Western 
Airlines 
  Western Air Lines Inc. 1970 Annual Report 
2 Highlights of 1970 
3 President's Letter 
4 Review of the Year 
12 Ten Years of Growth 
14 Balance Sheet 
16 Operations and Retai ned Earnings 
17 Source and Application of Funds 
18 Notes to Financial Statements 
19 Accountants' Report 
Notice to Stockholders 
Under a new rule adopted by the Civil Aeronautics Board in 
July 1970, any person who owns as of December 31 of any 
year or acquires ownership, either beneficially or as a trustee, 
of more than five percent of any class of capital stock of an 
air carrier shall file with the CAB a report containing 
information required by Subpart B of Part 245.13 of the 
Board's Economic Regulations. This report must be filed with 
the Civil Aeronautics Board on or before April 1 of each 
year as to capital stock or capital owned as of December 31 
of the preceding year and within 10 days of the acquisition, 
unless such person has otherwise filed with the CAB a report 
covering such acquisition or ownership. Any stockholder 
who believes that he may be required to file such a report 
may obtain further information by writing to the Director, 
Bureau of Operating Rights, Civil Aeronautics Board, 
Washington, D. C. 20428. 
 Highlights of 1970 
Operating 1970 
Seat miles produced ................... . 9,839,299,000 
Seat miles sold .......... .. . ........ .. . 5, 159,081 ,000t 
Passengers carried ..... .... . ... ....... . 6,187,527t 
Passenger load factor - actual % ........ . 52.4 
- breakeven point% .. 52.7 
Financial 
Operating revenues ........ ........... , $298,109,620 
Operating income (loss) .......... ... . .. . $ 11,811,622 
Net earnings (loss) .................. .. . $ 595,374 
Cash dividends paid ................... . $ 
Common stock outstanding .............. . 5,394,266* * 
Earnings (loss) per share ............... . $ 0.11 * k 
Cash dividends per share ............... . $ 
Shareholders' equity ................... . $ 79,904,835 
Shareholders' equity per share . .... .. .... . $ 14.81 ** 
Cash and short-term securities .... . ...... . $ 64,601,543 
Working capital ....................... . $ 35,238,447 
Property and equipment at cost .......... . $413,883,626 
Long-term debt . ..... . ................ . $174,184,358 
Number of employees at year end ........ . 8,830 
Wages and salaries paid . ............... . $100,629,845 
*Operations were suspended from July 29 to August 16, 1969 because of a strike . 
tOperations of a competing carrier were partially suspended from July 8 to December 14, 1970. 
**Adjusted for the 10% stock dividend paid on March 5, 1971. 
2 
1969* Change 
8,509,441,000 +15.6% 
4,021,296,000 +28.3% 
5,752,072 +7.6% 
47.3 +5.1 pts. 
53.1 - 0.4 pts. 
$240,351,788 +24 .0 % 
$ (12,400,902) 
$ (12,198,860) 
$ 2,451,634 
5,394,266 * * 
$ (2.26) * * 
$ 0.45 ** 
$ 79,309,461 +0.8% 
$ 14.70 ** +0. 8% 
$ 28,454,327 +127.0% 
$ 20,447,092 +72.3% 
$429,107,512 - 3.6% 
$197,149,588 - 11.7% 
9,225 -4.3% 
$ 87,495,153 +15.0% 
 President's Letter 
To Our Stockholders: 
It is indeed gratifying to report in the following pages that 
Western, despite the adverse circumstances facing the 
airline industry, was able to report a modest profit for 1970. 
This achievement could not have been accomplished without 
the efforts of thousands of loyal and resourceful employees, 
whose dedication is hereby acknowledged with sincere 
gratitude. 
As indicated in last year's annual report, our 1970 goal was to 
improve the company's financial condition with concentrated 
effort on two fronts: control of costs and capital expenditures 
and stimulation of new revenues. These efforts had to be 
exerted in the face of continuing inflation on the one haQd and 
a sagging economy that slowed the growth of air travel on 
the other. 
We believe that under such circumstances, our performance 
for 1970 was quite remarkable, particularly when compared 
to the airline industry as a whole. 
Through aggressive marketing programs, for example, 
Western was able to obtain a reasonable share of Hawaii 
travel, which in turn , permitted us to increase revenues on a 
systemwide basis by 24 percent. 
For the first time since 1966, the increase in seat miles sold- 
28.3 percent-was greater than the increase in seat miles 
produced-15.6 percent-as total capacity on routes other 
than the company's new Hawaii segments was reduced below 
the level of strike-affected 1969. 
With the introduction of increased legroom for the more than 
90 percent of our passengers who travel in coach or economy, 
the significant improvement in our on-time performance and 
the extra effort of our employees, the image of Western Air 
Lines as an aggressive, efficient and considerate airline was 
significantly enhanced . 
Nevertheless, Western was unable to show a profit on some 
of its key routes during 1970. These routes include Hawaii, 
which has excessive competition and an unrealistically low 
fare structure, and the California/Coastal operations which 
commenced to show a loss in 1968. 
Inflation, particularly in the areas of wages, employee benefits 
and work rules , is continuing to drive up our costs at a 
frightening rate; although projections for the U.S. economy 
indicate some improvement in 1971, the degree of traffic 
growth remains uncertain; and in the coming months we 
expect to be faced with more intense competition from 
the wide-bodied jets. 
On December 16, 1970, your board of directors voted to 
merge with American Airlines. The details of this proposal 
were submitted to you for your approval (n our proxy 
statement of February 22, 1971. 
While awaiting the outcome of the Civil Aeronautics Board 
proceedings associated with the merger proposal, your 
management will continue to operate Western as an 
aggressive company serving the interests of its stockholders, 
the traveling and shipping public and its employees. 
The airline industry is plagued with many problems and 
continues to function without being able to achieve an 
adequate rate of return on its investment. The most urgent 
need facing the carriers-and the one to which Western is 
devoting its full energies in 1971-is to find solutions which 
will work toward profitable employment of capital provided by 
Western's investors and by lend ing institutions at a level 
that will produce financial stability and future growth. 
Your continued support in this endeavor will be sincerely 
appreciated. We hope you will fly Western whenever possible 
and urge your friends and associates to do likewise. 
cW~ 
J. Judson Taylor 
President and Chief Executive Officer 
March 15, 1971 
3 
 Review of the Year 
Earnings 
Earn ings in 1970 were $595,374, or 11 cents a share, 
compared to a loss of $12,198,860, or $2.26 a share, for 1969. 
(Per-share results for both years are based on 5,394,266 
shares of stock, the number of shares outstanding at the end 
of each year after giving effect to a 1 O percent stock dividend 
declared on December 16, 1970, and paid March 5, 1971, to 
stockholders of record on January 15, 1971.) 
Operating income totaled $11,811,622, compared to a loss 
from operations of $12,400,902 in strike-affected 1969. The 
application of other expenses-primarily interest- resulted in 
a loss of $1,654,626 before tax credits, compared to a before- 
tax loss of $27,273,860 in 1969. 
After tax credits of $2,250,000 (see Note 1 of Notes to 
Financial Statements), net earnings for 1970 were $595,374. 
Revenues 
Total operating revenues for 1970 were $298,109,620 (after 
reduction of $2,711,000 for payments to a struck carrier under 
the airlines' Mutual Aid Agreement). This represents an 
increase of 24 percent over the $240,351,788 of the previous 
year. Western became a participant in the Mutual Aid pact 
effective August 3, 1970. 
Almost half of the increase in revenues was derived from the 
company's Hawaii routes which were inaugurated in August 
and September of 1969. The bulk of the remaining net gain 
in revenues resulted from increased coach revenues, as 
revenues from first class service on Mainland routes declined 
below the 1969 level. 
Of Western 's revenue dollar, 92.2 percent was derived from 
passenger traffic (82.5 percent coach and 9.7 percent first 
class). Express, freight and excess baggage accounted for 
4.7 percent; mail, 1.6 percent; charter and other sources, 
1 .5 percent. 
The number of passengers carried increased 7.6 percent. 
However, because the average passenger trip on Western 
increased from 699 miles in 1969 to 834 miles in 1970, seat 
miles sold were up 28.3 percent. 
Although the number of seat miles sold at discount fares 
increased 13.9 percent over 1969, the percentage sold at a 
4 
discount decreased from 41 .5 percent of all seat miles sold 
in 1969 to 36.8 percent in 1970. 
Despite fare increases of 3.1 percent in February and 3.7 
percent in October 1969 and more modest adjustments in 
1970 ( described in the Fare Changes section of this report), 
Western's average revenue per seat mile sold decreased 
from 5.51 cents in 1969 to 5.42 cents in 1970. The decline 
resulted primarily from the impact of the abnormally low 
fare structure on Hawaii routes which represented 
approximately 18 percent of all seat miles sold on Western's 
system during 1970. 
Fare Changes 
In 1970, the Civil Aeronautics Board instituted investigations 
into the structure and level of domestic and Mainland-Hawaii 
passenger fares, domestic freight rates and domestic mail 
rates and into the level of return on investment for U.S. 
carriers. Upon completion of those investigations, the CAB 
may prescribe changes in the structure and level of any or all 
such fares and rates. 
Although the industry has not been permitted to make broad 
across-the-board increases pending the outcome of the fare 
investigations sometime later this year, CAB approval was 
granted for certain selective fare adjustments. 
On July 1, a " round ing-up" of fares to even dollar amounts in 
conjunction with the introduction of a new federal travel tax 
resulted in a passenger fare increase expected to average 
7 /10 of one percent for Western . 
On October 15, a 10 percent increase in Alaska fares was 
granted which is expected to produce an annual increase in 
Western 's revenues equivalent to 8/1 O of one percent. 
On December 19, the CAB approved cancellation of 
commuter fares between California and Las Vegas resulting 
 in an additional 8/10 of one percent increase in Western's 
annual revenues. 
Effective January 11, 1971, the CAB authorized carriers to 
increase fares in certain short-haul markets, to eliminate 
excursion fares on most trips under 1,500 miles, to reduce 
certain fare discounts and to increase first class fares for 
trips under 1,200 miles, resulting in an increase in passen- 
ger fares expected to average 2.5 percent for Western. 
On July 9, 1970, the United States Court of Appeals for the 
District of Columbia held that the CAB's order permitting the 
October 1969 fare increase and the tariffs filed by the air 
carriers pursuant to that order were unlawful, on the ground 
that the CAB had not complied with the applicable statutory 
procedures. The Court's decision did not require any 
reduction in existing fares, nor was any such reduction 
effected. On September 24, 1970, after proceedings intended 
to comply with the statutory requirements, the CAB issued an 
order permitting tariffs identical to those previously approved 
to become effective October 15, 1970. While the Court's 
decision does not require repayment of fares collected in the 
past, on February 25, 1971 , the CAB instituted an investigation 
to determine whether such fares were unreasonable, and , if 
found to be unreasonable, to determine whether and to what 
extent relief, including restoration of overcharge or otherwise, 
may and should be granted. 
The Court's decision has occasioned a number of actions, 
brought in various cities on behalf of air travelers in general , 
naming a number of domestic air carriers (including Western) 
as defendants. The plaintiffs in these actions request 
repayment of the amounts alleged to have been unlawfully 
collected (in one action allegedly $300,000,000) by all the 
defendant air carriers since the October 1969 fare increase. 
In addition, the plaintiffs in one or more of these actions seek 
treble damages, punitive damages and injunctive relief 
againstthe continuation by the defendants of air fares at 
present levels and ask that the defendants deposit with the 
courts in which the actions have been brought the amounts 
alleged to have been unlawfully collected and that they 
provide the means of identifying and paying the cost of 
notifying all persons allegedly damaged . In Western's opinion , 
the plaintiffs are not entitled to any recovery on their claims. 
Expenses 
Despite continuing inflation and a change in aircraft seating 
configuration to give Western 's coach and economy 
passengers added legroom, the company was able to 
increase seat mile production 15.6 percent in 1970 at an 
increase in operating costs of 13.3 percent. 
Total operating expenses for the year amounted to 
$286,297,998, compared to $252,752,690 for the previous year. 
High on the list of inflationary items were wages, salaries 
and employee benefits costs which increased 16.4 percent 
despite a lower level of employment throughout the year. 
Depreciation and amortization was up 5.1 percent to 
$36,579,626 and other expenses increased 13.1 percent. 
Interest expense totaled $14,586,128, down 1.1 percent from 
the previous year. 
The change in seating configuration , completed in June, 
reduced the number of seats on the company's aircraft in 
subsequent months by eight percent and for the year by 
six percent. 
This configuration change caused an increase in the cost of a 
seat mile produced and in the breakeven load factor (as well 
as in the actual load factor). The impact of continuing 
inflation also tended to cause increases in the same cost 
indicators. Nevertheless, the company was able to reduce 
seat mile costs for the year to 2.91 cents from 2.97 cents in 
the previous year. Breakeven load factor was reduced to 
52.7 percent from 53.1 percent in strike-affected 1969. 
Finances 
Although the consistent earnings pattern which is needed for 
sound strengthening and to provide a reasonable return on 
investment did not emerge during the year, Western ended 
1970 in good financial condition . 
Cash and short-term securities increased during the year from 
$28,454,327 at December 31 , 1969, to $64,601 ,543 at the end 
5 
 Brief Statement of Earnings 
Western's revenues came from : 1970 1969* 
Passengers 
Coach .................... $246,019,597 $192,659,374 
Deluxe . . . . . . . . . . . . . . . . . . . . 28,773,126 
274,792,723 
Express, freight and baggage 13,993,889 
Mail . . . . . . . . . . . . . . . . . . . . . . 4,752,051 
Charter . . . . . . . . . . . . . . . . . . . . 3,187,243 
Other income.. . . . . . . . . . . . . . 3,405,008 
Western's expenses were : 
Wages and salaries ......... . 
Social security, group 
insurance and retirement 
plans .................. . 
Property, fuel and 
other taxes .............. . 
Aircraft fuels .............. . 
Depreciation and amortization . 
Materials and repairs ....... . 
Utilities and services ....... . 
Service to passengers ...... . 
Rentals of flying equipment .. . 
Rentals of ground facilities .. . 
Landing fees ........ . ..... . 
Advertising and publicity .... . 
Insurance ................ . 
Interest .................. . 
Other costs ............... . 
Loss before taxes on income ... 
Taxes on income (tax credits) 
300,130,914 
100,629,845 
12,486,516 
6,750,840 
37,357,120 
36,579,626 
20,424,846 
24,737,983 
14,511,559 
2,992,188 
5,301,331 
5,211,471 
8,780,598 
4,174,531 
14,586,128 
7,260,958 
301,785,540 
{1,654,626) 
{2,250,000) 
27,870,293 
220,529,667 
11 ,969,392 
4,502,928 
759,991 
2,945,423 
240,707,401 
87,495,153 
9,660,929 
4,985,938 
32,857,173 
34,820,805 
21,442,561 
20,399,425 
11,926,473 
350,994 
5,029,186 
4,360,150 
8,210,484 
5,148,098 
14,747,559 
6,546,333 
267,981,261 
(27,273,860) 
(15,075,000) 
Net earn ings (loss) .......... $ 595,374 $ (12,198,860) 
*Operations were suspended from Ju ly 29 to August 16, 1969 because of a strike . 
6 
Brief Balance Sheet 
Western owns: 1970 1969 
Cash and short-term securities $ 64,601 ,543 $ 28,454,327 
Receivab les due from others . . 21,732,984 
Federal income taxes 
refundable .............. . 
Maintenance and 
operating supplies 
Buildings and 
improvements, net 
Flight and other 
11,1 04,517 
13,364,022 
equipment, net . . . . . . . . . . . 234,062,785 
Prepaid expenses ..... . .... . 
Equipment not used in 
operations, net .......... . 
Deferred charges and other .. . 
Western owes: 
Payables due to vendors 
and others ........ . ..... . 
Federal income taxes- 
deferred ................ . 
Unamortized investment cred its 
Other deferred items ....... . 
Tickets sold but not yet 
used ................... . 
Notes payable-current 
4,575,804 
2,417,018 
3,310,253 
355,168,926 
37,861,900 
17,495,000 
13,584,000 
3,224,332 
5,949,274 
19,408,382 
12,285,989 
13,016,516 
14,007,513 
271,749,132 
2,986,496 
2,062,898 
3,616,859 
367,588,112 
34,582,902 
17,919,000 
16,060,000 
1,445,445 
4,926,089 
and long term . . . . . . . . . . . . 197,149,585 213,345,215 
Excess of what is owned 
over what is owed, or 
275,264,091 288,278,651 
shareholders' equ ity ....... $ 79,904,835 $ 79,309,461 
 of 1970. Cash not required in the daily operations of the 
company was invested in marketable securities. In 1970, these 
investments resulted in interest income amounting to 
$2,021,293. Working capital increased from $20,447,092 at 
the end of 1969 to $35,238,447 at December 31, 1970. 
The ratio of current assets to current liabilities was $1 .53-to- 
$1.00 at December 31 , 1970, up from $1.37-to-$1.00 at the 
previous year end . 
The Statement of Source and Application of Funds is 
constructed to show the major elements involved in the 
generation and utilization of cash and marketable securities. 
As indicated, operations generated a net contribution of 
$39,138,027. This amount included non-cash charges of 
$41,529,249 for depreciation, amortization and reserves 
against which was offset tax credits amounting to $2,050,000 
(for further details see Note 1 of Notes to Financial 
Statements). Other funds were provided by a refund of 
$12,285,989 in federal income taxes resulting from tax losses 
as filed for 1969, by an $11,071,783 increase in current 
liabilities, and by $3,220,138 received on disposition 
of property. 
Funds applied during the year amounted to $29,701,808. 
Scheduled payments under long-term debt agreements 
accounted for $22,965,227. In 1970, long-term debt was 
reduced from $197.1 million to $17 4.2 million (for further 
details see Note 2 of Notes to Financial Statements) . 
A significant difference between 1969 and 1970 lies in the 
area of capital expenditures. The company acquired no new 
aircraft in 1970 and additions to plant, equipment and 
inventories were kept to a minimum; as a result, expenditures 
in these categories declined from $46,196,539 in 1969 to 
$4,796,784 in 1970. Without the resumption of a reasonable 
earnings pattern, capital expenditures other than those 
required to maintain a high level of safety and service will 
remain highly restricted. 
Stock Dividend 
On December 16, 1970, Western 's board of directors declared 
a stock dividend of 1/10 of a share of capital stock for each 
share outstanding. This dividend was paid on March 5, 1971, 
to stockholders of record as of January 15, 1971. 
Annual Meeting 
The 1971 regu lar meeting of shareholders will be held at 
the Beverly Hilton Hotel, Beverly Hills, California, on April 22. 
On or about March 22, stockholders will receive formal notice 
of the meeting and proxy material. 
Shareholders, Stock and Debentures 
Although per-share earnings in this report were computed 
after adjustment for the 10 percent stock dividend declared 
on December 16, 1970, there were 4,903,879 shares of 
Western common stock issued and outstanding at the end 
of 1970, the same as at the end of the previous year. 
At year's end , 806,884 shares were reserved for conversion 
of the 5 percent convertible subordinated debentures sold 
in 1968. After giving effect to the 10 percent stock dividend, 
the number of shares reserved for conversion was increased 
to 887,572 and the conversion price was decreased from 
$36.75 per share to $33.41. 
Holders of the debentures received interest at the rate of 
5 percent per year on February 1 and August 1, 1970. 
The company's stock was held by approximately 12,000 
shareholders at year end. 
At the 1970 annual meeting of shareholders in Beverly Hills in 
April , 78.9 percent of all shares were voted in person or by 
proxy. 
Shareholders' equity at December 31, 1970, was $79,904,835, 
or $14.81 a share, compared to $79,309,461, or $14.70 a 
share, at December 31, 1969, after adjustment for the 
10 percent stock dividend. 
Aircraft 
At the end of 1970, Western operated 72 aircraft-five Boeing 
707-300C intercontinentals, 26 Boeing 720B's, three Boeing 
7 
 720s, six Boeing 727-200s, 30 Boeing 737-200s, and two 
Lockheed Electra propjets. 
Western has no additional aircraft of any type on order, having 
cancelled orders for three Boeing 7 47s, five Boeing 707s and 
four Boeing 727s in the summer of 1969 when satisfactory 
financing arrangements could not be made. The company is 
studying the 7 4 7s, DC-10s and 1011 s. 
Ten Electras were withdrawn from service during the year 
when the company discontinued an all-cargo service which 
was not profitable and temporarily transferred short-haul 
routes in Alaska to a local service carrier. 
Five Electras were sold during 1970 and, after withdrawing 
one additional Electra from Alaska service, six others were 
sold in February 1971 . One Electra is being retained to 
operate the company's Seattle / Tacoma-Kodiak service. 
Early in 1970, Western initiated a program to modify the 
engines on its 737 and 727 aircraft that will substantially 
reduce the visible exhaust smoke from these aircraft. Target 
date for the conversion of the 98 engines involved was 
December 31 , 1972. As of January 1971, 37 of these 
conversions had been completed and it appeared that 
Western will beat the 1972 target date by a substantial margin . 
Marketing 
Western carried a record 6,187,527 passengers in 1970, a 
7.6 percent increase over the previous year. Passenger load 
factor for the year, favorably affected by the seating 
configuration change, was 52.4 percent, compared to 
47.3 percent in 1969. 
Aided by a 19.3 percent increase in average length of 
passenger haul , passenger revenues increased 24.6 percent, 
from $220,529,667 in 1969 to $274,792,723 in 1970. 
Revenues from air cargo shipments (freight, express, excess 
baggage, air mail and regular first class mail) increased from 
$16,472 ,320 in 1969 to $18,745,940 in 1970. 
Western 's traffic and revenue gains during 1970 were 
achieved under adverse circumstances - a slowdown in the 
growth of air travel in the U.S. and increased competition . 
8 
Faced with the urgent need to return to profitable operations 
as soon as possible, the company aggressively launched new 
marketing programs which were carried out with determined 
enthusiasm by Western employees. 
Highlighting the company's program for 1970 were: 
. .. modification of aircraft interiors to provide every coach, 
economy and commuter passenger with the same legroom 
as in first class; 
... establishment of a program to improve the company's 
on-time performance; 
. .. greater concentration on group travel (particularly in 
Hawaii markets) ; 
... increased flexibility of aircraft utilization that would permit 
the company to increase its charter business and schedule 
extra sections whenever demand was great enough; 
... new in-flight service features appropriate to the 
passenger's destination and length of flight; 
.. . creation of a new corporate " look of the Seventies" 
through the establishment of a new company symbol and 
coord inated design program; 
. .. increased involvement of all company employees in 
product improvement through increased communication of 
goals, introduction of new service features and marketing 
programs to field personnel by a special task force of 
department heads, and establishment of a suggestion system 
to encourage employee suggestions for product 
improvements as well as cost control ideas. 
Backing up these programs was a realignment of the sales 
division into a broader marketing division and creation of a 
new service division along lines that would permit maximum 
support to changes in the marketplace. 
 Public acceptance of the company's increased legroom was 
enthusiastic. Using the slogans " Western: First in Space, " 
and " You 've Got First-Class Legs, " the company built 
its advertising and sales promotion programs around this 
system-wide feature wh ich no other airline has been 
able to duplicate to date, although several have attempted 
to copy it in part. 
The legroom feature, coupled with " Islander" in-flight service 
and aggressive promotion with tour operators, travel 
agencies and hotels, permitted Western to compete effectively 
on Hawaii routes. 
Western's on-time efforts also were highly successfu l as the 
company-seventh in the industry ratings in January- 
moved up to No. 1 in June, August, September and October 
to rank second in the industry for the year through November. 
In addition to working directly with tour operators and travel 
agents in developing Hawaii traffic, a high percentage of 
which is group travel , Western sought the cooperation of other 
airlines that do not serve the 50th state in a " Hawaii-Plus-(a 
Western connecting point) " concept to increase revenues 
from off-line sources. These were productive programs and 
are being continued. 
Charter revenues increased from $759,991 in 1969 to 
$3,187,243 in 1970. The company also operated more than 
700 extra sections for 50,000 passengers who otherwise 
could not have been accommodated on scheduled fl ights. 
In addition to its " Islander" service on Hawaii flights, in-flight 
innovations were introduced in a new " Fiesta" service on 
Mexico routes, a " Golden Californian " service on Twin 
Cities-California and Pacific Northwest-California routes. 
A new " Western 's World " in-flight magazine was introduced 
for the enjoyment of passengers on all Western flights, 
with advertising space paying the majority of its cost. 
Western 's new corporate symbol, which is shown on the cover 
of this report, is the key element of the company's " new 
look. " The new design format is being introduced to graphic 
material, equipment and facilities on a normal replacement 
basis in a controlled program to insure a coordinated and 
modern visual appearance to the company's many publics. 
In 1968, Western introduced its computerized ACCU-RES 
reservations and flight information system. In 1970, 
the company became the first airline operating into Mexico 
to provide " on-line" communication to its central 
reservations computer; in January 1971, this same servi ce 
was extended to Anchorage and, in March, will include 
Juneau and Ketchikan, thereby giving every city on Western's 
system direct access to al l pertinent customer service 
information stored electronically in the computer. 
Personnel and Management 
As of December 31, Western had 8,830 employees, compared 
to 9,225 at the end of 1969. 
In 1970, wages and salaries amounted to $100,629,845, 
35.1 percent of operating expenses, compared to $87,495,153, 
or 34.6 percent of operating expenses, in the previous year. 
Company contributions to Social Security, group insurance 
and employee retirement plans amounted to an 
additional $12,486,516. 
Approximately 85 percent of the company's employees are 
covered by agreements with unions. A contract was 
signed during the year with the company's stewardesses and 
negotiations with the pilots' union were begun . Agreement 
on the pilot contract was reached on February 26, 1971. 
Other contracts covering employees will be open for 
amendment as follows : dispatchers, July 1, 1971; mechanics 
and related employees, November 1, 1971; stores employees, 
November 1, 1971 ; stewardesses, March 31 , 1972; and 
clerical , office, fleet and passenger service employees, 
October 1, 1972. 
At the board of directors' July meeting, Kirk Kerkorian was 
elected chairman of the board of directors to succeed 
Terrell C. Drinkwater, who had retired as chairman and 
resigned as a director effective May 31. 
Mr. Drinkwater had served as the company's president from 
January 1947 until his election as chairman in 1969. 
In order that Western may continue to avail itself of his 
9 
 extensive experience and knowledge of air transportation, 
he has agreed that he will be available to serve as a consultant 
to the company. 
Elected to the board to fill the vacancy created by 
Mr. Drinkwater's resignation was actor-producer Cary Grant. 
At its first meeting of 1971, held on January 25, the board voted 
to increase the number of directors from 19 to 20 members 
and elected George Mason, vice president of Tracinda 
Investment Company, to fill the newly created vacancy. 
Officer changes during 1970 were: Gerald P. O'Grady, 
vice president-corporate affairs and secretary from vice 
president-properties and facilities; and Philip E. Peirce, senior 
vice president-service from vice president-administration. 
Arthur G. Woodley, who founded and was president of 
Pacific Northern Airlines until its merger into Western in 1967, 
retired as vice president-Alaska effective February 28, 
1971, but will remain as a director. 
Route Development 
During 1970, the Civil Aeronautics Board completed action 
on a number of major route applications involving Western. 
As a result, the company received the following new authority: 
Minneapolis/ St. Paul to Portland and Seattle/Tacoma: 
First competitive service on these new routes was inaugurated 
by Western on September 15; 
Phoenix to Portland and Seattle/Tacoma Nonstop Service: 
This award permitted the company to eliminate a mandatory 
stop at Los Angeles on flights between Arizona and the 
Pacific Northwest. The nonstop flights were inaugurated in 
January 1971; 
San Diego to Denver Nonstop Service: This award lifted a 
restriction which required that Western flights stop at Phoenix 
enroute between San Diego and Denver. The nonstop 
service was inaugurated on June 8. The matter of competitive 
service on this route is still pending. 
In the CAB's Pacific Northwest-California Service 
Investigation, Western was authorized to provide Seattle/ 
Tacoma and Portland-to-San Diego nonstop service but has 
not yet inaugurated the service because of current market 
conditions. Although little new service was authorized 
10 
between the Pacific Northwest and major airports at Los 
Angeles and San Francisco in this proceeding, new authority 
was granted to another carrier between the Pacific 
Northwest and Ontario/Long Beach/Burbank/Orange 
County, nonstop or via Oakland or San Jose. 
On September 1, Western temporarily transferred, pending 
the decision by the CAB on the route alignment proposals 
in the Alaska Service Investigation, its short-haul routes west 
of Anchorage to an Alaska-based local service carrier. 
An examiner's decision in the case, which was established to 
review intra-Alaska service and the route pattern from 
Portland and Seattle/Tacoma to key cities in Alaska (other 
than Anchorage) , is expected shortly. 
On January 29, 1971, the examiner in the Las Vegas/Reno- 
Portland/Seattle Nonstop Service Investigation recom - 
mended that Western be given nonstop authority between 
Las Vegas and Portland and Las Vegas and Seattle/Tacoma. 
The company will continue to seek Las Vegas-Reno and 
Reno-Portland/Seattle routes which also are at issue in the 
case. Final board action is expected later this year. 
In other route cases Western's applications for urgently 
needed access to major traffic-generating points on the East 
Coast were denied. There are no proceedings before the 
Civil Aeronautics Board which would give Western the 
opportunity to serve these long-haul, high-density routes in 
the foreseeable future. 
Pending before the CAB are the company's applications for 
routes to Tokyo from Seattle/Tacoma, nonstop and via 
Anchorage; to Guadalajara from California; and to Texas 
points from Minneapolis/St. Paul. 
 Western's Route System 
Western 's Routes 
Pending Route Applications - - - - - - - - 
11 
 10 Years of Growth 
Financial 
Revenues: 5 
Passenger ..... . . . . . . . ............... . ....... . ................... . 
Express, freight and excess baggage ... .... ... ... .. .................. . 
Mail ............................................................ . 
Other . . . ..... . . . . . ... . . ... . . . . . ..... . ....... ... .. .... . ... ....... . 
Total Revenues .................... . ............................ . 
Operating Expenses:5 
Depreciation and amortization ........... . .................... . ...... . 
Payroll .............................. . .................... . ...... . 
Other .... . .... ...... . . . ............................ ..... . . ... . . . . 
Total Operating Expenses . ... . .......... , . , ....... , .............. . 
Operating Incomes (Loss) ............................... . ........... . . 
Interests . . . . . ......... . ... . . . ..................... . ........ . .. . .... . 
Other Income and Expenses- Nets . . .. .. .... ... . . . . . .. ... . .. . . ....... .. . 
Earnings (Loss) before Taxes on Incomes ... ... .. . ..... . ..... ... ... .. . 
Taxes on Income (Tax Credits)s . . ....... . ..... . . . . ..................... . 
Net Earnings (loss) from Operationss .................... . . . . ... .... . 
Gain on Major Dispositions of Property (Less 
Applicable Income Taxes)s ... .. . . .. ... ......................... . . . .. . 
Net Earningss (Loss) .. . .. . ... ......... . .. .. ... .. .. .. ............ . . 
Shareholders 
Net earnings (loss) from operations per share2 
            
Gain on disposition of property per share2 
           
Total . ..... . .. . ............ . .. . .. . ... . . ... . .. .......... .. ... . . . 
Dividends paid per share: 
Cash3 
                    
Shares outstanding - actuals ... . .. ... . .... .. ............ . ............. . 
-adjusted2 
 
s .. .... .. .... . .. . . ... ... ... .. ... ... . .. . . 
Shareholders' equity - totals . ................................. . ....... . 
Shareholders' equity-a share2 
                     
Working capitals . .. . . . ........ . ...... . ...... . ... . ....... . .... .. ..... . 
Long-term debts .................................... . .......... . .... . 
Property and equipment-nets .......... . . ... . . . . . . ................... . 
Total assetss ........ . . ..... ..... .. .... ...... .... . . .. . ..... . .... . ... . 
Operations 
Route miles at end of year ................ . ... .. . . ............... . . .. . . 
Airplanes operated at end of year: 
Boeing 720-B ........ . ....... .. .. . . ...... . ............ . ... .. ..... . 
Boeing 720 ....... . . . ....... .... . ... . ....... . ....... ... ..... .. ... . 
Boeing 707-300C .. . ...... . . . . . .... .. ......... . .. . .. . .. .... ... ... . . 
Boeing 737 .... . .... . .. . . . . .... ........... . ....... . .... . .... . .... . 
Boeing 727 -200 - leased .... . . ..... . . . ... .. . . ... . .... . ... . . . . . ..... . 
Other aircraft .... . ... . . ... . . .... ........................ .. ... . . . .. . 
Airplane miles flowns ............ . ......... . ..... .. .. . ...... .. ....... . 
Ton miles produceds ................................................. . 
Ton miles sold s ....................... . ..... .. ....... . ............ . . 
Seat miles produceds ....... .............. . ........ . ... .... . ... . ..... . 
Seat miles sold4 
 
s ....... . . ............... .. ........... . . . ............ . 
Express, freight and mail ton miles saids ..... . . . . .. ... ... . ......... .. . . .. . 
Passengers carried .................................................. . 
Express, freight and mail tons carried ..................... .... ...... . ... . 
Passenger load factor-actual % ... ... . . . ..................... . 
-breakeven point% .......... . .... . . . ............ . 
Average length in miles per passenger trip ...... .. ....... . ..... . ....... .. . 
Operating expenses per seat mile produced .. .. ... .......... . .. .. ... . .... . 
Average revenue per seat mile sold ............................ . ........ . 
Employees at end of year . . .... . ... . . ....... . . ....... ....... ..... ..... . 
1970 
$ 274,793 
13,994 
4,752 
4,571 
298,110 
36,580 
100,630 
149,088 
286,298 
11,812 
(14,587) 
1,120 
(1,655) 
(2,250) 
595 
$ 595 
$ 0.11 
$ 0.11 
$ 
4,904 
5,394 
$ 79,905 
14.81 
35,238 
174,184 
247,427 
355,169 
26,891 
26 
3 
5 
30 
6 
2 
86,298 
1,266,124 
584,554 
9,839,299 
5,159,081 
68,646 
6,187,527 
73,140 
52.4 
52.7 
834 
$ .0291 
$ .0542 
8,830 
19694 1968 
$220,530 205,753 
11,969 9,331 
4,503 4,128 
3,350 2,741 
240,352 221,953 
34,821 25,051 
87,495 71,885 
130,437 105,335 
252,753 202,271 
(12,401) 19,682 
(14,748) (6,536) 
(125) 15 
(27,274) 13,161 
(15,075) 4,725 
(12,199) 8,436 
(12,199) 8,436 
(2.26) 1.56 
(2.26) 1.56 
0.45 0.91 
4,904 4,902 
5,394 5,392 
79,309 93,862 
14.70 17.41 
20,447 25,764 
197,150 183,718 
285,757 284,787 
367,588 349,039 
24,523 14,156 
26 27 
3 3 
5 5 
30 17 
6 
8 12 
72,650 60,125 
1,077,657 891,001 
448,420 418,856 
8,509,441 7,096,229 
4,021 ,296 3,841,864 
60,514 47,446 
5,752,072 5,692,947 
66,107 58,129 
47.3 54.1 
53.1 50.7 
699 675 
$ .0297 .0285 
$ .0551 .0537 
9,225 8,919 
1 
AII financial data in this report give effect, retroactively throughout the periods prio r to 1968, to the merger of Pacific Northern Airlines into Western on Ju ly 1, 
1967, which was accounted for as a pooling of interests. 
2Based on shares of the Company outstanding at the close of the respective period s, adjusted to give retroactive effect to the 10% stock dividend paid March 5, 1971, 
the May 1964 three-for-one split, and the equivalent outstanding shares of Pacific Northern Airlines, Inc., merged into the Company on July 1, 1967. 
12 
1967 19664 1965 1964 1963 1962 19614 
178,527 164,186 129,704 121,928 103,183 89,837 67,442 
7,581 6,848 5,991 5,897 5,055 4,747 3,833 
4,221 4,255 3,135 2,962 2,603 2,659 2,364 
2,153 1,895 1,768 2,095 3,472 2,878 2,935 
192,482 177,184 140,598 132,882 114,313 100,121 . 76,574 
20,085 15,779 14,676 12,980 12,373 14,605 12,033 
57,975 47,350 38,731 34,500 30,114 27,1 08 22,837 
89,082 77,708 62,391 57,650 50,969 47,997 38,848 
167,142 140,837 115,798 105,130 93,456 89,710 73,718 
25,340 36,347 24,800 27,752 20,857 10,411 2,856 
(3,011) (3,239) (2,553) (2,491 ) (2,916) (2,725) (1,930) 
17 775 253 783 621 472 (140) 
22,346 33,883 22,500 26,044 18,562 8,158 786 
10,125 15,558 10,337 12,493 9,252 4,130 443 
12,221 18,325 12,163 13,551 9,310 4,028 343 
883 191 889 807 
12,221 18,325 13,046 13,551 9,501 4,917 1,150 
2.27 3.45 2.29 2.55 1.75 0.76 0.07 
0.17 0.04 0.17 0.15 
2.27 3.45 2.46 2.55 1.79 0.93 0.22 
0.91 0.91 0.73 0.59 0.33 0.30 0.30 
4,893 4,835 4,826 4,826 1,965 1,965 1,965 
5,382 5,318 5,308 5,308 5,308 5,308 5,308 
90,016 81,750 67,361 57,748 46,988 39,061 35,574 
16.73 15.37 12.69 10.88 8.85 7.36 6.70 
19,585 18,047 11,522 8,274 5,031 12,315 5,369 
80,189 54,867 47,411 33,938 41,106 48,856 39,018 
183,106 145,771 124,096 99,928 93,284 80,052 69,865 
231,342 192,008 157,973 138,335 125,806 115,266 95,258 
14,156 13,075 13,075 12,991 12,991 13,086 12,368 
27 22 18 12 10 7 4 
3 3 2 2 2 2 
21 23 24 33 33 34 39 
51,692 42,830 36,554 36,746 33,388 29,551 25,239 
728,200 585,378 483,033 450,856 400,395 348,854 256,572 
360,791 314,137 244,588 231 ,303 191,229 159,658 121,850 
5,879,442 4,800,901 4,016,921 3,794,648 3,335,083 2,746,549 1,967,313 
3,327,160 2,898,088 2,243,695 2,124,582 1,753,037 1,435,992 1,080,189 
38,940 33,070 26,435 24,625 20,622 19,786 16,315 
5,107,672 4,700,839 3,807,706 3,717,189 2,970,909 2,270,455 1,659,323 
48,579 42,714 33,511 30,956 25,890 25,256 20,378 
56.6 60.4 55.9 56.0 52.5 52.3 54.9 
49.5 47.9 46.2 44.4 44.3 48.6 55.4 
651 616 589 572 590 633 651 
.0284 .0293 .0288 .0277 .0280 .0327 .0375 
.0537 .0567 .0578 .0574 .0589 .0626 .0624 
7,282 6,294 5,068 4,719 4,126 3,713 3,418 
3Cash dividenos per share for periods prior to January 1, 1967 are stated on the basis of the Company's shares (exclusive of equivalent Pacific Northern 
shares) outstanding at the date such dividends were declared as adjusted for the stock dividend and the stock split 
Operations of a competing carrier were partially suspended from July 8 to December 14, 1970, Western 's operations were suspended from July 29 to 
August 16, 1969 and substantially curtailed from February 17 to June 1, 1961 because of strikes. Five other major carriers were struck from July 8 to August 19, 1966. 
sooos omitted. 
13 
 Balance Sheets 
Western Air Lines Inc. 
December 31 , 1970 and December 31 , 1969 
ASSETS 
Current Assets: 
Cash .......... . .............. . .... . .. . ...... . ...... . .. . 
Short-term securities (at amortized cost, including 
accrued interest, which approximates market) .. ... . . . .. ..... . 
Receivables (net of allowance for doubtful accounts 
of $350,000 in 1970 and $275,000 in 1969) .... . ............ . 
Federal income taxes refundable ... .. ...... . ....... . ...... . . 
Maintenance and operating supplies (at average cost) . . .. . . ... . 
Prepaid expenses . . ... . ... . . . . . ... . .. . ........ .. ....... . . 
Total current assets ............ . ...... . ... . .. . . . ...... . 
Property and Equipment at Cost: 
Flight equipment ..... . .... . .. . .... . .. . ........ .... ..... . . 
Ground equipment . . .. . . . .. . .......... . .... . .. .. .. . ..... . 
Less allowance for depreciation and maintenance . .. .. .. . . . .. . . 
Deferred Charges and Other Assets: 
Boeing 737 and 727 preoperating costs, net . .. .... . . . . .... . .. . 
Flight equipment not used in operations, net ..... . ... . . . .... . . . 
Other items ....... . ... . ........ .. . . .. .. .. .. .. . .. ... .... . 
See accom panying notes to financial statements. 
14 
$ 
1970 
16,590,875 
48,01 0,668 
21 ,732,984 
11,1 04,517 
4,575,804 
102,014,848 
354,507,609 
59,376,017 
41 3,883,626 
166,456,819 
247,426,807 
712,078 
2,417,018 
2,598,175 
5,727,271 
$355,168,926 
1969 
$ 23,472,571 
4,981,756 
19,408,382 
12,285,989 
13,016,516 
2,986,496 
76,151 ,710 
370,020,328 
59,087,184 
429,107,512 
143,350,867 
285,756,645 
1,680,450 
2,062,898 
1,936,409 
5,679,757 
$367,588,112 
 LIABILITIES 
Current Liabilities: 
Accounts payable ........ . .............................. . 
Accrued salaries and wages .. . . .. .. ...... ... . ............. . 
Accrued liabilities ......... . .. .. ......................... . 
Unused transportation ...... . . . ........ . ... ..... .. . ....... . 
Current maturities of long-term debt (Note 2) ... . ... . ... . ..... . 
Total current liabilities . .......... . . . . . ............. . . .. . 
Long-Term Debt (Note 2) ... .. . .. . ................ . ... . .. . . 
Deferred Credits and Other Liabilities (Note 1 ): 
Deferred federal taxes on income .. .......... .... ......... . . 
Unamortized investment credits ...... . .. . ... . ...... . ....... . 
Other ... .... . ....... . .. . ..... . .. . ........ . . . .......... . 
Shareholders' Equity (Notes 2, 5 and 8): 
Common stock-$1 .00 par value per share 
Authorized 10,000,000 shares 
Issued 4,903,879 shares ...... . . . ..... . ..... . . . . . ... . ... .. . 
Capital in excess of par value .............................. . 
Retained earnings .... . . . . . .. . .. . .................... . ... . 
1970 
$ 18,698,697 
11,731,118 
7,432,085 
5,949,274 
22,965,227 
66,776,401 
174,184,358 
17,495,000 
13,584,000 
3,224,332 
34,303,332 
4,903,879 
19,235,433 
55,765,523 
79,904,835 
$355,168,926 
$ 
1969 
18,227,504 
9,421,598 
6,933,800 
4,926,089 
16,195,627 
55,704,618 
197,149,588 
17,919,000 
16,060,000 
1,445,445 
35,424,445 
4,903,879 
19,235,433 
55,170,149 
79,309,461 
$367,588,1 12 
15 
 Statement of Operations and Retained Earnings 
Western Air Lines Inc. 
For the years ended December 31, 1970 and December 31, 1969 
Operating Revenues: 
Passenger ..... . . . ............... . ......... ... ....... . . . 
Express, freight and excess baggage ... . .................... . 
Mail . . ........................... . .................. .. . 
Other (Note 7) ................................. . ........ . 
Operating Expenses: 
Flying operations ............ . ........................... . 
Maintenance ................................... . . .. .. .. . 
Passenger service ....... . .............. .. ...... . ........ . 
Aircraft and traffic servicing ........ . ...................... . 
Marketing and administrative ................... .... ...... . . 
Depreciation and amortization (Note 6) ................ ... ... . 
Operating Income (Loss) ........ . ................ . ...... . 
Other Income (Expenses) : 
Interest expense ........................................ . 
Interest income .............. . ........ . ............ .. . . . . 
Other expense - net ..................................... . 
Earnings (Loss) before Taxes on Income .. ..... . . . .. .... ... . 
Taxes on Income (tax credits) (Note 1) .... . ... . ........... . 
Net Earnings (Loss) 
$0.11 net earnings per share in 1970 and $2.26 net loss 
per share in 1969 based on shares outstanding at end of 
each year (adjusted for the 10% stock dividend paid 
March 5, 1971) (Note 8) ................................ . 
Retained Earnings at Beginning of Year .................... . 
Cash Dividends Paid ....... . ................. . ......... .. . 
Retained Earnings at End of Year (Note 2) ..... .. ..... ... ... . 
*Operations were suspended from July 29 to August 16, 1969 because of a strike. 
See accompanying notes to financial statements. 
16 
1970 
$274,792,723 
13,993,889 
4,752,051 
4,570,957 
298,109,620 
74,615,549 
37,658,485 
31,371,846 
52,693,576 
53,378,916 
36,579,626 
286,297,998 
11,811,622 
(14,586,128) 
2,021,293 
(901,413) 
(1,654,626) 
(2,250,000) 
595,374 
55,170,149 
55,765,523 
$ 55,765,523 
1969* 
$220,529,667 
11,969,392 
4,502,928 
3,349,801 
240,351,788 
62,799,486 
36,954,934 
24,918,332 
47,384,866 
45,874,267 
34,820,805 
252,752,690 
(12,400,902) 
(14,747,559) 
355,613 
(481,012) 
(27,273,860) 
(15,075,000) 
(12,198,860) 
69,820,643 
57,621,783 
2,451,634 
$ 55,170,149 
 Statement of Source and Application of Funds 
Western Air Lines Inc. 
For the years ended December 31, 1970 and Decemoer 31, 1969 
Source of Funds: 
Net earnings (loss) 
Add back: 
Depreciation , amortization and maintenance reserve provision. 
Deferred income taxes ........... .. . .. .. . ............ . 
Charge (credit) related to investment credits ....... . .. .. .. . 
Amortization of investment credits ... . . .. ... . ........... . 
Gain on disposition of property ........ . ....... . ....... . 
Total from operations .......... . ... . ............... . 
Proceeds from issuance of long-term debt .. .... ...... . .. . ... . 
Refunds of equipment purchase deposits . .. .... ..... . .. . . . .. . 
Federal income taxes refunded . .. . . . . .. .. .... .. ..... . ..... . 
Proceeds from disposition of property . . . . .. ..... . ... . . . .... . . 
Increase in current liabilities . . .. .. ............. . ........... . 
Application of Funds: 
Purchase of airplanes, property and equipment .. ............. . 
Increase in inventories, receivables and prepaid expenses .. ..... . 
Long-term debt transferred to current liabilities .. . .. ... . ...... . 
Cash dividends . . .... .. .. . ........... . . .. . . ..... .. . . . . .. . 
Boeing 737 and 727 preoperating costs ...... . .............. . 
Other (net) . . ...... .. ............. . ..................... . 
INCREASE IN CASH AND MARKETABLE SECURITIES .. . ...... . 
CASH AND MARKETABLE SECURITIES 
BALANCE AT: 
Beginning of period ............ . ... . ..... . ....... . .. . 
End of period .. .... .. .. .. ... . . . ..... . ............. . . . 
*Operations were suspended f rom July 29 to August 16, 1969 because of a strike. 
See accompanying notes to Financial Statements. 
1970 1969* 
$ 595,374 $ (12 ,198,860) 
41,529,249 37,692,055 
(850,000) 7,000,000 
(6,350,000) 
(2,050,000) (2,150,000) 
(86,596) (25,550) 
39,138,027 23,967,645 
29,706,000 
133,087 4,625,993 
12,285,989 
3,220,138 2,909,046 
11,071,783 20,283,904 
65,849,024 81,492,588 
4,796,784 46,196,539 
2,001 ,911 14,383,114 
22,965,227 16,195,627 
2,451 ,634 
1,483,430 
(62,114) 198,337 
29,701 ,808 80,908,681 
36,147,216 583,907 
28,454,327 27,870,420 
$ 64,601 ,543 $ 28,454,327 
17 
 Notes to Financial Statements 
Note 1. Taxes on Income. 
The 1970 net income tax credit is summarized as follows: 
Current income taxes . .. .. . . . . . ..... . ... $ 650,000 
Deferred income taxes (credits) . . . . . . . . . . . (850,000) 
Amortization of investment credits . . . . . . . . . (2,050,000) 
Net income tax credit . .. . ... . . ... . . . .. $(2,250,000) 
Deferred income taxes arise from timing differences between 
fi nancial and tax reporting. These differences are caused 
primarily by depreciation practices. 
Investment credits generated and unapplied on tax returns 
amounted to $1 8,510,000 at December 31 , 1970. Of this 
amount, $17,496,000 has been offset against the balance of 
deferred taxes on income and expire as follows: $897,000 in 
1972, $2,069,000 in 1973, $2,870,000 in 197 4, $9,030,000 in 
1975, and $2,630,000 in 1976. The investment credits not 
offset against deferred taxes amounted to $1 ,014,000 and 
expire as follows: $984,000 in 1976 and $30,000 in 1977. 
Of the $1 3,584,000 unamortized investment credit balance at 
December 31 , 1970, $1,510,000 remains from investment 
credits utilized by reduction of taxes paid and $12,074,000 is 
related to investment credits not yet utilized for reduction 
of taxes paid. 
Federal income tax returns have been exam ined by the U.S. 
Treasury Department through 1967. The federal income tax 
return for 1968 is being examined . 
Note 2. Long-Term Debt (Unsecured). 
On December 31 , 1970, long-term debt was as follows: 
18 
Promissory note due December 31 , 1975 with 
quarterly payments from March 31 , 1970. 
The interest rate is% over the bank's 
prime commercial rate ......... . .. . . . .. $ 97,312,997 
5 % promissory notes due September 1, 
1981 with annual payments of $1 ,000,000 
from September 1, 1970 which will increase 
to $4,000,000 a year starting in 1976 . . . . . 29,000,000 
6% % promissory notes due September 1, 
1984 with annual payments of $1 ,000,000 
from September 1, 1970, which will increase 
to $2,000,000 a year starting in 1975, and 
further increase to $7,000,000 a year 
starting in 1982 . . . . . . . . . . . . . . . . . . . . . . 39,000,000 
5% to 6 % promissory notes due 1971 
and 1972 ... .. ...... . . . . . . . .... .. . . . . 
Less current maturities . .. . . . . . ... .. .. . . . 
5 % convertible subordinated debentures 
due February 1, 1993, with sinking fund 
payments of $1 ,500,000 a year starting 
in 1979 . . ..... ...... . . . . . . . ... .. ... . 
2,183,588 
167,496,585 
22,965,227 
144,531 ,358 
29,653,000 
$174,184,358 
The following schedule shows the amount of long -term debt 
maturing in each of the five years subsequent to December 
31 , 1970: 
1971 . . .. ...... . . .. ... . ... . . . . . .. . ... . . $22,965,227 
1972 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,143,561 
1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,462,600 
197 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,462,600 
1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,462,600 
Reserved for the conversion of debentures are 806,884 shares 
of common stock at $36.75 per share which is subject to 
adjustments in certain cases. After giving effect to the 10% 
stock dividend, the shares reserved for conversion are 
887,572 and the conversion price is $33.41 . 
The related agreements with the bank and the insurance 
compan ies provide among other things (including restrictions 
on additional borrowings) conditions and requirements which 
operate to restrict retained earnings from which cash dividend 
distributions can be made. The indenture for the debentures 
also contains a requirement which operates to restrict 
retained earn ings from which cash dividend distributions can 
be made. Since the second quarter of 1969 the indenture 
has operated to prevent any use of retained earnings for cash 
dividend distribution. 
Note 3. Commitments and Contingent Liabilities. 
The estimated minimum annual rentals under long-term 
leases of real property, with expiration dates ranging to 1998, 
were approximately $2,500,000 at December 31 , 1970. 
Annual rentals under a lease agreement covering six Boeing 
727 aircraft aggregate $2,992,000 in 1970, $3,843,000 in 1971 
and $4,130,000 in each year thereafter through 1984. 
At December 31 , 1970, various legal actions were pending 
against the City of Los Angeles and various actions and 
cross actions were pending against Western and other 
airlines, alleging excessive aircraft noise in the vicinity of Los 
Angeles International Airport. Western 's counsel in these 
actions, which also represents most of the other airlines, is of 
the opinion that the airlines have substantial defenses to the 
imposition of any liability. An interlocutory judgment has been 
entered in one of these cases against the City of Los Angeles, 
 awarding damages aggregating $740,000 to 620 property 
owners. The City has appealed. 
Western is also a defendant, together with numerous other 
airlines, in a purported class action relating to charges for 
in-flight services. 
Western believes these actions will not result in any material 
liability to the company. 
For information regarding fare increases and re lated litigation 
see last two paragraphs under " Fare Changes". 
Note 4. Retirement Plans. 
The company has retirement plans covering all eligible 
employees. The cost of these plans charged to operating 
expense totaled $3,651 ,228 in 1969 and $4,660,611 in 1970. 
During 1970, reductions in annual pension costs due to a 
revision of an actuarial assumption were partially offset by 
increased annual costs due to improvements in pension 
benefits adopted during the year and the partial assumption 
by the company of a portion of contributions formerly 
paid by employees. The company's actuary is of the opinion 
that the assets under the plans exceed the accrued vested 
benefits of the plans. 
Note 5. Stock Options. 
At December 31, 1970, options were outstanding for the 
purchase of 109,500 shares of common stock by officers at an 
average price of $26.64 per share. An additional 76,700 
shares were reserved for issuance of future options. (After 
giving effect to the 10% stock dividend declared December 
16, 1970 and payable March 5, 1971, the number of shares 
subject to outstanding options is 120,450; the average option 
price is $24.22, and the additional shares reserved are 
84,370.) 
Note 6. Depreciation and Amortization. 
Depreciation for book purposes is computed on the 
straight-line basis predicated on estimated useful lives, 
which for flight equipment are ten to fifteen years. 
Note 7. Mutual Aid Agreement. 
The company's participation in the Mutual Aid Agreement 
with several other carriers became effective August 3, 1970. 
From this date through December 31, 1970, $2,711,000 was 
provided for payments to a struck carrier. This amount was 
charged to " Other" operating revenues. 
Note 8. Stock Dividend. 
A 10% stock dividend was declared on December 16, 1970, 
and paid on March 5, 1971 to shareholders of record on 
January 15, 1971 . The dividend will be recorded in 1971 by a 
transfer of $490,387 to common stock and $10,482,022 
to capital in excess of par value. After giving effect to this 
dividend the shares outstanding are 5,394,266. 
Note 9. Proposed Merger. 
On December 16, 1970, the Board of Directors of Western 
approved an Agreement of Merger providing for the merger 
of Western into American Airlines, Inc. This agreement as 
subsequently amended and restated was approved by the 
Board of Directors as of January 14, 1971. The proposed 
merger is subject to certain conditions including the approval 
of shareholders of both companies, the lending institutions, 
certain regu latory authorities, and the President of the 
United States. 
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, 1969 and 1970 and the related 
statements of operations and retained earnings and source 
and application of funds for the two years then ended. Our 
examination was made in accordance with 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, such financial statements present fairly the 
financial position of Western Air Lines, Inc. at December 31, 
1969 and 1970 and the results of its operations for the two 
years then ended , in conformity with generally accepted 
accounting principles applied on a consistent basis. Also, in 
our opinion , the statement of source and application 
of funds for the years ended December 31, 1969 and 1970 
presents fairly the information shown therein . 
Los Angeles, Calif. 
March 5, 1971 
19 
, 
 Board of Directors 
James D. Aljian 
Secre"tary-Treasurer, Tracinda Investment Company, Beverly Hills, California 
Fred Benninger 
President, International Leisure Corporation, Las Vegas, Nevada, and Vice Chairman of the Board, Western Air Lines, Inc. 
Hugh W. Darling 
Darling, Hall , Rae & Gute, Attorneys-at-Law, Los Angeles , California 
Leo H. Dwerlkotte 
Las Vegas , Nevada 
James D. Garibaldi 
Attorney at Law, Garibaldi & Lane, Los Angeles , California 
Cary Grant 
Universal City, California 
Arthur F. Kelly 
Senior Vice President - Marketing , Western Air Lines, Inc., Los Angeles, California 
Peter M. Kennedy 
Vice President, Dominick & Dominick, New York, New York 
Kirk Kerkorian 
Chairman of the Board, Western Air Lines, Inc., and Chairman of the Board, Tracinda Investment Company, Beverly Hills, Cal ifornia 
Arthur G. Linkletter 
Linkletter Enterprises, Inc., Los Angeles, Cal iforn ia 
George Mason 
Vice President, Tracinda Investment Company, Beverly Hills, California 
Edwin W. Pauley 
Chairman of the Board, Pauley Petroleum, Inc., Los Angeles , Cal iforn ia 
Walter M. Sharp 
President, Community Bank, Huntington Park, Cal iforn ia 
Stanley R. Shatto 
Executive Vice President - Transportation , Western Air Lines, Inc., Los Angeles, California 
William Singleton 
Vice President and Assistant to the President, Metro-Goldwyn-Mayer, Inc., Cu lver City, California 
J. Judson Taylor  
President, Western Air Lines, Inc., Los Angeles , Cal ifornia 
Vernon 0. Underwood 
President, Young's Market Company, Inc., Los Angeles, Cal iforn ia 
Harry J. Volk 
Chairman of the Board, Union Bank, Los Angeles, Californ ia 
Arthur G. Woodley 
Bellevue, Washington 
Richard W. Wright 
President, Mountain States Employers Council, Inc., Denver, Colorado 
DIRECTORS EMERITI 
Dr. Donald H. McLaughlin 
Chairman of the Board, Homestake Mining Company, San Francisco, California 
John M. Wallace 
Walker Bank & Trust Company, Salt Lake City, Utah 
Alexander Warden 
Great Falls, Montana 
Sidney F. Woodbury 
President, Pine Street Company, Portland , Oregon 
20 
 Corporate Officers 
Kirk Kerkorian, Chairman of the Board 
Fred Benninger, Vice Chairman 
J. Judson Taylor, President and Chief Executive Officer and Director 
Stanley R. Shatto, Executive Vice President-Transportation and Director 
Arthur F. Kelly, Senior Vice President- Marketing and Director 
Philip E. Peirce, Senior Vice President-Service 
Charles J. J. Cox, Vice President - Finance 
Gerald P. O'Grady, Vice President- Corporate Affairs and Secretary 
Robert 0. Kinsey, Vice President and Assistant to the President 
Richard B. Ault, Vice President- Engineering 
Willis R. Balfour, Vice President-Agency, Interline & Group Marketing 
Harold W. Caward, Vice President- Flight Operations 
Henry M. deButts, Vice President-Washington 
Richard P. Ensign, Vice President- Service (Staff) 
Anton B. Favero, Vice President- Maintenance 
Rick 0. Hammond, Treasurer and Assistant Secretary 
Ernest T. Kaufmann, Vice President- Regulatory Affairs 
Lawrence H. Lee, Vice President- Industrial Relations 
Bert D. Lynn, Vice President-Advertising and Sales Promotion 
J.P. Maginnis, Vice President- Procurement 
J. S. Neel, Jr., Vice President- Service (Line) 
Eugene D. Olson, Vice President - Data Processing and Systems 
Luis Pasquel, Vice President- Mexico 
Ray Silvius, Vice President- Public Relations 
Jack M. Slichter, Vice President- Market Planning 
Harry L. White, Vice President- Marketing Administration 
Peter P. Wolf, Vice President- Communications 
Charles S. Fisher, Assistant Vice President- Product Development 
Joseph M. Fogarty, Assistant Vice President- Maintenance and Overhaul 
H. S. Gray, Assistant Treasurer and Budget Director 
David E. Holt, Assistant Vice President-Agency and Tour Sales 
Roderick G. Leith, Assistant Treasurer and Controller 
S. J. Rogers, Assistant Vice President- Product Pricing 
Neil S. Stewart, Assistant Vice President- Market Development, Pacific Region 
Dan A. Zaich, Assistant Vice President- Labor Relations 
 General Offices 
Western Air Lines Building, 6060 Avion Drive 
Los Ange les International Airport 
Los Angeles, California 90009 
Stock Registrars 
Bank of America National Trust & Savings Assn. 
111 West Seventh Street, Los Angeles, California 90014 
The Chase Manhattan Bank 
1 Chase Manhattan Plaza, New York, New York 10015 
Stock Transfer Agents 
Security Pacific National Bank 
124 West Fourth Street, Los Angeles, California 90014 
Chemical Bank 
20 Pine Street, New York, New York 10015 
Debenture Trustee 
The Chase Manhattan Bank 
1 Chase Manhattan Plaza, New York, New York 10015 
Stock Listings 
Listed and traded on 
New York Stock Exchange 
Pacific Coast Stock Exchange 
General Counsel 
Hugh W. Darling 
Darling, Hall, Rae & Gute 
523 West Sixth Street, Los Angeles, California 90014 
Independent Accountants 
Peat, Marwick, Mitchell & Co. 
629 South Spring Street, Los Angeles, California 90014 
Annual Meeting 
Fourth Thursday in April