.
In December, the Lockheed Aircraft Company
successfully tested the first 400-m.p.h. propjet
Electra to roll off its Burbank assembly line as
Western officials witnessed the maiden flight of
the plane which is relied upon to place the com-
pany in the forefront of a new age of high-speed
competition. Western has ordered nine of these
ultra-modern aircraft; five are scheduled for 1959
delivery, four in the spring of 1960.
At the close of 1957, the Western fleet was
composed of 35 planes, including 17 60-passenger
DC-6Bs, four 87-passenger DC-6B aircoaches,
nine 40-passenger Convair 240s and five 22-pas-
senger DC-3s.
During the year, two DC-4s were retired from
service, the last of a fleet which introduced sched-
uled airline aircoach service to the West. The
company plans to retire the five DC-3s still in
service by the close of 1958.
Completed in the fall of 1957, the company's
new airline training center, a modern $1,000,000
school at Los Angeles International Airport, now
is in full operation. Principal features of the center
are a DC-6B flight simulator, being used exten-
sively to train pilots and flight engineers, and
quarters of the Western Air Lines Stewardess
School.
Work progressed throughout 1957 on the com-
pany's electronic reservations system which will
usher in a new era of fast customer service in
1958. Designed to expedite automatically more
than 90 per cent of all flight reservations, the
Resetron will automatically check space and con-
firm reservations in a matter of seconds from all
major centers on the system. It promises to provide
passenger service employees with the electronic
tools necessary to maintain pace with route and
flight pattern expansion.
ROUTE DEVELOPMENT
Most extensive in WAL history
The most substantial period of growth and
expansion in the 32-year history of Western Air
Lines was recorded in 1957 when the company
inaugurated service over 2,449 miles of new
routes, including the 1,555-mile Los Angeles-
Mexico City airway awarded to Western in 1946.
Carefully selected for thorough training, Western's
smartly-uniformed stewardesses are skilled in hospitality.
Western's system at the close of 1957 was certifi-
cated over 9,153 route miles in 13 western states,
Canada and Mexico as years of long-range plan-
ning were climaxed in a series of favorable Civil
Aeronautics Board decisions.
Culmination of an 11-year campaign to provide
regular, scheduled air transportation between
western North America and Mexico came on July
15 when the company became the first U.S. air-
line to link major cities of the West with Mexico
City via the Los Angeles gateway.
Daily nonstop service over the 1,555-mile inter-
national route was inaugurated after a long-
awaited reciprocal civil air agreement between the
federal governments of the United States and
Mexico was signed on March 7. In less than 24
hours, Western, which had held Civil Aeronautics
Board authority to operate the route since 1946,
was designated by the President to inaugurate the
long-sought service.
Coordinated by a special Mexico Service Com-
mittee, myriad details of preparation for launching
a major'international route were given top priority
by the company. As a result, Western became the
first U.S. airline to begin operations under the
bilateral agreement as leading government, civic
and business executives of both nations partici-
pated in a memorable inaugural program. Traffic
over the new route has developed steadily and the
company is hopeful that it will be able to obtain
authority to increase schedules soon.
On December 1, a four-year program to provide
strong regional air service between Phoenix and
other western metropolitan centers came to fru-
ition in the inaugural of regular service over the
894-mile route between San Diego and Denver,
via Phoenix, capital city of Arizona. Impact of the
newest link in the Wes tern system can be realized
from a brief study of the accompanying route map
illustrating in graphic form how the service pro-
vides new opportunities for passenger traffic, new
development of the company's "sun country''
theme, and new operational economies. Of par-
ticular note is the company's ability to offer one-
carrier service between Arizona and the northern
tier of western states. Appeal of one of the unsuc-
cessful applicants in the case against the CAB's
authorization of Western service over this route
will be heard by the U.S. Court of Appeals for
the District of Columbia circuit early in 1958.
At the close of the year, the CAB authorized
the company to inaugurate nonstop service between
Los Angeles and Phoenix early in 1958 when the
federal air policy panel issued a supplemental
opinion on Western's petition for reconsideration
of an earlier bid for the 368-mile route which the
board had rejected. This decision will make pos-
sible increased development of the Phoenix service
Modern Western offices in Phoenix now are serving as a
travel center for passengers on the newest route.
complex, with special emphasis on travel from the
Pacific Northwest.
In other far-reaching year-end action, transfer
of air service for eight small communities on
Western's system to local service carriers was
recommended by the CAB examiner acting favor-
ably on the company's request in the Seven States
Area Investigation.
Acting in accordance with established CAB
policy separating subsidized local service from
trunkline operations wherever possible, the exam-
iner's recommendation calls for suspension of
Western service at Alliance, Scottsbluff, Chadron,
Hot Springs, Spearfish, Brookings, Mankato and
Rochester. A final CAB decision in this case is
expected in 1958.
Hearings were held in 1957 on Western's
proposal in the Montana Local Service Case to
transfer to local service carriers authority to serve
Ogden, Logan, Jackson, Lewistown, and Cut
Bank. Procedural steps in this case should be
completed in 1958.
Substantial operating economies can be realized
from final authority to transfer service at these
points in favor of subsidized lines, as well as
further improvements in the company's trunkline
services.
Meanwhile, Western suspended service at
Cedar City on Jan. 2, 1958, in accordance with the
CAB's decision in the Service to Phoenix Case.
In 1957, the company entered the Dallas-to-the-
w est Service Case, a CAB proceeding now under-
way which is expected to determine the air service
needs of Dallas, Tex. Proposing to link the key
southwestern city with Los Angeles and San
Francisco-Oakland, as well as San Diego, Las
Vegas, Phoenix, El Paso, Albuquerque and Ft.
Worth, Western presented its case in support of
the City of Dallas' petition for additional service.
Hearings were held in 1957 on the Chicago-
Milwaukee-Twin Cities Case in which the com-
pany is seeking authority to provide competitive
air service between Minneapolis-St. Paul and
Chicago. A CAB decision in this important route
case is expected during 1958.
The company anticipates that in 1958 the U.S.
Government will continue to press for a bilateral
agreement with Canada which would implement
Western's dormant authority to serve Calgary in
the Province of Alberta, Canada.
Although the CAB took no action during the
year on the company's applications to serve Spo-
kane, Wash.; Sacramento, Calif.; or Boise, Ida.,
the petitions may gain board attention during the~
corning year.
PERSONNEL
Experience, training are keys
The company's board of directors, composed
primarily of men representing the principal regions
served by Wes tern Air Lines, was expanded to 16
members during 1957.
In April, Mr. Dudley Swim of Monterey, Calif.,
well-known in the fields of investment and indus-
try, was elected to the board. In June, Mr. Wilford
H. Gonyea, Oregon industrialist and lumberman,
joined the Western board. In December, Mr.
Goodrich Lowry, president of the Northwest
Bancorporation of Minneapolis, was elected to the
board to replace the late Mr. Joseph F. Ringland.
Mr. Ringland, who had served the company
with distinction since joining the board of directors
in 1952, died on overnber 8 after an extended
illness. His death brought to a close a distinguished
banking career which began in 1924 and ended
with a 12-year tenure as president of the orth-
western National Bank of Minneapolis.
Building on a core of experienced personnel,
and devoting special attention to the training and
development of management staff members,
Western increased its personnel by 18 per cent
during 1957, adding 430 men and women to its
rosters which, at the close of the year, carried the
names of 2,773 employees.
Average length of employee service at the close
of 1957 was 5.3 years, with 45 per cent of all
personnel wearing 5-year service pins. Ten-year
rnblerns have been awarded to 617 men and
women, representing 22 per cent of employees. At
the top of Western's seniority roster are 20 men
with a quarter-century of company service, includ-
ing three veterans who this year will pass the
30-year milestone.
The foremen responsible for maintenance and
overhaul of the aircraft fleet have the highest
average seniority with 17.4 years service to their
credit. Department directors at the company's
general offices share with Bight captains an aver-
age of 14 .4 years service, while station managers
are credited with a 13.6-years average.
AFTER 32 YEARS,
EVERY 23 SECONDS!
In 1957, Western Air Lines carried 1,379,653 pas-
sengers in giant aircraft flying over a route system
reaching 9,153 miles to 47 cities in three nations.
With a plane arriving or departing from a Western
city every 2.5 minutes throughout the year, the
company boarded an average of 3,780 air travelers
every 24 hours. Consuming more than 110,000 gal-
lons of high-test gasoline every day, the aerial
fleet covered 71,450 miles between dawns. Relax-
ing in airborne comfort, travelers enjoyed 687,445
meals, savored 1,772,600 cups of coffee and sipped
glasses of Champagne Flight private stock in rec-
ord numbers.
It was not always so.
On April 17, 1926, the day Western, the nation's
oldest airline, began operations, its first east-
bound Douglas M-2 biplane was refueled from a
100~gallon barrel with a hand pump (below). The
little two-place aircraft had a top speed of 115
m.p.h., and the lone passenger sat on a sack of
mail. The lot of air travelers improved in the early
'30s when Western provided box lunches aboard
its Fokker F-10s, first three-engine transports in
airline service (above). The first route was only
670 miles long, and at the end of 1926 Western
had carried 209 passengers.
Today, WAL boards a passengerevery23 seconds!
Two-thirds of the company's employees are men,
one-third are women. Ninety per cent of person-
nel are represented by the seven labor unions with
which Western maintains agreements. At the end
of 1957, contracts were signed with four unions,
while negotiations were underway with union
representatives of the pilots, the mechanics and the
office and station personnel.
A large majority of employees participated in
Western's group insurance program during the
year. As of December 31, 95 per cent were sub-
scribing to accident and sickness insurance, 88
per cent to hospitalization coverage, and 70 per
cent to the life insurance policies offered. Financed
jointly by the company and its employees, the
group program is available to all personnel.
During the year, employees and their families
received $189,520 in benefits from the insurance
plan, including $52,361 in accident and sickness
benefits and $127,559 to defray hospitalization
expenses.
At the close of the year, 77 per cent of eligible
employees were participating in the company's
contributory retirement plan. In operation for six
years, the program has become a substantial factor
in the long-range planning of many key
employees. To date, the company has expended
approximately $636,000 for past-service policies,
at no cost to personnel, and has contributed nearly
three times that figure to current-service premiums.
Throughout 1957, Western maintained its tra-
ditionally liberal free-transportation program for
employees and their families. During the year,
13,500 space-available passes were issued by the
company's pass bureau for travel over the Western
system, and several thousand additional passes
were arranged through reciprocal agreements with
other airlines. Value of the company-system passes,
if computed on the basis of average first-class fares,
was approximately $750,000, an average of $272
worth of free transportation for every man and
woman on the payroll. It is estimated that the
value of off-line passes would double the latter
figure.
The Westernaire Federal Credit Union, pro-
viding personalized savings and loan service to
employees, enjoyed a banner year, passing the
$1,000,000 total-assets mark for the first time in
its 10-year history. Seventy-three per cent of all
employees are members of the credit union.
Early in 1957, a management-development pro-
gram was inaugurated at the University of
Washington for key members of the Western staff.
Designed to prepare selected men for increased
future responsibilities while improving their pres-
ent managerial abilities, the graduate-level course
began with an intensive study session and was
followed throughout the year by a seminar series.
SALES AND SERVICE
New markets for development
Matching the company's major route extensions
and increased ability to serve the traveling public,
the Wes tern Air Lines sales effort during 195 7
was directed at development of new markets and
new services.
Number of passengers carried for the year was
49 per cent above the abridged 1956 total as
1,379,653 air travelers boarded the company's
planes at 4 7 cities throughout the system.
Revenues included $29,412,952 from deluxe
traffic and $9,830,159 from aircoach travel,
increases of 42 per cent and 76 per cent, respec-
tively. The latter rise clearly re8ects the expanded
offering of Western's economy air transportation
with the new 87-passenger DC-6B aircoaches.
Cargo revenue totaled $1,596,246, up 67 per
cent over 1956, while air mail revenue increased
to $1,067,404, of which $881,825 was from regular
air mail and $185,579 from transportation of sur-
face mail by air.
brief statement of income
Western's income came from:
Passengers . .. .. ...... ..... .
Express, freight and baggage
Mail ........................ .
Gain on disposal of property
Other income .. ... ....... .. .
Western's expenses were:
Wages and salaries .........
Social security, group
insurance and
retirement plans ....... . ..
Gasoline and oil ............ .
Materials and repair parts ...
Depreciation ................
Advertising and publicity ....
For service to passengers ...
Rentals and landing fees ....
Insurance ...................
Interest ....... ... ...........
Taxes .......................
Utilities and services ........
Other costs .................
Net Income ................... .
1957
$39,243,111
1,596,246
1,067,404
708,077
443,301
43,058,139
14,334,769
1,086,628
6,309,060
3,350,555
3,010,894
1,297,259
2,271,800
980,205
822,425
780,419
3,754,855
1,491,331
1,166,025
40,656,225
$ 2,401,914
1956*
26,249,113
954,210
775,481
2,694,415
270,248
30,943,467
10,283,297
853,786
3,729,882
2,235,558
2,316,439
873,097
1,487,768
759,975
652,770
393,610
2,766,848
737,691
808,288
27,899,009
3,044,458
Operations were suspended from January 9
to March 22, 1956, because of a strike.
Passenger load factor for the year was 59.8 per
cent as 702,727,000 of the 1,175,071,000 seat-
miles produced were sold. The 2.1 point decline
from the 1956 load-factor figure was largely the
result of the widespread fourth-quarter decline in
business activity. Extended to keep pace with the
59 per cent increase in seat-miles produced by new
aircraft and new routes, the company's seat-miles-
sold total was, nonetheless, up 53 per cent over
1956.
New sales centers were opened at Minneapolis,
Mexico City, Ontario, Phoenix and in the San
Francisco Merchandise Mart during 1957, and in
January 1958 a new district office was established
at the Disneyland Hotel, adjacent to the famed
southern California playground.
New popularity was won during the year by
the company's famous Champagne Flights, a name
now registered for Western's exclusive use. After
nearly four years, this new standard of person-
alized in-flight service continues to headline
Western' s Hight schedules and sales programs.
During the year, the Champagne Flight's
morning counterpart, the "Hunt Breakfast," was
introduced to selected Rights with immediate
popular acceptance.
In April, delivery of new equipment enabled
the company to introduce all-DC-6B service, both
first-class and aircoach, to principal Pacific Coast
cities, completing a modernization program which
also included assignment of Convair aircraft to
intermountain routes and retirement of DC-3s
from all but a segment of the Western system.
July proved to be a top month for sales effort as
the new international route between Los Angeles
and Mexico City was opened, and a new nonstop
service between Los Angeles and Portland was
inaugurated. In December, service was introduced
to Phoenix with special promotions designed
around the appeal of winter vacations. The most
complete program of "sun country" advertising
and promotion ever developed by the company
was employed to exploit the attractions of Mexico
City, Las Vegas, Palm Springs, southern Cali-
fornia and Phoenix, including preparation for the
inaugural of nonstop Los Angeles-Phoenix service
on February 18, 1958.
To provide the manpower and facilities required
to produce an expanded campaign, Western in
April retained Batten, Barton, Durstine & Osborn,
Inc. as the company's advertising agency. One of
the nation's top-rated advertising firms, 66-year-old
BBDO now is producing an expanded 1958 pro-
gram based on the theme, "Western's the Won-
derful Way to Fly."
AWARDS
Company wins national honors
In 1957, Western Air Lines received a number
of noteworthy honors, including awards for safety,
management, stockholder relations and advertis-
ing.
Recognition of the company's primary concern
- safety of operation - was accorded in the Na-
tional Safety Council's Award of Honor.
Analysis of Western's operations and accom-
plishments in 1957 by the American Institute of
Management resulted in presentation of a merit
citation for excellent management to the company
and placement on the AIM honor roll with only
494 other U.S. and Canadian organizations
selected on the basis of functional management
audit.
For the second consecutive year, Western was
awarded United Shareholders of America recog-
nition for "good management-shareholders rela-
tions."
The Socrates Award, top national prize for
transportation advertising, was won by the com-
pany for "exceptional showmanship in promoting
air travel" in an annual competition among more
than 1,000 companies.
ALBUQUERQUE

EL PASO

DALLAS
00
FORT WORTH
INTERNATIONAL CELEBRATION-In 1957, Western Air Lines became the first U.S. air
carrier to link major cities of the West with Mexico City via the Los Angeles gateway. Less
than 24 hours after the long-awaited civil air agreement was signed by the federal govern-
ments of the United States and Mexico, Western was designated by the President to
inaugurate flights over the route granted to WAL in 1946 by the Civil Aeronautics Board.
Government officials, civic leaders and business executives of both nations participated
in memorable inaugural programs at Los Angeles (above) and Mexico City (below).
Among the
1,379,653
Western
passengers
in 1957 were
these famous
personalities
. . . . . . . . . . . .
ENTERTAINER-Lawrence
Welk, the "champagne
music" maestro, waves to
friends before departure
CHIEF JUSTICE-Kotara
Tanaka, lead ing Japanese
jurist, and his wife, are
greeted on world tour by
WESTERN
FIRST CREW-Welcomed by WAL President Terrell C.
Drinkwater, first Western Air Lines crew to land at Sky
Harbor Airport in Phoenix launches new "sun country"
service linking the Arizona capital with other key cities
in the West. Major route award was the climax of a four-
year program to win Civil Aeronautics Board authoriza-
tion to inaugurate scheduled service to the resort area.
FILM FAVORITE-Former
child star Shirley Temple
arrives in Hollywood to pro-
duce her new series of
LATIN AMERICANS-Con-
s u Is of eight Western
Hemisphere nations board a
Western plane for a brief
1-,...,1!....J- .. !-:..J.. :_ I - - \J ___ _
I
1n the news
By its very nature, a major commercial
airline is newsworthy. The speed of its
operations, the grandeur of its giant air-
craft, the personal drama in the lives of its
passengers-all are charged with that magic
ingredient called "news value."
Serving 47 cities on a 9,153-mile system
in 13 western states, Canada and Mexico,
Western Air Lines links the key centers of
the hemisphere's most dramatic regions,
areas where progress, development and
future planning are vibrantly conscious fac-
tors in the lives of fast-thinking, fast-moving
people.
The year 1957 was a period of almost-
continuous news stories for Western as the
company pursued its basic policy of pro-
viding public services designed to merit
public approval.
The new routes inaugurated, the unique
promotions conducted, the new aircraft
tested for future Bights-all attracted atten-
tion of the communications media through
which Western tells its story.
And, adding luster to the glamour of
Hying were the famous passengers who, day
after day, selected Western as "the won-
derful way to By."
COWBOY STAR - Roy
Rogers, motion picture and
television favorite of young
America, leaves on a per-
GRID COACH - Henry
"Red" Sanders, famed
UCLA football mentor, and
Mrs. Sanders are off on a
IN PRODUCTION-Model of the ultra-modern Lockheed Electra propjet appears
in Western Air Lines markings. Now in production after highly successful tests, the
Electra will spearhead WAL entry into era of high-speed competition in 1959-60.
AUTHENTIC-Most colorful equipment acquired by Western Air Lines in 1957 was
this 1906 San Francisco cable car which is being displayed in an extensive promo-
tional campaign throughout the West. Completely renovated and motorized, "No.
44" already has proved a popular attraction in California and during 1958 will be
seen in several cities on the company's system during 100,000-mile tour.
MEXICAN OFFICIALS-Ing.
Gustavo Rocha Sagahon
(left) and Gen. Alberto
Salinas Carranza, and his
---?~-- ,:. ___ ~A - ~. :--
T RAVEL EXP ER T - 8 e rt
Hemphill, American So-
ciety of Travel Agents
president, is welcomed
_ ,..._ __ - -' - r'-1- - - . - - - - - r-1 !- I-J..
FAMOUS COUPLE-Sing-
ing favorite Bing Crosby
and his bride, Kathy Grant,
leave Las Vegas via Western
_ .r. ... __ .&.L. - ! - --'-' !- -
a decade of growth
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
financial summary
Revenues:**
Passenger .... ....... ... ... . . . . ... . . . ... .
Express, freight and excess baggage .. .
Mail ... . . . ... . ..... .... . ............. .. . .
Other .. . . . .. . , .. . .. .. . . . ... . . . .. .. . . . . . . .
Total Revenues . . . . .... . ........ . . .
Operating Expenses:**
Depreciation . .. . .... . . . . ... , . . . . ... . . .. .
Payroll . ... .. .... . . .. .. ...... .. . . .. . ..... .
Other . ..... . . ... . . . .. . ..... .. ... . . .. ... . .
Total Operating Expenses .. . .... .
Operating Income** . ... . ...... ... ..... . .. . . . . .
Other Income** .. .. . ... .. . . .. ..... ..... ... . . .
Provision for Federal Taxes on Income** ... .
Net Income** . . . .. ... ... . .. . ..... .
Earnings per share0 ..... . ... ........... .... .
Dividends paid per share:
Cash0 . . .. . . . .. . .. .. . . . . ... . . ... . ... . .. .
Stock . ......... , . ............. . . . ... . ... .
Shares outstanding**0 .. ... . . . ..... ....... . . .
Shareholders' equity-total** . . ........... . .. .
Shareholders' equity-a share0 ....... . .... .
Working capital** . ................ ........... .
Long-term debt** .... . . . ......... . . . . . .... .. . .
Properties and equipment- net** ............ .
Total assets** ................. . ..... , .... . .. .
operating statistics
Route Miles . . . . ... . .. . . .. .. . ... . , .... . .... .. .
Available Ton Miles** .......... . ... .. .. . ....
Revenue Ton Miles** ............... . ... . ....
Passengers and Tonnage Carried:
Revenue passengers ................ . ..
Mail tons ... . ....... ...... . .. . .. . . ... ...
Express and freight tons .......... . ... .
Revenue Miles Flown:**
Airplane miles ....... .. .......... . .. . ...
Passenger seat miles ................ . ..
Passenger miles ........ . ............ . .
Mail ton miles ............. ..............
Express and freight ton miles ...........
Other Statistics:
Passenger load factor ..................
Average length in miles per
passenger trip ................. . ......
Average revenu e per passenger mile ....
Number of employees end of year ......
1957
$39,243
1,596
1,067
313
42,219
3,011
14,335
20,164
37,510
4,709
18
4,727
2,325
$2,402
$2.83
0.79
4%
849
$17,469
20.59
4,688
16,827
24,652
$44,017
1957
8,799
137,640
74,468
1,379,653
5,367
6,170
21,896
1,175,071
702,727
3,092
4,026
% 59.8
509
$.0558
2,773
1956*
26,249
954
775
210
28,188
2,294
10,283
13,098
25,675
2,513
2,331
4,844
1,800
3,044
3.76
0.75
4%
809
14,991
18.53
4,600
9,677
17,216
32,075
1956*
6,350
86,196
48,481
928,746
4,034
4,166
14,851
740,174
458,131
2,212
2,455
61.9
493
.0573
2,343
1955
28,756
1,185
862
236
31,039
2,151
11,057
13,798
27,006
4,033
~ )
3,832
1,850
1,982
2.47
0.83
802
12,430
15.49
2,784
3,484
11,208
23,332
1955
5,525
100,015
54,999
1,092,578
4,897
5,435
18,335
870,596
514,677
2,621
3,207
59.1
471
.0559
2,130
1954
22,423
968
764
326
24,481
1,761
9,239
11,505
22,505
1,976
333
2,309
850
1,459
1.89
0.56
773
10,786
13.96
1,490
3,755
13,146
20,204
1954
5,525
80,261
42,669
834,910
3,283
4,276
15,842
721,255
402,255
1,669
2,556
55.7
482
.0557
1,864
1953
20,302
846
875
853
22,876
1,718
8,367
10,300
20,385
2,491
(56)
2,435
1,250
1,185
1.54
0.56
772
9,746
12.63
755
2,072
9,844
18,123
1953
5,525
68,580
38,088
838,732
3,284
4,206
14,450
613,814
359,965
1,610
2,100
58.6
429
.0564
1,813
Operations were suspended from January 9 to March 22, 1956, because of a strike.
1952
16,250
662
719
964
18,595
1,019
7,067
7,674
15,760
2,835
(103)
2,732
1,500
1,232
1.60
0.56
772
8,991
11.65
1,364
2,903
9,702
18,564
1952
5,016
48,557
31,434
774,079
3,243
3,729
12,631
453,332
298,931
1,358
1,524
66.0
386
.0544
1,649
1951
13,688
507
1,212
875
16,282
998
6,084
6,666
13,748
2,534
280
2,814
1,425
1,389
2.34
0.46
594
6,396
10.77
435
1,924
6,588
13,802
1951
5,016
43,036
27,549
691,322
3,419
3,191
11 ,487
401,720
259,693
1,449
1,282
64.7
376
.0527
1,459
0 Based on shares outstanding at close of respective periods adjusted fo r stock dividends paid in 1957 and 1956 .
.. 000 omitted.
1950
11,395
497
2,090
264
14,246
1,124
5,353
6,133
12,610
1,636
(196)
1,440
690
750
1.32
567
5,045
8.90
981
2,231
6,621
10,657
1950
5,016
44,515
24,697
619,624
2,150
3,396
11,783
414,169
233,118
978
1,442
56.3
376
.0489
1,279
1949
8,471
313
2,504
246
11,534
1,335
4,855
4,374
10,564
970
(258)
712
391
321
0.57
567
4,295
7.58
243
3,113
7,171
10,579
1949
4,727
32 ,034
16,383
422,193
1,359
2,435
9,496
299,503
155,747
567
926
52.0
369
.0544
1,226
1948
7,813
483
1,293
31
9,620
1,164
4,973
4,225
10,362
(742)
(186)
(928)
(589)
(339)
(0.60)
567
3,974
7.01
(315)
3,551
8,094
12,946
1948
4,727
29,534
14,660
353,569
1,543
2,702
8,707
243,771
135,724
574
1,089
55.7
384
.0576
1,285
For the year ended
December 31, 1957
(with comparative
ti gures for 1956)
For the year ended
December 31, 1957
statement of income
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Revenues:
Passenger . ........ . .... . . . .... . .... . .. . ..... . ... .. .... ... ... .
Express, freight and excess baggage . . . .. ... . . . ... . .... .. . .
Charter and other transport service ... . . . . ... . .. ... ... .. . . .
Mail . . ........ . . .... . .... .... .. ... .. . . . .. .. .. .... . . ... . ... . . . .
Incidental revenue (net) .. ..................... . ..... . . . .... .
Operating Expenses:
Flying operations ... .. ... .. .... . ... . ... . . . . . ... . ... ... ... .. . .
Maintenance .............. . ........... . ............. .... ... .
Passenger service .......... .. .................... . ... . .... . .
Aircraft and traffic servicing ......... .. .. .. .. . .... .... . . .. .
Promotion and sales . . .. .. . . . . . . .......... . ... . ... . . . . . . .. . .
General and administrative ......... . .... . .. . . . . . ... . . . . . . . .
Depreciation ...... . .. . ...... . .......... .. ... . , ... . .. . ....... .
Operating Income ... . ... . ...................... . . . . .
Non-Operating Income:
Gain on disposition of property . . . ... ..... . ............... .
Other . ..... . . . ... . .................. . . . . . ..... ............... .
Non-Operating Charges:
Interest .... . ...... .... ... .. .. . . ........ . .... .. .... , ...... . .. .
Other .............. ......................... ........ . ..... . .. .
Income before Federal Taxes on Income . . . . ... . ... .
Provision for Federal Taxes on Income (Note 1) ...... . .... . . .
Net Income . . . . .. . . ... . . . . . . .... . .... .... .... ... .. .. .
1957
$39,243,111
1,596,246
147,827
1,067,404
164,363
42,218,951
12,533,097
6,094,328
3,556,375
5,763,615 (
4,596,057\
1,956,040
3,010,894
37,510,406
4,708,545
708,077
131,111
839,188
780,419
40,400
820,819
4,726,914
2,325,000
$ 2,401,914
*Operations were suspended from January 9 to March 22, 1956 because of a strike.
1956*
$26,249,113
954,210
119,371
775,481
89,598
28,187,773
7,915,106
4,484,302
2,366,755
6,974,380
1,639,766
2,294,214
25,674,523
2,513,250
2,694,415
61,279
2,755,694
393,610
30,876
424,486
4,844,458
1,800,000
$ 3,044,458
statement of surplus
earned surplus
Amount as of December 31, 1956................................ $ 8,653,684
Net income for 1957 .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,401,914
Excess of proceeds over par value of :
36,806 shares of stock issued upon conversion
of debentures ........... ............................. . ... .
2,350 shares issued under restricted stock option plan .. .
Excess of market value over par value of 30,254 shares
paid as a stock dividend (Note 2) ....................... .
Dividends paid :
Cash - $0.80 a share, annual rate ......... , .............. .
Stock-4% (Note 2) ...................... , ................ .
Amount as of December 31, 1957 (Note 3) .................... .
11,055,598
660,002
755,492
$ 9,640,104
capital surplus
$ 5,558,420
692,030
34,255
695,842
6,980,547
$ 6,980,547
annual report
Current Assets:
Cash.
U. S.Treasury Bills at cost and accrued interest . ...... .. .. . . .
Receivables:
Traffic balances (net of allowance
for doubtful accounts $50,000) . . .
U.S. and State Government Departments ..... . .. .. . .
Other .
Expendable parts and supplies (Note 7) .
Prepaid expenses .
Total Current Assets ...
Sundry securities .
Properties and equipment at cost:
Flight equipment .
Buildings on and improvements to leased property ....
Other property and equipment ..
Less allowance for depreciation .
Deposits on equipment purchase contracts (Note 4).
Deferred charges .
assets
1957
$ 5,337,991
1,994,043
2,443,467
838,393
180,743
3,462,603
922,432
834,973
12,552,042
94,221
31,268,978
3,794,637
3,348,826
38,412,441
13,759,962
24,652,479
6,476,711
241,623
$44,017,076
1956
$ 4,625,094
1,984,170
2,028,677
1,039,722
199,049
3,267,448
386,543
735,138
10,998,393
74,051
23,801,634
3,531,863
2,238,408
29,571,905
12,356,329
17,215,576
3,360,213
426,847
$32,075,080
balance sheet as of December 31, 1957
(with comparative figures for 1956)
liabilities
Current Liabilities:
Current portion of bank debt. . .... ... . . ... . ............ . .... ... .
Accounts payable
Accounts payable-taxes collected from others ... . .... .. .
Accrued salaries and wages ............. .
Other accrued liabilities .
Air travel plan deposits .
Unused transportation.
Federal taxes on income (estimated ) .
Total Current Liabilities .
Long-term debt (Note 3) :
Notes payable to bank (net of current portion
included in current liabilities) ..
Notes payable to insurance companies .
4% convertible subordinated debentures
due June 1, 1971 ... .
Deferred federal taxes on income (Note 1) ..
Commitments and contingent liabilities (Note 4)
Retirement plans (Note 5)
Shareholders' Equity:
Common stock-$1.00 par value per share
Authorized 2,000,000 shares (Notes 3 and 6)
Issued 848,541 and 779,131 shares respectively .
Capital surplus
Earned surplus (Note 3) .
1957
$ 1,200,000
1,544,416
523,799
1,407,370
486,620
305,575
1,105,432
1,290,672
7,863,884
4,700,000
8,005,000
4,122,000
16,827,000
1,857,000
848,541
6,980,547
9,640,104
17,469,192
$44,017,076
----
1956
$ 1,200,000
1,174,868
409,446
1,046,206
219,423
288,575
818,371
1,241,956
6,398,845
4,800,000
4,877,000
9,677,000
1,008,000
779,131
5,558,420
8,653,684
14,991,235
$32,075,080
PEAT, MARWICK, MITCHELL & Go.
CERTIFIED PUBLIC ACCOUNT.A..'ITS
618 SOUTH SPBlNO STREET
LOS ANGELES 14, CALIF.
ACCOUNTANTS' REPORI'
To the Board of Directors
'Western Air Lines, Inc.:
We have examined the balance sheet of 'Western Air
Lines, Inc. as of December 31, 1957 and the related statements
of income and surplus for the year then ended. Our examination
was made in accordance with generaliy accepted auditing
standards, and accordingiy included such tests of the accounting
records and such other auditing procedures as we considered
nece saary in the circumstances.
In our opinion, the accompanying balance sheet and
statements of income and surplus present fairiy the financial
position of 'Western Air Linea, Inc. at December 31, 1957 and
the results of its operations for the year then ended, in
conformity with generaliy accepted principles of accounting
which, l!xcept for the changes (of which we approve) resulting
from revised requirements of the Civil Aeronautics Board as
eet forth in note 7 of notes to financial statements, have been
applied on a basis consistent with that of the preceding year.
Loa Angeles, California
February 10, 1958
notes to financial statements
Note 1. Federal Taxes on Income. Federal income tax re-
turns for 1955 and 1956 are in process of examination by the
U.S. Treasury Department. Provision has been made for all
known income tax liabilities.
Depreciation for federal tax purposes will, through 1960, exceed
that recorded on the books of account as a result of deducting
accelerated depreciation on the tax returns. Accordingly, the
federal tax provision for 1957 includes $849,000 to offset the
estimated effect on federal taxes which will occur in the years
1961-64 when depreciation recordable on the books of account
will be more than that allowable for federal tax purposes.
Note 2. Stock Dividends. On March 5,1957, the company paid
a stock dividend of 4% on the shares outstanding as of February
15,1957. For the 30,254 shares thus issued and the cash pay-
ments of $29,396 in lieu of fractional shares, the earned surplus
account was charged $755,492, with $695,842 being transferred
to capital surplus and $30,254 to the capital stock account. The
charge to earned surplus was based upon the closing price of
$24.00 a share on the New York Stock Exchange on January 31,
1957, the day preceding the declaration by the Board of Directors .
In 1958, on February 7, a like 4% stock dividend was declared
payable March 20, 1958, to shareholders of record on February
21, 1958.
Note 3. Long-Term Debt. The bank and insurance company
loans summarize as follows:
Bani< loans
1956 Agreement for $6,000,000
borrowed in 1956. Interest 4%.
1957 Agreement for $3,000,000-
$1,000,000 borrowed in 1957.
Interest 5%,
Payable
$100,000 a
month
$50,000 a
mo. effective
Oct. 1, 1961
Insurance Company loans Payable
1956 Agreement for $12,000,000- $1,200,000
$6,000,000 borrowed in 1957. annually effective
Interest 4 %. Sept. 1, 1962
1957 Agreement for $6,000,000- $600,000 annually
Maturity
Jan. 2,
1962
Sept. 1,
1966
Maturity
Sept. 1,
1970
$2,005,000 borrowed In 1957. effective Sept. 1,
Interest 5%, Sept. 1, 1966 1975
Amounts remaining for draw-down total $5,995,000 in 1958
(including $3,000,000 borrowed in February 1958), and $6,000,000
between July 1959 and December 1960, and carry a commitment
fee of of 1%.
The convertible subordinated debentures are subject to a sink-
ing fund requirement of 5% per annum effective May 31, 1961,
and 10% per annum effective May 31,1966, with maturity on
June 1, 1971. The debentures, which are subordinated to the
bank and insurance company debt, are convertible into common
stock of the company based on a conversion price per share
adjustable for, among other things, stock dividends. The effec-
tive price as of December 31, 1957 was $20.38 and 202,257 shares
of the authorized unissued stock of the company were reserved
for such conversion. The related trust indenture also provides
for retirement by call at a price of 104.25% through May 31, 1958,
decreasing annually until June 1, 1969, when the call price
becomes face value.
The 1956 and 1957 agreements with the bank and the insurance
companies and the trust agreement governing the debentures
provide among other things (including restrictions on addi-
tional borrowings) conditions and requirements which limit
the amount of earned surplus distributable as cash dividends.
As a result, earned surplus as of December 31, 1957, which may
be applied to the payment of cash dividends is limited to
$2,588,158.
Note 4. Commitments and Contingent Liabilities. At
December 31, 1957, the company had on order nine Douglas
DC-6B airplanes, with delivery scheduled for 1958, and nine
Lockheed Electra propjet aircraft, with delivery scheduled for
1959 and early 1960.
These aircraft together with other major items represent a
commitment in excess of deposits made at December 31, 1957
of approximately $26,000,000. (See Note 3 for related financing.)
As of December 31, 1957, the company was contingently liable
for claims and lawsuits in which it is or may be a defendant, but
management and its counsel believe the ultimate liability, if any,
will not materially affect the financial statements.
Note 5. Retirement Plans. The company has an insured con-
tributory retirement plan for all eligible employees, including
officers, and in addition, the company is negotiating in accord-
ance with the pilots' 1956 labor agreement a "variable pension
plan ," to be based on pilots' current services, of the trusteed
type which is subject to approval by the Treasury Department.
The cost of these plans charged to operating expense in 1957
total $598,283 for both current and past services. Management
contemplates that the remaining past service cost of the insured
plan will be funded over a period of approximately six years and
will require annual payments of $106,000.
Note 6. Options to Purchase Capital Stock. Through
December 31, 1957, 31,360 shares (including 2,350 shares in the
year 1957) have been issued under a restricted stock option
plan for officers and key employees approved by the share-
holders in 1951. The option prices ranged from $8.19 to $17.47
a share, representing a total option price and total fair value
when first exercisable of $384,884, and a total fair value at dates
when exercised of $596,973. At December 31, 1957 options for
4,053 shares were outstanding and exercisable within five years
from the dates granted. The prices average $15.25 a share and
represented a total option price and a total fair value when first
exercisable of $61,815.
Note 7. Accounting Changes. Effective January 1, 1957, a new
Manual of Accounts was prescribed by the Civil Aeronautics
Board which effected change in both form and account content.
The significant change in financial condition was the transfer
of expendable aircraft parts from property and equipment to
current assets. As a consequence, current assets at December
31, 1957, are increased by approximately $580,000. The Statement
of Income for 1956 was partially recast to provide a relative
basis for comparison.
board of directors
William S. Bartman
Bartman & Braun, Attorneys-at-Law
Los Angeles, Cal ifornia
Gordon Y. Billard
J. R. Williston & Co.
New York, New York
Hugh W. Darling
Darling, Shattuck & Edmonds, Attorneys-at-Law
Los Angeles, California
Terrell C. Drinkwater
President
Western Air Lines, Inc.
Robert E. Driscoll, Sr.
Honorary Chairman, Board of Directors
First National Bank of the Black Hills
Rapid City, South Dakota
Wilford H. Gonyea
Clear Fir Sales Co.
Springfield, Oregon
Hector C. Haight
International Operations
Hughes Aircraft Co.
Los Angeles, California
Goodrich Lowry
President, Northwest Bancorporation
Minneapolis, Minnesota
Dr. Donald H. McLaughlin
President, Homestake Mining Co.
San Francisco, California
L. Welch Pogue
Pogue & Neal, Attorneys-at-Law
Washington, D.C.
Stan ley R. Shatto
Vice President-Operations
Western Air Lines, Inc.
Dudley Swim
Monterey, California
Harry J. Volk
President, Union Bank
Los Angeles, California
John M. Wallace
Chairman, Board of Directors
Walker Bank & Trust Co.
Salt Lake City, Utah
Alexander Ward en
Publisher, Great Falls Tribune-Leader
Great Falls, Montana
Sidney F. Woodbury
Pine Street Co.
Portland, Oregon
executive staff
Terrell C. Drinkwater
President
Stanley R. Shatto
Vice President-Operations
Marvin W. Landes
Vice President-Service
Paul E. Sullivan
Vice President-Admin istration and Secretary
Arthur F. Kelly
Vice President-Sales
J. Judson Taylor
Vice President and Treasurer
D. P. Renda
Vice President-Legal
G. G. Brooder
Vice President
Charles J. J. Cox
Controller and Assistant Treasurer
Earnest H. Brown
Assistant Secretary and Director of Personnel
Thomas M. Murphy
Assistant to the President
General Offices
Western Air Lines Building
6060 Avion Drive
Los Angeles International Airport
Los Angeles 45, California
Registrars
Bank of Ameri ca National Trust &
Savings Assn.
660 South Spring Street
Los Angeles 14, California
The Chase Manhattan Bank
11 Broad Street
New York 15, New York
Stock Transfer A gents
Security-First National Bank of Los
Angeles
561 South Spring Street
Los Angeles 14, California
New York Trust Co.
100 Broadway
New York 15, New York
Trustee for Debentures
Union Bank
760 South Hill Street
Los Angeles 14, California
Stock Listings
Listed and traded on
New York Stock Exchange and
Pacific Coast Stock Exchange
General Cou nsel
Darling, Shattuck & Edmonds
Attorneys-at-Law
523 West Sixth Street
Los Angeles 14, California
A uditors
Peat, Marwick, Mitchell & Co.
618 South Spring Street
Los Angeles 14, California
A nnual Meeting
Fourth Thursday in April
at General Offices