Honolulu 
Hilo 
Present and Proposed Routes 
LEGEND 
Present Routes 
Proposed Routes 
 President's Letter 
To Shareholders, Employees, Customers and Friends: 
With considerable satisfaction, the management 
of Western Air Lines presents this detailed account of 
Western's operations for 1963, the most successful 
year in the history of the company. 
The key to the company's success during the year 
was its ability to hold down costs while responding 
to the ever-growing needs of the dynamic area served 
with substantial increases in service. In fulfilling its 
responsibility to the traveling and shipping public, 
western has made and will continue to make every 
effort to provide safe, comfortable and convenient air 
transportation at the lowest possible fares. 
Although there were no changes in the company's 
route structure during the year, Western is continuing 
to seek ways to expand its system. The Civil Aero- 
nautics Board's decision in the Hawaii route case was 
disappointing to the company. As discussed in the 
Route Development section of this report, the com- 
pany has taken action in an attempt to obtain a reversal 
or modification of this decision. 
During 1963, the airline industry was plagued with 
a seemingly never-ending series of new fare proposals. 
This is the most serious problem facing the industry 
today. It is hoped that fares will be permitted to 
stabilize at their present levels, thereby providing a 
sound economic climate for the future. 
Based on the strong financial condition of the company, 
western's board of directors increased the quarterly 
dividend in 1963 and again at its first regular meeting 
of 1964. In addition, the directors voted at their Febru- 
ary 1964 meeting to submit for stockholder approval 
at the next annual meeting a recommendation that 
Western's stock be split 3-for-1. 
We are optimistic about the future and confident 
that those factors which contributed to the company's 
growth and success in 1963 will continue in 1964. 
The management of the company will work diligently 
to make this a year of new growth and profitability 
for Western. 
Your continuing support, which is gratefully acknowl- 
edged, will assist in this endeavor. 
-- 
February 25, 1964 \  e I~ t:. 
~ 
 
~ 
te 
,..;1;., , 
President 
1 
Vestern's board of directors at February 1964 meeting in Phoenix. 
 Highlights of 1963 
1963 1962 
Seat miles produced 2,929,673,000 2,402,344,000 
Seat miles sold 1,615,189,000 1,307,173,000 
Passengers carried 2,812,640 2,128,225 
Total operating revenues $ 99,427,036 $ 86,369,850 
Operating income $ 21,317,947 $ 11,380,651 
Net earnings $ 9,424,826 $ 5,014,384 
Cash dividends paid $ 1,573,803 $ 1,430,730 
Common stock outstanding 1,430,730 1,430,730 
Earnings per share $ 6.59 $ 3.50 
Cash dividends per share $ 1.10 $ 1.00 
Total shareholders' equity $ 43,451,984 $ 35,600,961 
Shareholders' equity per share $ 30.37 $ 24.88 
Cash and securities $ 16,227,395 $ 18,641,554 
Working capital $ 6,580,448 $ 12,364,101 
Properties and equipment at cost $ 121,725,177 $ 104,984,213 
Long-term debt $ 32,940,000 $ 39,488,357 
Number of employees at year end 3,513 3,078 
Wages and salaries paid $ 24,748,998 $ 21,839,862 
 38th Annual Report 
EARNINGS Western Air Lines earned $9,424,826, or 
$6.59 a share in 1963, highest earnings in the com- 
pany's 38-year history and the 15th consecutive year in 
which Western has reported a profit. In 1962, the 
company earned $5,014,384, or $3.50 a share. 
Operations during 1963 produced net earnings of 
$9,816,840, or $6.86 a share. This was reduced by 
$392,014, or 27 cents a share, as the net result of 
two special items: (1) A year-end writedown of the 
carrying value of the company's fleet of DC-6B air- 
craft ( from $145,000 to approximately $60,000 each) 
totaling $582,953 after taxes, and (2) a gain of 
$190,939 after taxes from the disposition of property. 
Operating income amounted to $21,317,947, equal to 
21.4 percent of total operating revenues. In 1962, op- 
erating income was $11,380,651, or 13.2 percent of 
total operating revenues. 
Earnings from operations before taxes totaled 
$19,616,840, or $13.71 a share; the provision for taxes 
on income consumed $9,800,000, or $6.85 a share. 
Per-share figures are based on 1,430,730 shares of 
common stock outstanding. 
DIVIDENDS For the 13th consecutive year, shareholders 
of Western Air Lines received cash dividends in 1963. 
Quarterly dividends of 25 cents a share were paid on 
March 8, May 17 and August 9. At its October meet- 
ing, the board of directors increased the dividend rate 
from 25 cents to 35 cents, effective with the dividend 
paid on November 8, 1963, resulting in a total pay- 
ment of $1.10 a share for 1963. 
At the first regular meeting of 1964, held in Phoenix 
on February 10, the board again increased the quarterly 
dividend, from 35 cents to 45 cents a share, payable 
on March 6 to stockholders of record on February 21. 
When the 3-for-1 stock split recommended by the 
board at the February meeting and discussed in the 
Shareholders and Stock section is approved by the 
shareholders, the current annual dividend rate of $1.80 
will be equivalent to $.60 a share on the new stock. 
REVENUES Operating revenues for 1963 also estab- 
lished a record high for the company, totaling 
$99,427,036, a 15.1 percent increase over the previous 
high of $86,369,850 in 1962. 
Supporting the growth in operating revenues were a 
22 percent increase in seat miles produced and a 23.6 
percent increase in the number of seat miles sold. 
At the same time, however, the company's yield per 
seat mile decreased by 6.6 percent, from 6.23 cents to 
5.82 cents. The reduction in yield was largely the re- 
sult of three factors: ( 1) a continuing shift of pas- 
sengers on an industry-wide basis from deluxe travel 
to regular or coach travel, ( 2) the development of 
Western' s $11.43 "Thriftair" shuttle service between 
Los Angeles and San Francisco which, at 3.36 cents per 
mile, is the lowest one-way fare in the U.S., and (3) 
an industry-wide family plan fare structure for deluxe 
service which was generally lower than coach fare. 
Seat miles sold in the coach section increased 3 7. 5 
percent for 1963, while deluxe seat miles sold de- 
creased by 20.7 percent. 
Western's income dollar was derived from essentially 
the same sources as in 1962. Passenger traffic accounted 
for 93.5 percent (16.6 percent deluxe and 76.9 percent 
coach); express, freight and excess baggage added 3.2 
percent; mail 1.3 percent and all other sources, includ- 
ing property gains, 2 .0 percent. 
EXPENSES Total operating expenses for 1963 were 
$78,109,089, a 4.2 percent increase over 1962. Costs 
other than depreciation were up 8.3 percent, while de- 
preciation and amortization were down 17 .9 percent. 
A major portion of the expense increase resulted from 
the 2 2 percent increase in seat miles produced and a 
14.9 percent increase in airplane miles flown. 
The holding of the overall expense line and a turn- 
down of the cost line in certain areas, combined with 
the substantial increase in production, had a very favor- 
able effect on unit costs and on Western's break-even 
load factor (percentage of seats produced which must 
 be sold to produce a break-even of expenses and in- 
come) . Cost per seat mile decreased from 3 .12 cents 
to 2.67 cents, cost per ton mile produced decreased 
from 24.38 cents to 22.19 cents and Western's break- 
even load factor was lowered from 48 percent for 1962 
to 43.6 percent for 1963, despite the reduced yield per 
passenger mile, mentioned in the Revenues section of 
this report. 
Illustrative of favorable expense trends in 1963 were: 
the emergence of the 720B as the most economical 
aircraft on an overall seat mile cost basis the com- 
pany has ever operated; the substantial increase in 
volume, especially of "Thriftair" operation, which 
resulted in a greater spread of fixed costs, particularly 
in the Los Angeles-San Francisco market; and an 
improved computer-based fuel management program. 
The 720B cost-improvement factor was of even greater 
import in relation to 1962 by reason of the return in 
September 1962 of the two leased Boeing 707s. The 
efficiency of the 720B also permits its use on shorter 
routes. 
FINANCES Western closed 1963 in a strong financial 
position. 
Working capital amounted to $6,580,448, a decrease 
of $5,783,653 from the 1962 level. The decline in 
working capital resulted when the company elected to 
deposit with the manufacturer an amount equal to the 
purchase price of two Boeing 720B fanjet aircraft 
which are scheduled for delivery in 1964. Accordingly, 
$7,947,221 in deposits on equipment purchases are 
earning interest at a higher rate than is available from 
usual short-term investments. 
The ratio of current assets to current liabilities at 
December 31, 1963, was $1.30-to-$1.00, down from 
$1.71-to-$1.00 at the end of 1962. 
The overall improved financial condition, which per- 
New company headquarters and expanded maintenance base is 
1mder construction at Los Angeles International Airport. 
 Brief Statement of Earnings 
Western's income came from: 
Passengers 
Deluxe ........ . ..... . $ 
Coach .. . . ...... . .... . 
Express, freight and baggage 
Mail . . ........... . .... . 
Gain on disposition 
1963 
16,703,444 
J_},_ 
2~9_,226 
93,912,670 
3,247,853 
1,320,254 
of property . . . . . . . . . . . . 333,939 
Other income . . . . . . . . . . . 1,585,724 
100,400,440 
Western's expenses were: 
Wages and salaries ...... . 
Social security, group 
insurance and 
retirement plans . .... . . 
Aircraft fuels ........... . 
Materials and repairs . .... . 
Depreciation and aircraft 
write-down ........... . 
Rentals of flying equipment 
Other rentals and 
landing fees ......... . . 
Advertising and publicity .. 
For service to passengers .. 
Insurance .............. . 
Interest .... . .. . ... .. . . . 
Taxes . . ............... . 
Utilities and services .. .. . . 
Other costs ..... . ..... . . 
24,748,998 
2,321,131 
10,550,751 
9,724,424 
10,980,060 
2,966,259 
2,722,875 
3,095,603 
3,466,687 
2,322,109 
11,194,149 
5,186,520 
1,696,048 
90,975,614 
Net earnings .. . ..... . . . .. .. $ 9,424,826 
Western' s Income Dollar 
76.9 from aircoach passenger services 
- 
16.6 from deluxe passenger services 
I 
3.2 from express, freight and excess baggage 
I 
1.3 from mail 
I 
1962 
$23,544,861 
57,624,935 
81 ,169,796 
2,964,055 
1,426,720 
1,539,087 
1,292,514 
88,392,172 
21 ,839,862 
1,937,375 
9,659,785 
9,335,283 
13,088, 5.98 
1,381,263 
2,611 ,112 
2,823,355 
2,577,694 
2,946,972 
2,285,700 
6,727,535 
4,639,192 
1,524,062 
83,377,788 
$ 5,014,384 
2.0 from all other sources, including property gains 
Statement of Working Capital for 1963 
Sources of Working Capital 
From operations 
Net earnings ... . ... . ........ . . ..... $ 9,424,826 
Add back 
Depreciation and maintenance reserve 
provision ....... . ..... . . .... .. . 11,097,084 
Deferred income taxes . . . . . . . . . . . . . 6,589,000 
Total from operations . . . . . . . . . . 27,110,910 
From other sources 
Proceeds from disposition of property, 
net of taxes . . . . . . . . . . . . . . . . . . . . . . 536,715 
Flight equipment lease/ sale contracts . . . 958,626 
Other items . . . . . . . . . . . . . . . . . . . . . . . . (87,788) 
Total from all sources . . . . . . . . . . 28,518,463 
Applications of Working Capital 
To purchase airplanes and other property 
and equipment ... .. . . ... .... ... . .. . 
To pay cash dividends ... .. .. . . .. .. . . .. . 
To reduce long-term debt . .. . ... . . .. . .. . 
Total applied . . ... .. . ........ . 
26,179,956 
1,573,803 
6,548,357 
34,302,l 16 
Decrease of Working Capital .. . . . .... .. . . . (5,783,653) 
Working capital at beginning of year . . . . . . 12, 3!54, 101 
Working Capital at End of Year ........... $ 6,580,448 
Western's Expense Dollar 
29.7 for wages and salaries 
- 
12.3 for local, state and federal taxes 
- 
12 .1 for depreciation 
- 
11.6 for aircraft fuels 
- 
10. 7 for materials and repairs 
- 
2 3. 6 for all other expenses 
 Brief Balance Sheet 
Western owns: 1963 1962 
Cash and securities ....... 16,227,395 $18,641,554 
Owed by others .......... 9,030,622 9,695,305 
Expendable parts and 
supplies .... .. ........ 1,661,804 1,266,308 
Building and improvements, 
net .................. 2,509,904 2.484,779 
Flight and other equipment, 
net .................. 68,651,705 60,374,316 
Deposits on new equipment 11,081,171 4,837,528 
Prepaid expenses ......... 1,649,715 1,229,162 
Def erred charges and other. ~2jz_ 301,459 
111,201,563 98,830,411 
Western owes: 
Owed to vendors and others 11,464,612 9,482,491 
Federal income taxes- 
current and deferred . . . . 16,274,443 7,252,124 
Tickets sold but not yet used 1,910,524 1,575,613 
Notes payable- 
current and long-term . . . 38.100,000 44,919,222 
Excess of what is owned over 
what is owed, or 
67,749,579 63,229.450 
- -~ -- 
shareholders' equity ...... $___iM_SJ.,_?84_ $35,600,961 
mitted the interest-bearing aircraft deposits, also per- 
mitted the company to forego any borrowings under its 
1962 credit agreements. These agreements had been 
set up to finance the purchase of three 720B's which 
were delivered in 1963. During the year, the agree- 
ments were amended to make these funds available for 
the aircraft scheduled for delivery in 1964. However, 
this right to borrow was cancelled by the company 
effective December 31, 1963, in anticipation that cur- 
rent commitments can be covered by internally gen- 
erated funds. 
The level of current earnings is the fundamental key 
to the company's improved financial position. How- 
ever, the significant amount of annual depreciation 
( which does not consume working capital) and the 
effective acceleration of depreciation for tax purposes 
( which lowers income taxes currently payable but for 
which provision is made under def erred taxes) have 
both materially aided the retention of working capital. 
The company anticipates further material and effective 
fund flow from both sources in 1964. During 1963, 
the investment of excess cash funds produced $500,000 
in interest income. 
As of December 31, 1963, Western's long-term debt 
totaled $32,940,000. This debt was composed of 
$14,220,000 in notes payable to banks and $23,880,000 
payable to insurance companies, less current maturities 
of $5,160,000. During the year, the company made 
payments as scheduled under the various loan agree- 
ments in the amount of $3,960,000 and paid off in full 
the equipment lease/purchase contracts which totaled 
$2,859,222 at December 31, 1962, and were part of 
the long-term debt at the close of 1962. 
A full summary of debt, interest rates and repayment 
schedules is shown in Note 2 to the financial state- 
ments. A statement of source and application of work- 
ing capital is included in this report. 
SHAREHOLDERS AND STOCK At the close of 1963, there 
were 1,430,730 shares of Western's common stock 
issued and outstanding. 
The stock was held by approximately 7,500 stock- 
holders, residing in each of the 50 states and several 
foreign countries. 
At the 1963 annual meeting of shareholders held in 
Los Angeles on April 25, 85.1 percent of all shares 
were voted either in person or by proxy. 
Shareholders' equity reached a new high in 1963, total- 
ing $43,451,984, or $30.3 7 a share, compared with a 
1962 equity of $35,600,961, or $24.88 a share. 
On the New York Stock Exchange, 1,171,300 shares 
  of the company's stock were traded during the year. 
The high was 76, the low 28 and the closing price 
on December 31, 1963, was 73. On the Pacific Coast 
Stock Exchange, 102,881 shares were traded with a 
high of 75, a low of 28 and a year-end closing 
price of 73. 
At the February 10, 1964 meeting, the board voted to 
recommend to the shareholders at the next annual meet- 
ing a proposal to increase the number of 1 par value 
authorized stock from 2,000,000 shares to 10,000,000 
shares and to split the stock 3-for-1. 
Shareholders of record on March 6, 1964, will be en- 
titled to vote at the annual meeting to be held on 
April 23. Upon obtaining shareholder approval and 
after compliance with security regulations, the pro- 
posed stock split will be made effective May 4, 1964, 
and the additional shares will be mailed to sharehold- 
ers on or about June 1, 1964. 
ANNUAL MEETING The 1964 meeting of shareholders 
will be held at the Beverly Hilton Hotel, Beverly Hills, 
on April 23. On or before March 20, stockholders will 
receive a notice of the meeting and proxy material. 
EQUIPMENT Western took delivery on three addi- 
tional Boeing 720B aircraft during 1963 increasing 
its fanjet fleet to 10. 
The three new 122-passenger jets, delivered in April, 
May and June, permitted the company to increase the 
number of passenger seat miles produced by 22 percent 
over 1962, from 2.4 billion seat miles in 1962 to 2.9 
billion in 1963. 
The company also ordered three additional 720B's for 
delivery in May and November of this year and April 
1965. Two piston-powered Douglas DC-6B's were sold 
.. 
during the year. At year's end, W< stern operated a fleet 
of 36 aircraft, including the 10 720B's, 12 Lockheed 
Electra II's and 14 DC-6B's. 
New Western terminal facilities at San Francisco Inter- 
national Airport offer latest passenger-service features. 
While expanding the four-engine fanjet fleet, company 
officials also followed closely the development of two 
short-to-intermediate range twin-engine jets-the Brit- 
ish Aircraft Corporation One-Eleven and the Douglas 
DC-9-as the next step in the company's continuing 
effort to operate the most modern and efficient aircraft 
available. Although no orders have been placed, it is 
anticipated that short-range jets will be acquired in 
the future. 
Construction of a new company headquarters and main 
maintenance base at Los Angeles International Airport 
proceeded according to plan during the year. Occu- 
pancy of the new facilities, which will include jet 
hangars, maintenance shops and an engine test cell, in 
addition to corporate offices, is scheduled for the sum- 
mer of 1964. 
During 1963, the company occupied modernized termi- 
nal facilities at San Francisco and Las Vegas. At San 
Francisco, Western installed jet passenger loading 
bridges- the first on the WAL system - and two pop- 
ular passenger service features which are unique to 
Western: curbside baggage checking and a dial-a-matic 
electronic flight information system. 
Scheduled for 1964 are the installation of passenger 
loading bridges at Western' s Los Angeles terminal and 
new boarding concourses at Seattle and Denver. 
SALES AND SERVICE New records in traffic volume and 
continued emphasis on economy air services were 1963 
highlights of the most extensive marketing program in 
Western's history. 
The company carried 2,812,640 passengers during 
1963, 32.2 percent more than in the previous year. 
A 15. 7 percent increase in passenger revenue , from 
81 169,796 in 1962 to 93,912,670 reflects an ex- 
pansion of passenger volume and two additi nal key 
factor : ( 1) the successful full-year operation f three 
new routes-Los Angeles-Sacramento, an Franci co- 
Ontario ( alif.) and an Franci co-La Vi ga, and (2) 
the high-volume, 1 w-fare "Thriftair" ervi e b tween 
 Los Angeles and San Francisco and, effective Decem- 
ber 1, between Los Angeles and Las Vegas. 
The percentage of increase in passenger revenues was 
less than that of passengers and revenue passenger 
miles because of the reduced yield per passenger mile 
mentioned in the Revenues section of this report and 
a shorter length of haul. The latter was influenced in 
part by growth of the "Thriftair" operation. 
Volume of cargo shipments continued to increase 
throughout the system with air freight tonnage 
( freight, express, excess baggage, airmail and regular 
first-class mail) and revenue reaching an all-time high 
of $4,568,107, compared to $4,390,775 in 1962. 
Continuing its program to make air travel available to 
a greater number of people through economy air serv- 
ices, Western remained the nation's No. 1 trunkline in 
this field, with approximately 85 percent of its capacity 
in economy seating. The company continued to offer 
and promote deluxe services as well, so that a choice of 
accommodations would be available to travelers. 
Sales teamwork between Western and its authorized 
travel agents was further developed during 1963, with 
the company's ticket sales by agencies establishing a 
new record of $28,400,000, an increase of 21.3 percent 
over the previous year. 
Closer relationships and joint sales programs with 
other airlines brought a new high in connecting traffic, 
with Western' s interline revenues reaching $28,600,000, 
up 4.2 percent from 1962. 
Despite the 22 percent increase in seat miles produced, 
Western's overall load factor increased to 5 5.1 percent, 
compared to 54.4 percent for 1962. 
On February 25, 1963, the company reduced the one- 
way fare on its "Thriftair" DC-6B shuttle service be- 
tween Los Angeles and San Francisco to $11.43, lowest 
fare on the highly competitive route. This service pro- 
vides every-hour-on-the-hour departures from each city 
during the business day, with 15 daily roundtrips. 
Extensive programs of advertising, promotion and 
publicity were devoted to the Mexico route during the 
year, under the theme of "Let's Go Mexico!" Travel 
between Pacific Coast cities and Mexico was stimulated 
by economy tours and trips by special groups mer- 
chandised through travel agents. A new concept of 
routing transcontinental travelers via Mexico was well- 
received. Emphasis on such "Circle Trips" is being 
l 
I 
developed for the New York World's Fair. 
For its leadership in promoting travel from Mexico to 
the Pacific Coast under the "Visit U.S.A." program, 
Western was awarded the President's "E'' A ward for 
excellence in developing foreign markets. 
In addition to expanding its 12th annual "Sun Break" 
campaign in wintry northern regions, the company 
developed for the first time a summer counterpart of 
this program. The "Fly North" program encouraged 
vacationers to visit the Pacific Northwest, Canada, 
Alaska and other summer vacation areas. 
Arrangements were made during the year for Western 
to offer a "Fly Now-Pay Later" plan. This conven- 
ience, and BankAmericard, which is being added in 
March of this year, augment the five credit cards al- 
ready honored by the company: American Express, 
Diners' Club, Hilton Carte Blanche, the industry-wide 
Universal Air Travel Plan and Western's own Charge- 
A-Flight. 
ROUTE DEVELOPMENT Although there were no 
changes in Western' s route system during 1963, certain 
developments are significant. 
On November 8, i963, the Civil Aeronautics Board 
decided by ~ 3-2 vote to terminate both the domestic 
and the international phases of the Transpacific Route 
Case. The majority took this action without either 
granting or denying Western' s applications for Cali- 
fornia-Hawaii domestic authority, stating that it would 
review again the entire Pacific route pattern in a new 
proceeding at some time in the future. 
The two minority members stated that they would 
have issued a certificate for Los Angeles-, San Fran- 
cisco-, and San Diego-Hawaii authority to Western in 
accordance with the board's decision of December 7, 
1960. 
On November 29, 1963, the company filed a petition 
asking the CAB to reconsider this decision. The com- 
pany contends that the CAB committed a number of 
major legal errors in its disposition of the domestic 
phase of this case. It is Western' s position that federal 
law requires the CAB to act upon outstanding applica- 
tions after a proceeding has been completed and also 
New traffic records were set during the year as 2,812,640 
business and pleasure travelers were cartied on WAL flights. 
  requires that authorization for new service be issued 
when a finding is made that additional service is 
required by public convenience and necessity. 
The CAB' s findings in its decision of December 7, 1960 
-that new California-Hawaii service is required-have 
not been revoked by the CAB. Instead, the CAB 
has attempted to hold those findings in abeyance pend- 
ing a future proceeding. The CAB is expected to rule 
soon on the company's petition for reconsideration of 
the November 8 decision. 
In order to protect its legal rights, the company also 
filed on January 6, 1964, a petition with the United 
States Court of Appeals for the District of Columbia 
requesting that it review and set aside the CAB' s 
November 8 decision on the grounds stated above. If 
the Civil Aeronautics Board grants the company's peti- 
tion for reconsideration, the petition for court review 
will be withdrawn or amended, depending on the 
nature of the CAB's ruling. However, if the CAB 
should deny the company's petition, Western will pro- 
ceed with the court proceeding, which should be 
argued in the spring or early summer of 1964. 
The company continues to remain hopeful that these 
legal issues will be resolved successfully and that it will 
ultimately be authorized to inaugurate the much-needed 
new service from California to Hawaii. 
The CAB also issued a decision in the Southern Rocky 
Mountain Local Service Case during 1963, denying the 
company's application for Phoenix-Salt Lake City serv- 
ice but also denying the main applications of subsidized 
local service carriers which proposed to duplicate 
WAL service on certain routes in an area bounded by 
Los Angeles, Las Vegas, Reno, Denver and San Diego. 
International negotiations between the governments of 
the United States and Mexico, conducted during July 
and August, resulted in the extension of the bilateral 
Shareholders' Equity 
$45 (millions) 
40 
35 
30 
25 
20 
15 
54 55 56 57 
Load Factors 
100% 
90 
80 
70 
60 
Actual load Factor 
Tan-jacketed 11Special Agents" became a familiar sight at 
major Western terminals during 1963.Among passengers aided 
0 
by company's new program are mothers with small children. 56 57 
58 59 60 61 62 63 
58 59 60 61 62 63 
 Seat Miles Sold 
1600 (millions) 
agreement under which the company operates its 
Los Angeles-San Diego-Mexico City route, from 
1400 
August 14, 1963, to August 15, 1964. 
PERSONNEL Western' s greatest asset has always been 
1200 
its employees. During 1963, as a result of expanded 
training programs and individual initiative, they con- 
1000 tinued to broaden their knowledge, learn important 
new skills and accept greater responsibilities in the 
800 fulfillment of their demanding tasks. 
Deluxe 
As of December 31, there were 3,513 employees on 
600 the WAL employment roster, compared to 3,078 in 
1962. Wages and salaries accounted for $24,748,998 
400 during 1963. 
Contracts were signed during the year with four unions, 
200 representing the company's pilots, clerks and agents, 
maintenance personnel and communication workers. A 
contract also is in force with the dispatchers' union. An 
54 55 56 57 58 59 60 61 62 63 
agreement which covers Western' s stewardesses was the 
only one open for negotiation at the close of 1963. 
Seat Miles Eighty-eight percent of total employees are represented 
3000 (millions) 
by the six unions. 
Participation by employees in the company's voluntary 
group insurance program continued high during 1963, 
2500 
with 3,099 employees subscribing to the basic coverage, 
1,362 members of this group carrying an additional 
life insurance feature of the plan and 1,614 employees 
2000 
carrying family benefits. 
Produced 
As of December 31, 1963, there were 1,621 employees 
eligible (by length of service) to participate in the 
company's insured, contributory retirement income pro- 
gram; 1,129 of these employees participated in the plan, 
now in its 12th year of operation. 
During the year, the retirement programs cost the 
company $1,020,085 for current and past services. 
Western believes its employee benefit programs are 
second to none in the industry. 
--~-- 
Successful Los Angeles-San Francisco "T hriftair" fiights 
54 55 56 57 58 59 60 61 62 63 were extended to Los Angeles-Las Vegas route in Decembe1'. 
  A Decade of Growth 
1963 
Revenues:** 
Passenger . . . . . . . . . . . . . . . . . . $93,913 
Express, freight and excess 
baggage . . . . . . . . . . . . . . . . . 3,248 
Mail . . . . . . . . . . . . . . . . . . . . . . 1,320 
Other ..................... _ __,9;_4_.;;..6 
Total Revenues . . . . . . . . . . . 99,427 
Operating Expenses:** 
Depreciation and amortization. . 9,762 
Payroll . . . . . . . . . . . . . . . . . . . . 24,749 
Other . . . . . . . . . . . . . . . . . . . . . 43,598 
Total Operating Expenses . . . 78,109 
Operating Income** . . . . . . . . . . . 21,318 
Interest** . . . . . . . . . . . . . . . . . . . . {2,322) 
Other Income and Expenses 
Net** ..................... __ 
6_2_1 
Provision for Taxes on Income** . 
Net Earnings from 
Operations** .......... . 
Special Items (Less Applicable 
Income Taxes) : * * 
Gain on disposition of 
property .............. . 
Write-down of aircraft .... . 
Net Earnings** ........ . 
Net earnings from operations 
19,617 
9,800 
9,817 
191 
(583) 
$ 9,425 
per sharet . . . . . . . . . . . . . . . . . $ 6.86 
{0.27) 
Special items per sharet ....... . 
Dividends paid per share: 
Casht .................... . 
Stock .................... . 
Shares outstanding* *t ........ . 
Shareholders' equity-total** ... . 
Shareholders' equity-a sharet .. . 
Working capital** ........... . 
Long-term debt** ............ . 
Properties and equipment-net** .. 
Total assets** ... ......... ... . 
1.10 
1,431 
$43,452 
30.37 
6,580 
32,940 
71,162 
111,202 
Route miles at end of year . . . . . . . 9,474 
Airplanes at end of year: 
Boeing 720-B . . . . . . . . . . . . . . . 10 
Boeing 707-leased ......... . 
Lockheed Electra II . . . . . . . . . . 12 
Douglas DC-6B . . . . . . . . . . . . . 14 
Other aircraft-piston powered .. 
Airplane miles flown** . . . . . . . . 29,035 
Ton miles produced** . . . . . . . . . 352,038 
Ton miles sold** . . . . . . . . . . . . . 168,002 
Seat miles produced** ......... 2,929,673 
Seat miles sold** ............. 1,615,189 
Express, freight & mail ton 
miles sold** . . . . . . . . . . . . . . . 12,291 
Passengers carried ............. 2,812,640 
Express, freight & mail tons 
carried . . . . . . . . . . . . . . . . . . . . 16,250 
Passenger load factor- 
actual % 55.1 
breakeven point % 43.6 
Average length in miles per 
passenger trip . . . . . . . . . . . . . . 574 
Average revenue per passenger 
mile . . . . . . . . . . . . . . . . . . . . . . $ .0582 
Employees at end of year . . . . . . . 3,513 
* 0 perations were ad verse Ly a/Jected by strike. 
1962 
81,170 
2,964 
1,427 
__Q2_ 
86,370 
11,895 
21,840 
41,254 
74,989 
11,381 
{2,286) 
_ill_ 
9,578 
4,875 
4,703 
889 
_{lli) 
5,014 
3.29 
0.21 
1.00 
1,431 
35,601 
24.88 
12,364 
39,488 
62,859 
98,830 
9,545 
7 
12 
16 
1961* 
59,737 
2,271 
1,231 
1,013 
64,252 
11,211 
17,987 
32,864 
62,062 
2,190 
(1,889) 
-1.!.!2) 
182 
_!l.?_ 
57 
807 
864 
0.04 
0.56 
1.00 
1,431 
32,017 
22.38 
5,505 
36,097 
58,493 
85,697 
8,827 
4 
2 
12 
19 
25,262 20,624 
307,570 224,819 
137,492 101,232 
2,402,344 1,718,854 
1,307,173 957,560 
11,574 8,987 
2,128,225 1,529,137 
16,037 12,364 
54.4 55.7 
48.0 55.5 
614 626 
.0623 .0632 
3,078 2,794 
1960 
64,356 
2,473 
1,393 
_m 
69,077 
10,000 
19,478 
33,323 
62,801 
6,276 
(1,330) 
~ 
5,384 
3,050 
2,334 
105 
1.63 
0.07 
0.99 
5% 
1,431 
32,584 
22.77 
16,841 
24,790 
33,302 
72,433 
8,827 
2 
6 
27 
4 
25,996 
207,554 
109,316 
1,776,076 
1,034,481 
1959 
59,194 
2,256 
1,295 
~ 
63,253 
6,643 
17,704 
27,696 
52,043 
11,210 
{1,127) 
__JJlQ_ 
10,263 
5,456 
4,807 
210 
5,017 
4.41 
0.19 
0.80 
4% 
1,091 
24,545 
22.50 
11,518 
25,272 
37,546 
67,223 
8,827 
5 
27 
5 
25,689 
196,178 
103,741 
1,623,007 
982,010 
1958* 
31,459 
1,305 
732 
_ill 
33,970 
4,136 
11,947 
16,831 
32,914 
1,056 
(1,023) 
-1! 
107 
______I!:]_ 
(120) 
1,522 
(0.12) 
1.51 
0.73 
4% 
1,011 
18,996 
18.78 
5,320 
19,748 
31,035 
49,.596 
9,153 
27 
8 
16,449 
123,416 
56,710 
981,740 
533,443 
1957 
39,243 
1,596 
1,067 
-2.Ll 
42,219 
3,011 
14,335 
20,076 
37,422 
4,797 
(780) 
_.2Q 
4,107 
2,233_ 
1,874 
528 
2,402 
1.95 
0.55 
0.70 
4% 
962 
17,469 
18.16 
4,688 
16,827 
24,652 
44,017 
8,799 
21 
14 
21,896 
137,640 
74,468 
1,175,071 
702,727 
1956* 
26,249 
954 
775 
210 
28,188 
2,294 
10,283 
13,009 
25,586 
2,602 
(394) 
__ 
3_1 
2,239 
1,205 
1,034 
2,010 
1.13 
2.19 
0.66 
4% 
917 
14,991 
16.35 
4,600 
9,677 
17,216 
32,075 
6,350 
14 
16 
14,851 
86,196 
48,481 
740,174 
458,131 
1955 
28,756 
1,185 
862 
--1li 
31.039 
2,151 
11,057 
13,775 
26,983 
4,056 
(262) 
_ _ l_O 
3,804 
1,860 
1,944 
38 
1.982 
2.14 
0.04 
0.74 
909 
12,430 
13.67 
2,784 
3,484 
11,208 
23,332 
5,525 
8 
23 
18,335 
100,015 
54,999 
870,596 
514,677 
1954 
22,423 
968 
764 
_lli_ 
24,481 
1,761 
9,239 
11,456 
22.456 
2,025 
(160) 
_ill) 
1,850 
764 
1,086 
373 
1.24 
0.43 
0.49 
876 
10,786 
12.31 
1,490 
3,755 
13,146 
20,204 
5,525 
8 
24 
15,842 
80,261 
42,669 
721,255 
402,255 
9,538 8,899 5,309 7,118 4,667 5,828 4,225 
1,721,619 1,689,278 970,498 1,379,653 928,746 1,092,578 834,910 
13,354 
58.2 
53.3 
601 
.0626 
2,730 
12,792 
60.5 
50.0 
581 
.0605 
2,962 
8,010 
54.3 
54.1 
550 
.0595 
2,547 
11,537 
59.8 
53.5 
509 
.0558 
2,773 
8,200 
61.9 
56.6 
493 
.0573 
2,343 
10,332 
59.1 
51.3 
471 
.0559 
2,130 
7,559 
55.7 
51.1 
482 
.0557 
1,864 
i-Based on shares outstandin/!, at close of respective periods adjusted /01 stock dividends paid throuf!,h 1960. 
* *000 omitted. 
 Statement of Earnings and Retained Earnings 
For the year ended December 31 ., 1963 (with comparative figures for 1962) 
Operating Revenues : 1963 1962 
Passenger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,912,670 $ 81,169,796 
Express, freight and excess baggage ............................... . 3,247,853 2,964,055 
Charter and other transport service ................................ . 205,031 484,899 
Mail ........................................................ . 1,320,254 1,426,720 
Incidental revenue - net .. . ...................................... . 741,228 324,380 
99,427,036 86,369,850 
Operating Expenses : 
Flying operations .............................................. . 20,818,768 20,313,399 
Maintenance ................................................... . 13,303,710 12,445,297 
Passenger service .............................................. . 6,694,820 5,517,229 
Aircraft and traffic servicing ..................................... . 12,270,573 10,861,460 
Promotion and sales ........................................... . 11,096,120 10,194,263 
General and administrative ............... . ...................... . 4,162,991 3,762,967 
Depreciation and amortization ................................... . 9,762,107 11,894,584 
78,109,089 74,989,199 
Operating Income ................. . ....................... . 21,317,947 11,380,651 
Other Income (Expenses) : 
Interest expense ............................................... . (2,322,109) (2,285,700) 
Interest income ................................................ . 639,465 447,271 
(18,463) 
Other income (expense) - net ..................................... - -~-- 35,964 
Earnings before Taxes on Income ............................. . 19,616,840 9,578,186 
9,800,000 
Provision for Taxes on Income ( ote 1) .... . .... . .... . ..... . . . ....... - --'-- 4,875,000 
Net Earnings from Operations . ............. . .......... . . . .. . 9,816,840 4,703,186 
Special Items (Less Applicable Income Taxes - Note I): 
Gain on disposition of property .................................. . 190,939 889,087 
Write-down of piston aircraft ... . ................................ . (582,9~) 
_ ____,_ 
__ _ (577,889) 
Net Earnings ....................................... . ..... . 9,424,826 5,014,384 
Retained Earnings at Beginning of Year ...... . ....................... . 14,808,646 
_ 
____;._...:.. 
11,224,992 
24,233,472 16,239,376 
Cash Dividends Paid 
$1.10 per share in 1963 and $1.00 in 1962 .. . ... . ... . .. .. . . ....... . 1,573,803 1,430,730 
22,659,669 ! 14,808,646 
Retained Earnings at End of Year (Note 2) ........ . ................... $ 
===== 
See accompanying notes to financial stc1tements 
 Western Air Lines Balance Sheet 
Assets 
As of December 31, 1963 
( with comparative figures for 1962) 
Current Assets : 1963 1962 
Cash ......................................................... $ 3,550,685 $ 3,154,038 
Certificates of deposit .......................................... . 8,261,806 7,554,521 
--- 
u. S. Treasury Bills ( approximating market) ........................ . 4,414,904 7,932,995 
--- 
Receivables : 
Traffic balances (net of allowance for doubtful accounts $125,000) .. . 6,591,951 5,537,104 
U.S. and State Government Departments ....................... . 956,493 1,106,284 
Other ................................................... . 1,299,669 1,910,782 
8,848,113 8,554,170 
1,661,804 
Expendable parts and supplies .................................... ____ _ 1,266,308 
Prepaid expenses .............................. ............ .... . 1,649,715 1,229,162 
- - - - - 
Total Current Assets . ..................................... . 28,387,027 29,691,194 
Deposits on equipment purchase contracts (Note 3) . .................... . 11,081,171 4,837,528 
Properties and equipment at cost : 
Flight equipment .............................................. . 106,433,995 92,889,702 
Buildings on and improvements to leased property ................... . 4,738,364 4,533,785 
Other property and equipment ................................... . 10,552,818 7,560,726 
121,725,177 104,984,213 
Less allowance for depreciation and maintenance .................... . 50,563,568 42,125,118 
71,161,609 62,859,095 
Flight equipment lease/sale contracts ( exclusive of current maturities) ....... . 182,509 1,141,135 
Def erred charges and other assets ..................................... . 389,247 301,459 
$ 111,201,563 $ 98,830,411 
-- 
 Liabilities 
Current Liabilities : 
Current maturities of long-term debt (Note 2) ...................... . 
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 (Note 1) ....................... . 
Total Current Liabilities . .................................. . 
Long-term debt (Note 2) .......................................... . . 
Deferred federal taxes on income (Note 1) ............................. . 
Shareholders' Equity (Notes 2 and 5): 
Common stock-$1.00 par value per share 
Authorized 2,000,000 shares 
Issued 1,430,730 shares ..................................... . 
Capital in excess of par value .................................... . 
Retained earnings ............................................. . 
See accompanying notes to financial statements 
$ 
$ 
As of December 31, 1963 
( with comparative figures for 1962) 
1963 1962 
5,160,000 $ 5,430,865 
5,744,189 4,581,791 
914,324 794,544 
2,698,200 2,268,318 
1,808,699 1,522,488 
299,200 315,350 
1,910,524 1,575,613 
3,271,443 838,124 
21,806,579 17,327,093 
32,940,000 39,488,357 
13,003,000 6,414,000 
1,430,730 1,430,730 
19,361,585 19,361,585 
22,659,669 14,808,646 
43,451,984 35,600,961 
111,201,563 $ 98,830,411 
 Notes to Financial Statements 
Note 1. Taxes on Income. Federal income tax returns have been ex- 
amined by the U. S. Treasury Department through December 31, 1962. 
The net provision of $9,308,000 as summarized below includes 
$2,719,000 for taxes currently payable and $6,589,000 for deferred 
income taxes, which relate primarily to the use of guideline lives and 
accelerated depreciation for tax purposes. 
Charged to operations: 
Current year's provision . . . .... .. ..... . ....... $9,952,000 
Investment credit . . . . . . . . . . . . . . . . . . . . . . . . . . . (152,000) * 
9,800,000 
Included in special items: 
Applicable to gain on the disposition of property. . 143,000 
Reduction applicable to write-down of aircraft. . . . (635,000) 
Net provision for taxes . .. ..... .. ........... . ... $9,308,000 
*The 48% portions of investment credits are being amortized to 
income over eight years. 
Note 2. Long-term Debt (Unsecured). The long-term debt is sum- 
marized as follows: 
Bank Loans: 
5 % notes payable 
51/8 
% notes payable 
5  % notes payable 
Insurance Company Loans: 
4 % notes payable 
5  % notes payable 
6 % notes payable 
Outstanding 
December 31, 
1963 
$1,530,000 
3,890,000 
8,800,000 
9,120,000 
5,760,000 
9,000,000 
38,100,000 
Less current maturities 5,160,000 
$32,940,000 
Payable 
$50,000 
monthly 
$80,000 
monthly 
$200,000 
monthly 
$1,200,000 
annually 
$600,000 
annually 
effective 
Sept. 1, 1966 
$810,000 
annually 
effective 
Sept. 1, 1965 
Final 
Maturity 
Sept. 1, 
1966 
Dec. 31, 
1967 
Sept. 1, 
1967 
Sept. 1, 
1970 
Sept. 1, 
1975 
Sept. 1, 
1975 
The related agreements with the bank and insurance companies pro- 
vide among other things (including restrictions on additional borrow- 
ings) conditions and requirements which at December 31, 1963 op- 
erated to restrict retained earnings from cash dividend distribution 
in the amount of $20,286,248 leaving $2,373,421 not so restricted. 
Note 3. Commitments and Contingent Liabilities. At December 31, 
1963, the company had on order three Boeing 720B fanjet aircraft 
with deliveries scheduled in May and November 1964 and April 1965. 
These aircraft together with orders for other major items represented 
purchase commitments at December 31, 1963 of approximately 
$13,000,000 in excess of the related deposits already paid. 
The estimated minimum annual rentals under long-term leases were 
approximately $1,000,000 at December 31, 1963. 
Note 4. Retirement Plans. The costs charged to operating expense in 
1963 totaled $1,020,085 for both current and past services. The past- 
service costs of the 1952 group annuity plan became fully funded 
in 1963. 
The company's pension plans are in the process of being revised. The 
actuarial computations have not been finalized; however, the company 
does not anticipate any material adverse effect upon earnings as the 
result of these changes. 
Note 5. Stock Split and Cash Dividend. On February 10, 1964, the 
Board of Directors proposed a three-for-one stock split, subject to 
shareholder approval. The Directors also declared a quarterly divi- 
dend, payable March 6, 1964, at the increased rate of $0 .4 5 per share 
on the shares currently outstanding. 
PEAT, MARWICK, MITCHELL & Go. 
CEBTIJPIED PUBLIC ACCOUNTANTS 
829 SOUTH SPJUNO STREET 
LOS ANOE LES 14, CALIF. 
ACCOUNTANTS' REPORT 
The Board of Directors 
Western Air Lines, Inc.: 
We have examined the balance sheet of 
Western Air Lines, Inc. as of December 31, 1963 
and the related statement of earnings and retained 
earnings for the year then ended. Our examination 
vas made in accordance vi th generally accepted 
auditing standards, and accordingly included such 
tests of the accounting records and such other 
auditing procedures as we considered necessary 
in the circumstances. 
In our opinion, the accompanying balance 
sheet and statement of earnings and retained earnings 
present fairly the financial poai tion of Western Air 
Linea, Inc. at December 31, 1963 and the results of 
its operations for the year then ended, in confonnity 
vi th generally accepted accounting principles applied 
on a basis consistent with that of the preceding year, 
Loa Angeles, California 
February 12, 1964 
 Board of Directors 
HUGH W. DARLING 
Darling, Shattuck, Hall & Call 
Attorneys-at-Law 
HECTOR C. HAIGHT 
Los Angeles, California 
L. WELCH POGUE 
Pogue & Neal 
Attorneys-at-Law 
Washington, D.C. 
Los Angeles, California GOODRICH LOWRY 
President 
TERRELL C. DRINKWATER 
President 
Northwest Ban corporation 
Minneapolis, Minnesota 
STANLEY R. SHATTO 
Vice P1esident-O perations 
Western Air Lines, Inc. 
Western Afr Lines, Inc. 
ROBERT E. DRISCOLL 
Honorary Chairman of the Board 
First National Bank 
DONALD H. MC LAUGHLIN 
Chairman of the Board 
Homestake Mining Co. 
San Fran6sco, California 
HARRY ]. VOLK 
President, Union Bank 
Los Angeles, California 
of the Black Hills 
Rapid City, South Dakota EDWIN W. PAULEY 
Chairman of the Board 
Pauley Petroleum, Inc. 
Los Angeles, California 
Executive Staff 
Senior Officers 
TERRELL C. DRINKWATER, President 
Stanley R. Shatto, Vice President-O perntions 
Marvin W Landes, Vice President-Service 
Arthur F. Kelly, Vice Pi-esident-Sales 
J. Judson Taylor, Vice President and Treasurer 
D . P. Renda, Vice President-Legal and Sec1etary 
G. G. Brooder, Vice President 
Operations Division 
STANLEY R. SHATTO, Vice President 
Anton B. Favero, Assistant Vice President 
and Director of Maintenance 
Harold W Caward, Assistant Vice President 
and Director of Flight Operations 
Terrell S. Shrader, Assistant Vice President 
and Director of Industrial Relations 
Richard B. Ault, Director of Engineering 
Peter P. Wolf, Director of Communications 
Charles S. Fisher, Dfrector of Flight Schedules 
Stanley J. Cavill, System Chief Pilot 
GENERAL OFFICES 
Western Air Lines Building 
6060 Avion Drive 
Los Angeles International Airport 
Los Angeles 9, California 
REGISTRARS 
Bank of Ame1'ica National Trust & 
Savings Assn. 
111 West Seventh St1eet 
Los Angeles 14, California 
The Chase Manhattan Bank 
1 Chase Manhattan PlaZc1 
New York 15, New York 
Service Division 
MARVIN W LANDES, Vice P1esident 
Philip E. Peirce, Assistant Vice P1'esident 
and Director of Ground Services 
Richard P Ensign, Assistant Vice P1'esiden/ 
and Director of In-Flight Services 
Sales Division 
ARTHUR F. KELLY, Vice Pi-esident 
Bert D. Lynn, Assistant Vice Pi-esident 
and Director of Advertising 
and Sales Pmmotion 
Arthur C. Smith, Assistant Vice President 
and Directo1 of Sales Administ1ation 
Willis R. Balfour, Director of Agency 
and Interline Sales 
Ray Silvius, Director of Public Relations 
Memphis E. Sullivan, Dfrecto1 of Traffic 
STOCK TRANSFER AGENTS 
Secu1'ity Fi1'St National Bank 
124 1Vest Fourth Sheet 
Los Angeles 14, California 
Chemical Bank New York Trust Co. 
20 Pine Street 
New York 15, New York 
STOCK LISTINGS 
Listed and traded on 
New York Stock Exchange and 
Pacific Coast Stock Exchange 
JOHN M. WAL LACE 
Chairman of the Board 
Walket Bank & Trust Co. 
Salt Lake City, Utah 
ALEXANDER WARDEN 
Publisher 
Great Falls Tribune-Leader 
Great Falls, Montana 
SIDNEY F. WOODBURY 
President 
Pine Street Co. 
Portland, Oregon 
Treasury Division 
J. JUDSON TAYLOR, Vice President 
and Treasurer 
Charles J. J. Cox, Contt"oller 
and Assistant Treasurer 
Kenneth W: Kendrick, Director of 
Purchasing and Sto1'es 
H. S. Gray, Direc/01 of Budget 
Legal Division 
D. P RENDA, Vice Pl'esident and Secreta1'y 
John W: Simpson, Assistant Secretary 
and Director of Law 
Thomas M. Murphy, Di1'ecto1' of State 
and Community Aff afrs 
James L. Mitchell, Directo1' of Research 
James M. Keefe, Director of Properties 
GENERAL COUNSEL 
Hugh W. Darling 
Dading, Shattuck, Hall & Call 
523 West Sixth Street 
Los Angeles 14, California 
AUDITORS 
Peat, Marwick, Mitchell & Co. 
629 South Sp1'ing Street 
Los Angeles 14, California 
ANNUAL MEETING 
Fourth Thursday in April