Western Airlines Annual Report 1973

Notice to Stockholders
A rule adopted by the Civi I Aeronautics Board
("CAB") in July 1970, as amended on December 29,
1972, imposes obligations on certain stockholders of
air carriers. Any person who owns as of December 31
of any year or subsequently acquires, either bene-
ficially or as a trustee, more than 5% of any class of
capital stock of an air carrier must file with the CAB
a report containing the information required by Part
245.12 of the CAB's Economic Regulations on or
before April 1 as to the capital stock owned as of
December 31 and/ or a report containing the informa-
tion required by Part 245.13 of the CAB's Economic
Regulations within 10 days after acquisition as to the
capital stock acquired after December 31. Any bank
or broker which holds as trustee more than 5% of
any class of capital stock of an air carrier on the last
day of any quarter of a calendar year must file with
the CAB within 30 days after the end of the quarter a
report in accordance with the provisions of Part
245.14 of the CAB's Economic Regulations.
Any person required to report under either Part
245.12, Part 245.13 or Part 245.14 of the CAB's
Economic Regulations who grants a security interest
in more than 5% of any class of capital stock of an
air carrier must within 30 days after granting such
security interest 'file with the CAB a report containing
the information required in Part 245.15. Any stock-
holder who believes that he may be required to file
such a report may obtain further information by writ-
ing to the Director, Bureau of Operating Rights, Civil
Aeronautics Board, Washington, D. C. 20428.
Highlights of 1973
Operating 1973 1972 Change
Available seat miles 11,175,518,000 10,300,178,000 + 8.5%
Revenue passenger miles .
Passengers carried .
Passenger load factor-actual %
-breakeven point%
Financial
Operating revenues .
Operating income
Net earnings .
Net earnings per share .
Net earnings per share assuming
conversion of the debentures .
Cash dividends per share .
Stock dividend paid (5% in March 1974) .
Shares of common stock outstanding
Shareholders' equity
Shareholders' equity per share .
Cash, certificates of deposit and
short-term securities
Working capital .
Available bank credit
Property and equipment at cost .
Long-term debt .
Number of employees at year end
Wages and salaries paid
Operations of a trunk carrier were suspended and opera-
tions of a competing intrastate carrier were partially sus-
pended during the fourth quarter of 1973. Operations of
competing carriers were substantially suspended from June
30 to October 2, 1972, and from January 1 to April 10, 1972.
6,476,087,000 5,995,925,000 + 8.0
7,382,000 6,931,000 + 6.5
57.9 58.2 0.3 pts.
52.3 54.4 2.1 pts.
$414,716,000 $365,663,000 +13.4%
$ 40,122,000 $ 23,607,000 +70.0
$ 20,386,000 $ 11,216,000 +81.8
$ 1.39 $ 0.77
$ 1.24 $ 0.70
$ 0.24 $ 0.08
3%
14,619,000 14,618,000
$113,652,000 $ 96,723,000 +17.5
$ 7.77 $ 6.62
$ 47,621,000 $ 55,382,000 -14.0
$ 6,931,000 $ 20,592,000 -66.3
$ 65,000,000 $ 65,000,000
$509,855,000 $452,333,000 +12.7
$124,387,000 $130,487,000 - 4.7
9,875 9,676 + 2.1
$141,016,000 $126,618,000 + 11.4
Per share data are adjusted where appropriate throughout
this Annual Report for the 5% stock dividend declared on
January 21, 1974, payable on March 20, 1974 to share-
holders of record on February 20, 1974, for the 3% stock
dividend paid April 10, 1973, and for the 2 for 1 stock
split effected on September 13, 1972 and distributed on
October 30, 1972.
President's Letter
To Our Shareholders:
The year 1973 was the most successful in the history
of Western Air Lines.
Earnings of $20,386,000 were the highest in our
48-year history. We carried a record number of pas-
sengers. In addition, the company was an industry
leader on some of the most important yardsticks of
performance by which an airline's service is judged.
Western's traffic, as expressed in revenue passen-
ger miles, was up eight percent, compared to a
growth rate of 5.9 percent for the domestic airline
industry.
In the most competitive market served by Western,
Mainland-Hawaii, we not only increased our share of
this growing market but also became one of the first
carriers-if not the first-to make a profit since 1969
when the number of carriers serving Hawaii was
increased from three to eight.
The introduction of Western's first wide-bodied
jets, four McDonnell Douglas DC-1 Os, was accom-
plished on schedule. The 239-passenger jets were
delivered in the spring and summer of the year and
were placed into service on high-density, long-haul
routes where their additional seating and cargo
capacity were needed. Western's employees did their
usual highly professional job of adapting to the new
technology required to operate these third-genera-
tion jet aircraft. Western has experienced none of
the major difficulties that frequently accompany the
introduction of dramatically different aircraft.
Recognizing that an airline's on-time performance
is one of its most important obligations to the travel-
ing and shipping public, Western continued to con-
centrate on schedule performance and excellence
in operations. For the second consecutive year,
Western was ranked No. 1 in Civil Aeronautics Board
tabulations of on-time performance for the entire
industry.
The company also was again among the industry's
leaders in fewest complaints filed with the CAB per
100,000 passengers carried.
I am sure you will agree that these two important
yardsticks attest to the high quality of service that
Western 's employees provided to our customers
during 1973.
The company also was recognized for the quality
of its service to another of our important publics, our
investors. Western was ranked No. 1 in the airline
industry in 1973 judging by the Financial Analysts
Federation which annually evaluates the quality of
each airline's reporting of financial information
through press releases, annual and interim reports
to shareholders and communications with financial
2
analysts. It was the fourth consecutive year in which
Western has received the award.
We were also gratified in 1973 with the success of
our intensified corporate planning program. Early in
the year, a new department was established along
lines which we believe are unique in the industry
wherein flight scheduling was combined with budget
and cost control, forecasting , economic research
and analysis and fleet programming into a single
planning unit. The profit plan prepared by this group
in cooperation with all departments of the company
was used as a guide to monitor performance and
control costs throughout the year.
The planning group proved particularly effective
late in the year when the fuel shortage made it nec-
essary for the company to make rapid adjustments in
its operating pattern. A special fuel committee, con-
sisting of procurement, operations and flight sched-
uling specialists, was established to obtain every
available gallon of jet fuel and to make optimum use
of the fuel that was available to the company.
Desp ite federal regulations which allocated to
trunk airlines 95 percent of their 1972 fuel consump-
tion for 1974, the availabil ity of fuel to each airline
has been further limited by the ability of suppliers
to deliver allocated amounts. For the first quarter of
197 4, for example, Western was able to establish
flight schedules based on a fuel supply of only 85
percent of our 1972 level, or 22 percent less than
we had planned to use during this period. However,
by adjusting schedules, by increasing the seating
capacity of many of the aircraft flying our Hawaii
routes and by introducing the efficiencies of the
DC-10, we expect to produce essentially the same
number of available seat miles in the first quarter as
we did in the same period of 1972 with 15 percent
less fuel.
Equally important is the matter of fuel price. Based
on our present level of consumption-approximately
300 million gallons a year - a one-cent per gallon
increase escalates the company's fuel costs by
approximately $3 million a year. The per-gallon cost
of jet fuel increased 3.8 cents during the last six
months of 1973. An additional increase became
effective in January. Other increases may be forth-
coming in 197 4.
Western 's management is working diligently with
the Air Transport Association and the Federal Energy
Office to establish for the scheduled carriers the
priority status that is required to carry out our respon-
sibility as a key element of the national transportation
system. In order to do this, the carriers must first
be guaranteed that their full allocation of fuel will be
delivered and, second, that some system of cost
recovery will be established which will permit the
carriers to increase their fares as fuel costs rise.
Traditionally, fare adjustments for our industry lag
far behind cost increases. Because of the magnitude
and frequency of recent fuel price increases, some
more expeditious method of relating fares to costs
must be developed.
Another element of concern is continuing inflation
in other areas of expense. We believe we are doing
an excellent job of controlling those costs that are
controllable. However, because we are in a labor-
intensive, high-technology industry our job is more
difficult.
In other respects, we are cautiously optimistic
about the future. The company is in a sound financial
condition. We are continuing to modernize our fleet
by taking delivery of the most efficient new aircraft
available and by selling others that are surplus to
our needs.
We believe that traffic on Western's route system
will continue to grow, barring an intensification of
the energy crisis or a significant downturn in the
economy.
Of particular importance to us will be the construc-
tion of the Alaska pipeline. Much of the passenger
and cargo traffic related to the pipeline will originate
in California and Western is the only airline that flies
between these two states. In addition, if our pro-
posed equipment interchange with Continental
Airlines is approved, we also will be more directly
involved in traffic that will move from the Texas/
Oklahoma/Louisiana "oil country" area to Alaska.
We have established a special task force at key
cities on our system to work closely with construction
companies, engineering firms, oil companies and
other industries that will be heavily involved in the
many projects that are planned for the 49th state.
Western's management will earnestly endeavor in
1974 to increase revenues and hold costs at the
lowest level consistent with safe, reliable service.
Your continued support will be sincerely appreciated.
We hope you will fly and ship on Western whenever
possible and urge your friends, neighbors and asso-
ciates to do likewise.
Sincerely,
Arthur F. Kelly
President and Chief Executive Officer
March 15, 1974
Fred Benninger Arthur F. Kelly Dominic P. Renda
Chairman President Executive Vice President
3
Year in Review
Earnings
Net earnings in 1973 were $20,386,000, the highest
in the company's 48-year history and an 82 percent
increase over 1972 earnings of $11,216,000.
(All per-share figures appearing throughout this
report are adjusted for stock splits and stock divi-
dends, including the five percent stock dividend pay-
able March 20, 197 4.)
Net earnings per share were $1.39, compared to
77 cents for 1972. (For purposes of comparison to
interim reporting made during 1973, the net earnings
per share unadjusted for the 197 4 stock dividend
were $1.46, compared to 81 cents for 1972.)
Fully diluted net earnings per share (assuming
that all holders of the company's 5 percent Con-
vertible Subordinated Debentures had converted
their debentures into common stock) were $1.24,
compared to 70 cents for 1972.
Western's rate of return on investment, based
essentially on Civil Aeronautics Board methodology,
was 11.0 percent, compared to 6.4 percent in 1972.
Operating income totaled $40,122,000, equal to
9.7 percent of operating revenues, compared to
$23,607,000, or 6.4 percent of operating revenues,
for 1972.
Despite a decrease in long-term debt, interest
expense increased slightly because of the higher
prime rates. Interest rates on the bank notes are fixed
at one-quarter percent over the bank's prime com-
4
83.9% from coach passenger services
7.0% from deluxe passenger services
5.5% from cargo
0.8% from charter
2.8% from other
REVENUE DOLLAR
mercial rate. In 1973, the prime rate fluctuated
between six percent and 10 percent, compared to a
low of 4 percent and a high of six percent in 1972.
Interest income increased from $2,832,000 for
1972 to $3,186,000 for 1973.
Earnings before income taxes for 1973 totaled
$35,286,000, more than double Western's pre-tax
earnings for 1972.
Taxes on income were $14,900,000, compared to
$6,300,000 in 1972. (See Note 2 of Notes to Finan-
cial Statements for a complete explanation of current
and deferred taxes on income and investment
credits.)
Revenues
Total operating revenues for 1973 were a record
$414,716,000 (after payment of $1,870,000 to a
struck carrier under the airlines' Mutual Aid Agree-
ment) , a 13.4 percent increase over the $365,663,000
of the previous year when mutual aid payments were
$5,181 ,000.
Contributing to the increase were an 8.0 percent
growth in revenue passenger miles and a 3.3 percent
increase in revenue per passenger mile from 5.78
cents to 5.97 cents.
Passenger revenues increased 10.8 percent and
represented 91 .6 percent of total operating revenues.
Revenues from coach traffic were up 10.6 percent and
represented 92.3 percent of passenger revenues.
Revenues from deluxe traffic were up 13.1 percent.
EXPENSE DOLLAR
41 .6% for wages, salaries and employee benefits
11.2% for aircraft fuel
9.6% for depreciation and amortization
4.9% for food and beverages
4.8% for utilities and services
4.7% for materials and repairs
3.9% for commissions
2.9% for advertising and publicity
3. 7% for taxes on income
12. 7% for all other expenses
Cargo revenue s in creased 10.7 percent to
$23,040,000 . Charter revenu es increased to
$3,489,000 from $2,100,000.
Fares and Rates
In 1973, Western participated in 14 successful tariff
filings with those regulatory bodies which control
airline fares. Included were basic fare increases,
reductions in discounts and institution of surcharges
to cover the costs of airport security measures im-
plemented in 1973. The impact of these add itional
charges, assuming no loss of traffic, could amount
to approximately $30 million in added revenues on
an annualized basis.
Western's passenger fare structure is divided into
six geographical areas, each regulated separately by
the Civil Aeronautics Board, agencies of other
national governments or, in the case of intra-Califor-
nia travel, by a state public utilities commission.
Fare changes in 1973 were as follows:
Domestic U.S. ( 48 states): On June 1, the discounts
that had been in effect for Youth Standby, Youth
Reservation and Family Plan were reduced by one-
third. In accordance with the CAB's December 1972
decision in the Discount Fare Phase of the Domestic
Passenger Fare Investigation , these fares were
reduced by a second one-third on December 1, 1973,
and are to be cancelled on June 1, 197 4.
On December 1, al l domestic fares were increased
by five percent.
Hawaii: On June 1, a $2 rental charge for the use
of aud io headsets by coach passengers when movies
are shown was introduced. On September 1, most
Mainland-Hawaii fares were increased by an aver-
age of eight percent.
Contributing to Western's " new look"
are color-coordinated uniforms of
contemporary classic design that were
introduced by flight attendants in
December and will be donned by
other uniformed personnel in the
coming months.
5

Intra-California: Western was permitted to increase
fares on part of its intra-California routes by 5.6 per-
cent on October 10 and on the remaining portion of
its intra-state system in February 1974.
Alaska: On September 1, fares between Anchor-
age/Kodiak and Seattle/Tacoma and between
Anchorage and Portland were increased five percent.
Mexico: On May 1, fares between the U.S. and
Mexico were increased five percent.
U. S.-Canada: Fares between the U.S. and Canada
were increased five percent on December 9.
Air Freight: Increases for most markets were on a
sliding scale of mileages but overall averaged nine
percent. Eastbound rates from the West Coast to the
Twin Cities were increased 10 percent, as were rates
between Anchorage and Seattle/Tacoma.
Security Surcharges: A charge of 34 cents per
passenger on all flights except U. S.-Mexico and
intra-California was implemented on April 1 to cover
the costs of screening passengers and baggage. On
May 12, an additional charge of 25 cents for each of
these same passengers was implemented to cover
the costs incurred by local airport authorities for pro-
viding armed guards at airports, which are then
passed on to the airlines. The 34-cent charge also
was implemented for intra-California passengers on
May 22, but the proposed 25-cent airport guard
charge was reduced by the state PUC to 12 cents
before being implemented on intra-California flights
on December 19.
Expenses
Operating expenses increased 9.5 percent, from
$342,056,000 in 1972 to $374,594,000 for 1973.
Contributing to the increase were the continuing
effects of inflation, an 8.5 percent increase in seat
The impact of Western 's more modern,
more efficient identification program is
particularly evident in Hawaii where it
is featured at airport and ticketing
facilities, as well as in flight.
6
mile production, including the addition of four wide-
bodied DC -10s and significant increases in the
average cost per gallon of jet fuel during the fourth
quarter.
Personnel costs, which accounted for 41.6 percent
of the expense dollar, increased 12.3 percent despite
the fact that the average number of employees during
the year was up only 4.5 percent over the previous
year. Of the $32,538,000 increase in operating
expenses, $18,081,000, or 55.6 percent, was for
wages and salaries, plus related costs for Social
Security, group insurance and retirement plans.
Jet fuel costs for the year increased 10.9 percent
and represented 11.2 percent of the company's
expense dollar.
Other major items of expense and comparisons
with 1972 levels are detailed in the Expenses section
of the Brief Statement of Earnings.
Expense increases were offset in part by a $7.9
million reduction in reserves for engine overhauls
caused by converting from a program of complete
overhauls to one of regular inspection and overhauls
as needed at shorter hourly periods. (See Note 9 of
the Notes to Financial Statements.)
The cost of producing a seat mile increased from
3.32 cents to 3.35 cents. However, the breakeven
load factor, which was favorably affected by the
improvement in revenue per passenger mile referred
to in the Revenues section, was reduced to 52.3
percent from 54.4 percent in 1972.
NET EARNINGS (PROFIT)
20.4
DOLLARS IN MILLIONS
0.6
- 12.2
1969 1970 1971 1972 1973
Finan os
The company's financial condition was further
strengthened during 1973.
As shown in the Statement of Changes in Financial
Position, total working capital provided by all sources
was $87,621,000, compared to $49,261,000 in 1972.
Working capital provided by operations was
$56,302,000, an increase of $10,489,000. Other
increases came from additional long-term debt in
the amount of $15,362,000 and the recovery of pur-
chase deposits totaling $12,125,000 when leasing
arrangements for two of the DC-1 Os delivered in
1973 were completed.
Applications of working capital during 1973
totaled $101 ,282,000. The purchase of property and
equipment, including the two company-owned
DC-1 Os, engines and spare parts, consumed
$63,676,000.
Another $21,463,000 was applied to scheduled
repayment of long-term debt. Purchase deposits to
manufacturers for aircraft on order took $10,604,000
and $3,462,000 was used to pay cash dividends dur-
ing 1973.
At the end of 1973, the balance of working capital
was $6,931,000, compared to $20,592,000 at year-
end 1972. However, the company had an unused
$65 million line of credit available for general cor-
porate purposes, including the financing of aircraft.
The decrease in the balance of working capital
is reflected on the Balance Sheet in a 21.5 percent
increase in current liabilities and a 3.2 percent in-
crease in current assets.
The increase in current liabilities resulted primarily
from increases in the amount and cost of goods and
services purchased , taxes and advance ticket sales.
Cash and securities decreased 14 percent. How-
ever, receivables were up 25.3 percent as a result of
increased credit sales, sales by commission agents
and tickets sold by other airlines for transportation
on Western.
The 1974 meeting of shareholders will be held at the
Marriott Hotel, Los Angeles, California, on April 25.
Formal notice of the meeting and proxy material
were mailed to you with this report.
Shareholders received four regular cash dividends
and one stock dividend during 1973. Cash dividends
of five cents per share were paid on April 10, June 7
and August 27. At its fourth regular meeting of the
year, the board voted to double the dividend rate to
7
Brief Statement of Earnings Brief Balance Sheet
(in thousands of dollars) (in thousands of dollars)
Western's revenues came from: 1973 1972 Change Western owns: 1973 1972 Change
Passengers Cash, certificates of deposit
Coach . $350,476 $316,908 + 10.6% and short-term securities . $ 47,621 $ 55,382 14.0%
Deluxe 29,348 25,943 + 13.1 Receivables due from others . 36,024 28,760 + 25.3
379,824 342,851 + 10.8 Flight equipment
Cargo 23,040 20,819 + 10.7 expendable parts 13,497 10,456 + 29.1
Charter 3,489 2,100 + 66.1 Buildings and improvements, net 13,502 12,290 + 9.9
Interest income 3,186 2,832 + 12.5 Flight and other equipment, net . 232,621 201,967 + 15.2
Other income 10,233 5,075 + 101.6 Deposits on purchase contracts . 23,251 24,772 6.1
Mutual aid payments . (1 ,870) (5,181) 63.9 Prepaid expenses 4,941 4,332 + 14.1
417,902 368,496 + 13.4 Flight equipment not used in
operations 354 2,952 88.0
Preoperating costs . 1,858
Deferred charges and other 3,788 1,620 +133.8
Western's expenses were for:
377,457 342,531 + 10.2
Wages, salaries and
employee benefits . 165,363 147,282 + 12.3
Aircraft fuel . 44,510 40,137 + 10.9
Western owes:
Depreciation and amortization . 38,304 36,224 + 5.7
Payables due to vendors
Food and beverages . 19,649 18,584 + 5.7
and others. 37,035 28,185 + 31.4
Utilities and service 19,125 18,343 + 4.3
Salaries, wages and
Materials and repairs 18,711 19,808 5.5
vacations 17,466 15,550 + 12.3
Commissions 15,344 12,949 + 18.5
Income taxes - deferred 24,729 19,033 + 29.9
Advertising and publicity 11 ,673 11,156 + 4.6
- current 10,641 6,297 + 69.0
Interest, net of amounts
Unamortized investment credits . 14,329 12,596 + 13.8
capitalized 9,016 8,787 + 2.6
Tickets sold but not yet used . 8,547 6,843 + 24.9
Landing fees 8,890 7,519 + 18.2
Other deferred items 5,208 5,354 2.7
Rentals of ground facilities . 7,221 6,275 + 15.1
Notes payable-current and
Property, fuel and other taxes 6,601 6,759 2.3
long-term 145,850 151 ,950 4,0
Rentals of flying equipment 5,633 4,135 + 36.2
263,805 245,808 + 7.3
Insurance and related costs 4,613 5,285 - 12.7
Excess of what is owned over
Other costs . 7,963 7,737 + 2.9
what is owed, or
Taxes on income . 17,325 8,600 +101 .5
shareholders' equ ity . $113,652 $ 96,723 + 17.5
Amortization of investment
credits (2,425) (2,300) + 5.4
397,516 357,280 + 11.3
Net earnings . . . . . . $ 20,386 $ 11,216 + 81 .8
8
10 cents per share effective with the dividend payable
on November 26.
In September 1972, Western 's board of directors
expressed by resolution its intention to declare
regular quarterly dividends, consistent with sound
business principles, either in cash, stock or a combi-
nation of cash and stock, equivalent on the average
to 50 percent of earnings.
At its first regufar quarterly meeting of 1973, the
board voted a stock dividend of three percent to
implement this policy.
In a similar manner, at its first regular quarterly
meeting of 197 4, the board voted a stock dividend
of five percent. Also voted at the January 197 4 meet-
ing was a cash dividend of 1 0 cents per share. Both
such dividends are payable on March 20 to share-
holders of record on February 20.
Shareholders, Stock and Debentures
As of December 31 , 1973, there were 14,619,000
shares of Western stock outstanding, after giving
effect to the five percent stock dividend that was
declared in January 197 4. Reserved for the conver-
sion of the company's 5 percent Convertible Sub-
ordinated Debentures were an additional 2,393,000
shares . The adjusted conversion price of these
debentures is $12.35 per share. Holders of the
debentures receive interest payments on February 1
and August 1.
The company's stock was held by approximately
14,000 shareholders of record at year end, compared
to approximately 10,500 at the end of the previous
year.
At the 1973 annual meeting of shareholders in
April, 75.2 percent of all shares were represented
in person or by proxy.
Western 's " new look" goes sightseeing in Mexico.
9
Shareholders' equity at December 31 , 1973, was
$113,652,000, or $7.77 per share, compared to
$96,723,000, or $6.62 per share, at the close of 1972.
Equipment and Facilities
At the end of 1973, Western operated 7 4 jet aircraft,
compared to 71 at the end of 1972.
Added to the fleet during the year were the com-
pany's first wide-bodied jets-four McDonnell Doug-
las DC-1 Os. Two of the aircraft were leased for a
period of 18 years and the other two aircraft were
purchased.
Scheduled for delivery in 197 4 are seven long-
bodied Boeing 727-200s and an additional DC-10,
all of which were ordered early in 1973. The 727s
are being delivered in March, April (2), May (2), June
and July. The DC-1 0 will be delivered in May. On
order for 1975 delivery is an additional DC-10, which
will be the company's sixth. The company continues
to hold options to purchase thirteen 727-200s for
delivery in 1975 and 1976.
In order to adjust capacity, Western began a pro-
gram of progressive retirement of aircraft in Septem-
ber 1973 when it contracted to sell two Boeing 737
twinjets; one was delivered in November 1973 and
the second in January 197 4. In November, the com-
pany also completed arrangements for the sale of
three Boeing 720B four-engine jets and granted to
the purchaser options to purchase five additional
720B's. The three aircraft that were sold were
delivered during the first quarter of 197 4. Two of the
aircraft on option would be for delivery in 1975 and
three would be for delivery in 1976. Two additional
720B's have been withdrawn from service since the
first of January.
The key elements of Western 's
distinctive design program have been
extended to include colorful full-size
china in first class, sleek flatware,
beverage pieces and other cabin
service items.
10
The company intends to dispose of an as yet
undetermined number of aircraft in 197 4 to the extent
that they are rendered surplus to its needs.
Western's Jet Fleet
Owned Leased 1974 Delivery
DC-10 2 2 1
8707-300C 5
87208 22
8727-200 5 6 7
8737-200 28
(as of March 15, 1974)
In 1973, the company completed a number of air-
port terminal bu i Id i ng improvements that were
required to accommodate the introduction of DC-1 O
service. Construction of a single "high bay" hangar
that will provide maintenance support for the com-
pany's DC-10 fleet and an employee parking struc-
ture, both to be located at the company's Los Angeles
International Airport headquarters, was begun in
February 197 4. The project, which will cost approxi-
mately $11 million, is scheduled for completion early
in 1975. The new hangar and parking structure will
be built by a non-profit corporation organized for
the purpose of assisting in the financing of improve-
ments at airports operated by the City of Los Angeles
and will be financed out of the proceeds of bonds
to be issued by the corporation for that purpose.
Western will lease the facilities for a term which
coincides with the maturity schedule of the bonds.
RETURN ON INVESTMENT

WESTERN AIR LINES-ten years of growth, annual report

INDUSTRY (trunks and PA)*source McDonnell Douglas airline industry data
12%
1 2 % - - - - - - -- - - - - - - - - - -
CAB GUIDELINE 11.0
8% - - - - - - - - - - - - - - -
4%
2%
1972 1973
* 1973 figures for trunk carriers and PA is for year ended 9/30/73
Regulatory Matters
Alaska Interchange: On July 11, 1973, Western and
Continental Airlines applied to the Civil Aeronautics
Board for approval of an equipment interchange
agreement. The proposal will provide the first one-
plane service in airline history between Alaska and
" oil country" centers in Colorado, Kansas, Okla
homa, Texas and Louisiana, a service which would
be of vital importance to the construction of the
Trans-Alaska pipeline. The interchange point will be
Seattle with each airline operating the through flights,
using Boeing 727 and DC-1 O equipment, over its own
routes. Public hearings were held before an admin-
istrative law judge in Washington, D. C., in early
January 197 4. On March 7, his initial decision recom-
mending that the board approve the proposed inter-
change as well as one proposed by Braniff and
Alaska Airlines was announced. A decision by the
board is expected shortly.
The Miami-Los Angeles Competitive Nonstop
Case: Western is an applicant for competitive author-
ity on the Miami-Los Angeles nonstop route which is
now served exclusively by National Airlines. In an
initial decision, announced in June 1973, the admin-
istrative law judge recommended that Pan American
Airways be granted the route. This decision is now
under review by the CAB.
Las Vegas/ Reno-Portland/ Seattle Nonstop Serv-
ice Investigation: Western is an applicant for nonstop
service between Las Vegas and Portland/Seattle;
Reno and Portland/Seattle; and Las Vegas and Reno.
In a 1971 initial decision, the administrative law judge
concluded that Western should be authorized to oper-
ate between Las Vegas and Portland and Seattle, that
another carrier should be authorized to operate
between Reno and Portland and Seattle, and that
Western 's request for authority to operate between
Las Vegas and Reno should be denied. Upon review,
the CAB remanded the case to the administrative
law judge for further proceedings. On August 13,
1973, the administrative law judge issued an initial
decision reaffirm ing his original conclus ion. The
decision is still under review by the CAB
Remanded Additional Service to San Diego Case:
The CAB issued its decision denying appl ications for
competitive authority over Western 's Denver-San
Diego route on December 12, 1972. Petitions request-
ing reconsideration of this decision are still pending.
Transatlantic Route Proceedings: Western, as well
as other carriers, is an applicant for new and com-
petitive authority between points on its existing
routes and points in Europe and the Middle East.
Hearings are scheduled in June 197 4 and a final
decision is expected in 1975.
11
Additional Mexico Route Authority: On August 2,
1973, the company asked the Civil Aeronautics Board
for authority to provide the first service by a U.S. air-
line from Los Angeles and San Francisco to six cities
in Mexico - LaPaz, Mazatlan, Puerto Vallarta, Guada-
lajara, Manzanilla and Zihuatanejo - and for nonstop
authority from San Francisco to Mexico City and
Acapulco.
Bilateral Agreements: Negotiations on renewal of
the United States-Mexico bilateral air agreement are
scheduled to resume in Mexico City on March 20;
the currently effective agreement has been extended
to June 30, 197 4.
Another bilateral air agreement change which is
expected to affect Western during 1974 is that
between the United States and Canada. Agreement
on amendments to the existing agreement was
reach e d i n the s u m m e r of 1 9 7 3 and a 11 pa rt i es
initialed it. Final signing and implementation is await-
ing completion of the formal language. In its initial
form , the following additional route authority in the
area served by Western would be granted immedi-
ately:
For a U.S. carrier (to be selected by the CAB) :
Vancouver-Honolulu; Las Vegas-Calgary /Edmonton ;
and the addition of Edmonton to the Denver-Great
Falls-Calgary route now served by Western.
For a Canadian carrier: Vancouver-Los Angeles
(now served exclusively by Western); and Edmonton/
Calgary-San Francisco. (Western now serves Cal-
gary-San Francisco on a multi-stop basis.)
In a second phase, to take effect in 1976, the
agreement would permit a U.S. carrier to operate
nonstop between San Francisco and Calgary/
Edmonton and nonstop between Los Angeles and
Calgary /Edmonton , which Western now serves on
multi-stop authority.
A third phase, effective in 1978, would give a
Canadian carrier Edmonton/Calgary-Los Angeles
non-stop authority.
Western will apply for authority to operate all of
the above routes.
Other Pending Applications: Western also has an
application pending for authority to operate service
between both Seattle/Tacoma and Anchorage and
Tokyo, Japan. No estimate can be made as to when
CAB action on this application may be expected or
whether such action will be favorable to Western.
Alaska Service Case Appeal: In a decision
announced February 20, 197 4, the U.S. Court of
Appeals for the District of Columbia Circuit affirmed
the Civil Aeronautics Board 's decision in this case
suspending Western 's authority at Juneau and
12
Ketchikan for a period of seven years from February
7, 1972. The company had appealed the decision on
the grounds that the CAB exceeded its statutory
authority and set a dangerous precedent when it
took away from one carrier a profitable, permanently
certificated route not for the purpose of correcting
any deficiencies in service but for the purpose of
providing financial assistance to another carrier.
Marketing
Western carried a record 7,382,000 passengers in
1973, a 6.5 percent increase over the previous year.
Passenger load factor for the year was 57.9 percent,
compared to 58.2 percent in 1972.
Comparisons between 1973 and 1972 are influ-
enced by strikes against two competitors that inflated
Western's traffic in 1972, one in the first quarter and
the other in the third quarter. Traffic in 1973 was
inflated to a smaller degree by strikes against a
California intra-state carrier and a transcontinental
carrier in the fourth quarter.
One of the most significant marketing develop-
ments of 1973 was the introduction of wide-bodied
DC-10 service in selected major markets-from
California to Honolulu, Mexico City, Acapulco,
Vancouver and Minneapolis/St. Paul. One additional
DC-10 will be delivered in 197 4 and will be placed
into service on a California-Seattle/Tacoma-Anchor-
age routing.
PASSENGERLOADFACTOR-ACTUALVSBREAKEVEN
58.2%

Actual

Breakeven
1969 1970 1971 1972 1973
Western continued to feature first class legspace
for every passenger on every flight and complimen-
tary champagne to all passengers who desired it.
Western's marketing programs stressed the many
attractive leisure destinations and resort areas
served.
Among the strongest gainers in Western's leisure
markets was Hawaii. Aided by the introduction of
DC-10s on Los Angeles - and San Francisco-
Honolulu segments, traffic on the company's Main-
land-Hawaii routes increased 17.7 percent on a 15.9
percent increase in available seat miles. The higher
load factor, along with an improvement in yield , per-
mitted the company to show a profit on its Hawaii
routes in 1973 for the first time. Western ranked No. 3
in share-of-market in 1973.
Despite the 1972 suspension of service to Juneau
and Ketchikan, Western also was the leading carrier
between Alaska and other states and was the No. 2
U.S. carrier in the Mexico market.
Western 's travel agency sales represented an
important part of overall sales results, at 49.3 percent
or $187,169,000. Of this amount, prepaid tour pack-
ages totaled $43,048,000 and represented 11 percent
of total passenger sales.
Group travel showed substantial increases during
the year, with meeting and convention travel up 27
percent to $14,217,000.
The company's participation in air /sea cruise pro-
motion increased sharply in 1973. The West Coast
U. S.-Mexico air/sea market and the West Coast
U. S.-Alaska air/ sea market expanded considerably,
as wel l as one air /sea program in the West Coast-
Hawaii market.
Because of a growing interest in Western America,
Western has increased its marketing activiti es in
In the air and on the ground, from
aircraft to facilities to advertising and
sales promotion materials, Western's
new design program has spread
throughout the company to provide a
totally new and modern appearance
for the Seventies.
foreign countries and its efforts to have those Ameri -
cans who normally travel overseas on vacation visit
destinations on Western 's system.
In anticipation of the construction of the Trans-
Alaska pipeline, the company also stepped up its
attention to those companies and individuals who
will be involved in the construction of the pipeline
and ancillary activities. Late in the year, a task force
of Alaska specialists was established to work directly
with passengers and shippers. These special coordi-
nators are located in Fairbanks, Anchorage, Seattle/
Tacoma, San Francisco, Los Angeles, Denver, Min-
neapolis/St. Paul and Dallas/Fort Worth.
In an effort to participate more fully in the traffic
that flows from " oil country" points in Louisiana,
Texas, Oklahoma, Kansas and Colorado to Alaska,
the company and Continental Airlines sought Civil
Aeronautics Board approval of an equipment inter-
change between these major oil development areas.
Details of the proposal are found in the Regulatory
Matters section of this report.
Leisure activity markets - skiing , golf, tennis, fish-
ing, scuba diving , hunting , camping and bicycling-
also received increased attention during the year.
Special emphasis was placed on skiing because of
the sport's rapid growth and the large number of
winter sports areas served by Western . Backing up a
" Whoosh 'n Schuss" campaign were special week-
end " Skibird " charter flights from San Francisco to
gateway airports for Sun Valley, Idaho, and Aspen ,
Colorado, areas.
" Acapulco, Do It Now," a summer vacation pro-
gram conce ived by Western and carried out in
cooperat ion with lead ing hotels to increase off-
season business to the Mexican resort, produced
summer traffic increases for the third consecutive
year.
As the only airline flying between
California and Alaska, Western expects
to play an active role in the movement
of passengers and cargo that will be
involved in the construction of the
Trans-Alaska pipeline.
14
Western's recently expanded TRAVELCARD credit
plan showed a 45 percent increase over its 1972
level of activity. In 1973, sales on all credit plans
represented 29 percent of total passenger sales.
Management Changes
Elected to the board of directors at the board's
October meeting was Miguel M. Blasquez, Mexico
City businessman. Mr. Blasquez is the first Mexican
national to be elected to the company's board of
directors.
At its first meeting of 1973, the board elected
Arthur F. Kelly, a veteran of 35 years with the com-
pany, president and chief executive officer to suc-
ceed J. Judson Taylor, who was elected vice
chairman. Dominic P. Renda, who rejoined Western
on January 1, 1973, as executive vice president, also
was elected to the board at the January meeting.
Effective January 1, 197 4, his responsibilities were
expanded to include supervision of the day-to-day
activities of the company's four operating divisions.
Other officers elected during the year were: Robert
O. Kinsey, vice president-corporate planning from
vice president and assistant to the president; Charles
S. Fisher, vice president-schedule planning from
assistant vice president; H. S. Gray, vice president-
financial planning from assistant treasurer; Dan A.
Zaich, vice president-labor relations from assistant
vice president; Carl M. Anderson, assistant vice presi-
dent-economic planning from director of research
PASSENGER MILES VS SEAT MILES
Millions

Seat Miles

Passenger Miles
9.839
1969 1970 1971 1972
11 .175
1973
and analysis; John Good, assistant vice president-
marketing for cargo sales and service from director;
and Robert V. Johnson, assistant vice president-flight
operations from director of flight.
Scheduled to retire on March 31, 197 4, is J. Judson
Taylor, who was elected vice chairman in January
1973 after serving as president and chief executive
officer since October 1969. He joined the company
in 1942 and had served as the company's chief finan-
cial officer prior to being elected president.
Stanley R. Shatto, former board member and
senior officer, concluded a 44-year airline career on
December 31, 1973, when he retired after 26 years
with Western.
Personnel
As of December 31, Western had 9,875 employees,
compared to 9,676 at the end of 1972. The year-end
total, which included 330 part-time employees, repre-
sents a decrease of 142 employees from the year's
peak level of 10,017 employees and a reduction of
121 from the number at the end of September, just
prior to the fuel shortage. The number of employees
was further reduced to 9,706 at the end of January
1974 and to 9,585 at the end of February, including
378 part-time employees.
Wages and salaries for 1973 amounted to
$141,016,000, compared to $126,618,000 in the pre-
vious year. Company contributions to Social Security,
group insurance and employee retirement plans
increased 17.8 percent, from $20,664,000 for 1972
to $24,347,000 for 1973.
Approximately 85 percent of the company's
employees are represented by labor unions. Follow-
ing is the contractual status for each group of these
employees:
No. of
Employee Employees Contract Open
Group 12/31 /73 Union for Amendment
Mechanics and 1,859 IBT November 16, 1973
Related Employees (In mediation on
date of this report.)
Stock Clerks 116 IBT November 16, 1973
(In mediation on
date of this report.)
Flight Attendants 1,299 ALPA April 1, 1974
Clerical, Office, Fleet 3,764 BRAG May 1, 1974
& Passenger Service (pay and vacation)
April 1, 1975
(contract)
Pilots 1,257 ALPA September 1, 1975
Dispatchers 40 TWU November 1, 1975
15
Ten Years of Growth
Financial 1973/1972 1973 1972 1971 1970 19696 1968 1967 19665 1965 1964
Revenues: 8
Passenger + 10.8% $ 379,824 342,851 295,807 274,792 220,530 205,753 178,527 164,186 129,704 121,928
Cargo . + 10.7 23,040 20,819 20,231 18,745 16,472 13,459 11,802 11,103 9,126 8,859
Other (net of mutual aid payments)5 11,852 ~ 9,557 4,572 3,350 2,741 2,153 1,895 1,768 2,095
Total Revenues . + 13.4 414,716 365,663 325,595 298,109 240,352 221,953 192,482 177,184 140,598 132,882
Operating Expenses:8
Depreciation and amortization + 5.7 38,304 36,224 35,144 36,583 34,821 25,051 20,085 15,779 14,676 12,980
Payroll + 11.4 141,016 126,618 111,584 100,629 87,495 71,885 57,975 47,350 38,731 34,500
Other + 9.0 195,274 179,214 162,561 149,086 130,437 105,335 89,082 77,708 62,391 57,650
Total Operating Expenses + 9.5 374,594 342,056 309,289 286,298 252,753 202,271 167,142 140,837 115,798 105,130
Operating Income (Loss)8 + 70.0 40,122 23,607 16,306 11,811 (12,401 ) 19,682 25,340 36,347 24,800 27,752
Interest expense, net of amounts capitalized8 + 2.6 (9,016) (8,787) (11,162) (14,586) (14.748) (6,536) (3,011) (3,239) (2,553) (2,491)
Other Income and Expenses- Net8 + 55.0 4,180 2,696 4,463 1,120 (125) 15 17 775 1,946 783
Earni ngs (loss) before taxes on incomes . +1 01.5 35,286 17,516 9,607 (1,655) (27,274) 13,161 22,346 33,883 24,193 26,044
Taxes on Income (Tax Credits)8 +136.5 14,900 6,300 ~ (2,250) (15,075) 4,725 10,125 15,558 11,147 12,493
Net Earnings (Loss)s + 81 .8 $ 20,386 ~ 6,4576 595 (12,199) 8,436 12,221 18,325 13,046 13,551
Earnings per share2
,
3
Primary $ 1.39 0.77 0.44 0.04 (0.84) 0.58 0.85 1.28 0.91 0.94
Fully diluted . 1.24 0.70 0.42 0.04 (0.84) 0.55
Return on investment7 % 11 .0 6.35 5.93 5.22 0.71 6.54 10.28 16.28 15.37 18.72
Cash dividends paid per share4 $ 0.242 0.08 _2 0.17 0.34 0.34 0.34 0.27 0.22
Shares outstanding-adjusted2,s . 14,619 14,618 14,584 14,580 14,580 14,573 14,549 14,376 14,349 14,349
Shareholders' equity-totals + 17.5 $ 113,652 96,723 86,397 79,905 79,310 93,862 90,016 81.750 67,361 57,748
Shareholders' equity per share2 7.77 6.62 5.92 5.48 5.44 6.44 6.19 5.69 4.69 4.02
Working capitals 66.3 6,931 20,592 53,207 35,238 20,447 25,764 19,585 18,047 11 ,522 8,274
Long-term debts 4.7 124,387 130,487 152,040 174,184 197,150 183,718 80,189 54,867 47,411 33,938
Property and equipment-nets . + 12.7 269,374 239,029 216,738 247,426 285,757 284,787 183,106 145,771 124,096 99,928
Total assetss + 10.2 377,457 342,531 340,352 355,168 367,588 349,039 231,342 192,008 157,973 138,335
Operations
Airplanes operated at end of year:
McDonnell Douglas DC-10 4
Boeing 727-200 11 11 6 6 6
Boeing 737 29 30 30 30 30 17
Boeing 707-300C 5 5 5 5 5 5
Boeing 720-B 25 25 25 26 26 27 27 22 18 12
Other 4 5 11 15 24 26 26 35
Airplane miles flown. + 4.1 94,676 90,925 86,425 86,298 72,650 60,125 51,692 42,830 36,554 36,746
Available ton miless + 8.9 1,447,442 1,328,871 1,266,130 1,266,124 1,077,657 891,001 728,200 585,378 483,033 450,856
Revenue ton miles5,s. + 7.1 724,083 675,825 598,448 584,554 448,420 418,856 360,791 314,137 244,588 231,303
Available seat miles8
+ 8.5 11,175,518 10,300,178 9,776,869 9,839,299 8,509,441 7,096,229 5,879,442 4,800,901 4,016,921 3,794,648
Revenue passenger miles5
,
s + 8.0 6,476,087 5,995,925 5,251,989 5,159,081 4,021,296 3,841,864 3,327,160 2,898,088 2,243,695 2,124,582
Cargo revenue ton miless + 0.3 76,474 76,233 73,249 68,646 60,514 47,446 38,940 33,070 26,435 24,625
Passengers carried5

s . + 6.5 7,382 6,931 6,206 6,188 5,752 5,693 5,108 4,701 3,808 3,717
Cargo tons carried + 0.2 75,793 75,649 77,731 73,140 66,107 58,129 48,579 42,714 33,511 30,956
Passenger load factor-actual . 0.3 pts % 57.9 58 .2 53.7 52.4 47 .3 54.1 56.6 60.4 55.9 56.0
- breakeven point 2.1 pts % 52.3 54.4 52.2 52.7 53.1 50.7 49.5 47.9 46.2 44.4
Average length in miles per passenger trip + 1.4% 877 865 846 834 699 675 651 616 589 572
Operating expenses per available seat mile + 1.0 $ .0335 .0332 .0316 .0291 .0297 .0285 .0284 .0293 .0288 .0277
Average revenue per revenue passenger mile + 3.3 $ .0597 .0578 .0577 .0542 .0551 .0537 .0537 .0567 .0578 .0574
Employees at end of year + 2.1 9,875 9,676 9,039 8,830 9,225 8,919 7,282 6,294 5,068 4,719
1AII financial data in this report give effect, retroactively throughout the 3Based on the weighted average number of shares outstanding during the give retroactive effect to stock splits and stock dividends, and do not were partially suspended during the fourth quarter of 1973.
periods prior to 1968, to the merger of Pacific Nort hern Airlines, Inc. respective periods, adjusted to give retroactive effect to stock splits, include equivalent Pacific Northern shares for periods prior to January 1967. Western's operations were suspended from July 29 to August 16, 1969.
into Western on July 1, 1967, which was accounted for as a stock dividends (including the 1974 dividend}, and the equivalent 5Operations of other carriers were substantially suspended from 6lncludes $560,000 from the involuntary conversion of an aircraft.
pooling of interests. outstanding shares of Pacific Northern. November 5 to December 18, 1973; June 30 to October 2, 1972; 7The methodology used to compute the rate of return is essentially that
2Stock dividends were: 5% in 1974, 3% in 1973 and 10% in 1971. 4Cash dividends per share are stated on the basis of the company's December 15, 1971 to April 10, 1972; July 8 to December 14, 1970; and used by the CAB.
Stock splits were: 2 for 1 in 1972 and 3 for 1 in 1964. shares outstanding on dates such dividends were declared , adjusted to July 8 to August 19, 1966. Operations of a competing intrastate carrier 8000s omitted.
16 17
Balance Sheet
Western Air Lines, Inc.
December 31, 1973 and 1972
(in thousands of dollars)
ASSETS
Current Assets:
Cash .
Certificates of deposit
Short-term securities (at amortized cost, including accrued
interest, which approximates market)
Receivables (net of allowance for doubtful accounts of
$595 in 1973 and $475 in 1972)
Flight equipment expendable parts, at average cost less allowance
for obsolescence of $7,126 in 1973 and $5,371 in 1972 (Note 1)
Prepaid expenses .
Total current assets .
Properties and Equipment at Cost ( Notes 1, 4 and 9):
Flight equipment .
Ground equipment
Deposits on aircraft purchase contracts
Less allowance for depreciation and amortization (including
reserves for overhauls of flight equipment of $11,500 in 1973
and $18,164 in 1972) .
Deferred Charges and Other Assets:
Flight equipment not used in operations
Preoperating costs related to McDonnell Douglas DC-10
aircraft (Note 1)
Other items .
See accompanying Notes to Financial Statements.
18
1973 1972 Change
$ 10,527 $ 10,506 + 0.2%
4,333 19,502 77.8
32,761 25,374 + 29.1
47,621 55,382 14.0
36,024 28,760 + 25.3
13,497 10,456 + 29.1
4,941 4,332 + 14.1
102,083 98,930 + 3.2
414,911 363,957 + 14.0
71 ,693 63,604 + 12.7
23,251 24,772 6.1
509,855 452,333 + 12.7
240,481 213,304 + 12.7
269,374 239,029 + 12.7
354 2,952 - 88.0
1,858
3,788 1,620 +133.8
6,000 4,572 + 31 .2
$377,457 $342,531 + 10.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities :
Accounts payable
Accrued salaries, wages and vacation benefits
Accrued liabil ities
Accrued income taxes
Advance ticket sales .
Current maturities of long-term debt (Note 3) .
Total current liabilities .
Long -Term Debt (Note 3) .
Deferred Credits (Notes 1 and 2) :
Deferred federal taxes on income
Unamortized investment tax credits
Reserves for overhauls of leased fl ight equipment (Note 9)
Other.
Shareholders' Equity (Notes 3, 6 and 8):
Common stock-$1.00 par value per share
Authorized 25,000,000 shares
Issued 13,927,000 and 13,521 ,000 shares .
Capital in excess of par value .
Retained earnings
Commitments and Contingent Liabilities (Note 4).
1973
$ 26,009
17,466
11 ,026
10,641
8,547
21,463
95,152
124,387
24,729
14,329
1,099
4,109
44,266
13,927
26,468
73,257
113,652
$377,457
1972
$ 20,726
15,550
7,459
6,297
6,843
21,463
78,338
130,487
19,033
12,596
1,707
3,647
36,983
13,521
21,951
61,251
96,723
$342,531
Change
+25.5%
+12.3
+47.8
+69.0
+24.9
+21.5
- 4.7
+29.9
+13.8
- 35.6
+ 12.7
+19.7
+ 3.0
+20.6
+19.6
+17.5
+10.2
19
Statement of Earnings
For the years ended December 31, 1973 and 1972
(in thousands of dollars)
Operating Revenues:
Passenger
Cargo
Other . .
Mutual aid payments (Note 7) .
Operating Expenses:
Flying operations .
Maintenance (Note 9)
Passenger service
Aircraft and traffic servicing
Marketing and administrative
Depreciation and amortization (Notes 1 and 9)
Operating income
Other Income (Expense):
Interest expense . . .
Interest capitalized (Note 1)
Interest income . . . .
Gain on disposal of property and equipment
Other- net . . . . . . . . .
Earn ings before taxes on income .
Taxes on income (Notes 1 and 2)
Net earnings . . . . .
Net earn ings per share (Note 10):
Primary . . . . . . . . . . . . . . . .
Fully diluted (assuming conversion of the debentures) .
See accompanying Notes to Financial Statements.
20
1973
$379,824
23,040
13,722
(1,870)
414,716
103,790
38,651
42,444
75,619
75,786
38,304
374,594
40,122
(10,505)
1,489
3,186
945
49
(4,836)
35,286
14,900
$ 20,386
$ 1.39
1.24
1972 Change
$342,851 + 10.8%
20,819 + 10.7
7,174 + 91 .3
(5,181) 63.9
365,663 + 13.4
91,213 + 13.8
37,102 + 4.2
40,964 + 3.6
69,390 + 9.0
67,163 + 12.8
36,224 + 5.7
342,056 + 9.5
23,607 + 70.0
(10,240) + 2.6
1,453 + 2.5
2,832 + 12.5
582 + 62.4
(718)
(6,091) 20.6
17,516 + 101 .5
6,300 +136.5
$ 11,216 + 81.8
$ 0.77
0.70
Statement of Changes in Financial Position
For the years ended December 31, 1973 and 1972
(in thousands of dollars)
Sources of Working Capital:
Net earnings . . . . . . . . . . . . . . . . . . . . .
Add back charges (credits) which did not affect working capital:
Depreciation, amortization and provision for overhauls (Notes 1 and 9) .
Taxes (Notes 1 and 2):
Deferred federal income taxes . . . . . . . . .
Investment credits applied and deferred to future periods
Amortization of investment credits . . .
Gain on disposal of property and equipment .
Total from operations . . . . . .
Proceeds from disposal of property and equipment
Proceeds from issuance of long-term debt
Purchase deposits reimbursed upon lease of equipment .
Exercise of stock options . . . . . . .
Other . . . . . . . . . . . .
Total sources of working capital .
Applications of Working Capital :
Cash dividends . . . . . .
Purchases of property and equipment, net of deposits previously made
Deposits on aircraft purchase contracts (Notes 1 and 4) . . .
Transfers of long-term debt to current liabilities . . . . . .
Preoperating costs related to McDonnell Douglas DC-1 O aircraft
Total applications of working capital
Net decrease . . . . . . . .
Balances of Working Capital :
At beginning of year . .
At end of year (Note 3) . .
Summary of Changes in Working Capital:
Increases
Receivables
Inventories and prepaid expenses
Decreases
Cash, certificates of deposit and short-term securities .
Accounts payable, advance ticket sales, accrued and
other current liabilities
Net decrease .
See accompanying Notes to Financial Statements.
1973 1972
$ 20,386 $11 ,216
29,436 35,254
4,050 (3,275)
5,800 5,500
(2,425) (2,300)
(945) (582)
56,302 45,813
5,615 1,689
15,362
12,125
5 236
(1,788) 1,523
87,621 49,261
3,462 1,217
63,676 36,403
10,604 22,793
21,463 21,463
2,077
101 ,282 81 ,876
(13,661) (32,615)
20,592 53,207
$ 6,931 $ 20,592
$ 7,264 $ 5,817
3,650 (367)
10,914 5,450
7,761 25,642
16,814 12,423
24,575 38,065
$ (13,661) $ (32,615)
21
Statement of Shareholders' Equity
For the years ended December 31, 1973 and 1972
(in thousands of dollars)
Common Stock
$1.00
Par Value
Balance at December 31, 1971 $ 5,395
Exercise of stock options 16
Conversion of debentures 3
2 for 1 stock split (Note 8) 8,107
Net earnings
Cash dividends ($0.08 per share) .
Balance at December 31 , 1972 13,521
Exercise of stock options 1
3% stock dividend (Note 8) . 405
Net earnings
Cash dividends ($0.24 per share) .
Balance at December 31, 1973 (Notes 3 and 8) $13,927
See accompanying Notes to Financial Statements.
Notes to Financial Statements
(All dollar amounts except amounts per share are expressed in thousands.)
Note 1. Summary of Significant Accounting Policies.
Capital In
Excess of
Par Value
$29,750
220
88
(8,107)
21,951
4
4,513
$26,468
Retained
Earnin s
$51 ,252
11,216
(1,217)
61,251
(4,918)
20,386
(3,462)
$73,257
Shareholders'
E ulty
$ 86,397
236
91
11,216
(1,217)
96,723
5
20,386
(3,462)
$113,652
a. Depreciation Method: Depreciation is provided by allocating costs of property and equipment, exclusive of
estimated residual values, over estimated useful lives by using the straight-line method . See Note 9 for estimated
useful lives.
b. Preoperating Costs: When new types of aircraft are introduced, major costs, principally related to training ,
necessary to put new aircraft into service are deferred and amortized during the estimated periods to be benefited
(five years for McDonnell Douglas DC-10 aircraft) .
c. Reserves for Overhauls of Flight Equipment: The estimated future costs of airframe and engine overhauls
are provided for by charges to maintenance expense based on hours flown.
d. Interest Capitalized: Interest related to deposits on aircraft purchase contracts with manufacturers is capital-
ized and amortized over the useful lives of the equipment.
e. Investment Tax Credits: Investment tax credits generated by acquisitions of assets to the extent used to
reduce current and/or deferred taxes are amortized to income over the useful lives of the related assets.
f. Obsolescence of Expendable Parts: An allowance for obsolescence of flight equipment expendable parts
is accrued over the useful lives of the related aircraft types.
Note 2. Taxes on Income: Income taxes are summarized as follows:
Current income taxes
Federal .
State .
Deferred federal income taxes (credit) .
Investment credits applied and deferred to future periods
Amortization of investment credits .
1973
$ 5,775
1,700
4,050
5,800
(2,425)
$14,900
1972
$ 5,300
1,075
(3,275)
5,500
(2,300)
$ 6,300
Deferred income taxes arise from timing differences between financial and tax reporting. The tax effects of these
differences follow: 1973 1972
Depreciation . $ 539 $ (3,062)
Overhauls of flight equipment 3,446 594
Preoperating expense 892 (69)
Interest capitalized 62 647
Pension plans . (520) (1,337)
Other (369) (48)
$ 4,050 $ (3,275)
22
Investment credits unapplied on tax returns amounted to $12,787 at December 31, 1973 ($14,434-1972) with
$2,426 expiring in 1978, $6,204 expiring in 1979 and $4,157 expiring in 1980.
Of the $14,329 unamortized investment credit balance at December 31, 1973 ($12,596-1972), $4,935 ($3,000-
1972) remains from investment credits utilized by reduction of taxes paid and $9,394 ($9,596-1972) is related to
investment credits not yet utilized for reduction of taxes paid.
A reconciliation between the amount computed by multiplying earnings before taxes by a tax rate of 48% and the
amount of reported taxes on income follows:
1973 1972
% of Earnings % of Earnings
Amount before taxes Amount before taxes
Taxes on income at 48% $16,937 48.0% $ 8,408 48.0%
Increases (reductions) in taxes
resulting from:
Amortization of investment credits . (2,425) (6.9) (2,300) (13.1)
State income taxes net of federal
income tax benefit 884 2.5 559 3.2
Other (496) (1.4) (367) (2.1)
Taxes on income . $14,900 42.2% $ 6,300 36.0%
The federal income tax returns for 1968, 1969 and 1 970 are being examined by the Internal Revenue Service.
Note 3. Long-term Debt (Unsecured): At December 31 , 1973 and 1972 long-term debt was as follows:
1973 1972
Senior Debt:
Installment note due December 31, 1975 with quarterly principal
payments of $4,865. The interest rate is % over the bank's
prime commercial rate . . . . . . . . . . . .
5 % installment notes due September 1, 1981 with annual
principal payments of $1,000 from September 1, 1973 which
will increase to $4,000 a year starting in 1976 . . . . .
6%% installment notes due September 1, 1984 with annual
principal payments of $1,000 from September 1, 1973 which
will increase to $2,000 a year starting in 1975 and further
increase to $7,000 a year starting in 1982 . . . .
8 % installment notes due November 16, 1985 with
quarterly principal payments of $768 starting in 1981
Less current maturities . . . . . . . . .
Subordinated Debt:
5 % convertible subordinated debentures due
February 1, 1993, with sinking fund payments of $1,500
a year starting in 1979 . . . . . . . . . . .
$ 38,926
26,000
36,000
15,362
116,288
21,463
94,825
29,562
$124,387
$ 58,388
27,000
37,000
122,388
21,463
100,925
29,562
$130,487
Under an amended agreement with a bank, additional borrowings of $65,000 are available on a revolving basis
until June 30, 1974, at which time the amount then outstanding, which may be all or part of the $65,000, may be
converted by Western into a term note due June 30, 1979, payable in substantially equal quarterly installments
commencing March 31, 1976. The commitment fee on the unused portion is % per annum. The interest rate is,
and will be, % over the bank's prime commercial lending rate until the conversion to the term note, when it will
become % over the bank's prime commercial lending rate for the duration of the loan.
The following schedule shows the amount of long-term debt maturing in each of the five following calendar years
(assuming that all of the $65,000, none of which is currently outstanding, will be converted into a long-term note):
1974 $21,463
1975 22,463
1976 25,460
1977 25,460
1978 25,460
The financial agreements related to the senior debt provide conditions and requirements which restrict retained
earnings from which cash dividend distributions can be made and that Western will not permit its working capital,
computed in accordance with certain instructions, to be less than the greater of $13,500 or a sum equal to 5% of its
cash operating expenses for the preceding twelve-month period. Other provisions include, among other things,
23
restrictions on additional borrowings. In addition, the Indenture for the Debentures provides, among other things,
a requirement restricting retained earnings from which cash dividend distributions can be made. The most restric-
tive of these requirements limited amounts available for cash dividend distribution to approximately $7,551 at
December 31, 1973 ($10,387- 1972).
At December 31, 1973, 2,279,000 shares of common stock were reserved for conversion of debentures (2,393,000
shares at a conversion price of $12.35 per share after giving effect to the 5% stock dividend declared on January
21 , 1974).
Note 4. Commitments and Contingent Liabilities:
Total rental expense was $12,855 for 1973 ($10,410 for 1972). Rental expense for noncapitalized " financing"
leases was $7,861 for 1973 ($6,338 for 1972). For purposes of these disclosures, a "financing" lease is one which,
during the noncancelable lease period, either (i) covers 75% or more of the economic life of the property or
(ii) has terms which assure the lessor a full recovery of the fair market value of the property at the inception of the
lease, plus a reasonable return on his investment.
At December 31, 1973 minimum rental expense under all noncancelable leases expiring after December 31, 197 4
is as follows:
Totals
Annually Flight Eguipment Airport Facilities Other Facilities Financing Leases All Other Leases
1974 $ 7,243 $ 4,295 $ 932 $ 9,421 $ 3,049
1975 7,243 4,129 876 9,421 2,827
1976 7,243 3,895 791 9,421 2,508
1977 7,243 3,720 718 9,421 2,260
1978 7,243 3,433 582 9,421 1,837
Five-year Periods
1979-1983 36,215 15,429 1,792 46,913 6,523
1984-1988 18,663 14,128 28 29,028 3,791
1989-1993 7,783 7,935 13,618 2,100
Thereafter
1994-2007 6,975 6,666 309
Flight equipment leases are for six Boeing 727-200 aircraft acquired in 1969 under a lease expiring in 1984 and
two McDonnell Douglas DC-10 aircraft acquired in June 1973 under a lease expiring in 1991 . The rental expense
for DC-10 aircraft included in the above tabulation is normalized on a straight-line basis because required cash
payments are not level throughout the term of the lease. During the five-year period 197 4-1978 cash payments
under flight equipment leases will total $3,521 less than the expense amounts shown above.
The present values, in the aggregate and by major categories, of minimum lease commitments, applicable to
noncapitalized " financing " leases at December 31 , 1973 and 1972 were as follows:
Present Values
1973 1972
Flight Equipment $53,594 $28,496
Term inal Facilities . 12,886 13,245
Hangar and Other Facilities 11 ,557 11 ,871
$78,037 $53,612
Interest Rates Used in
Computations
Weighted Average Range
1973 1972 1973
9.6% 10.0% 8.4-10.0%
6.6 6.6 6.0- 7.5
5.8 5.8 3.7- 8.6
1972
10.0%
6.0-7.5
3.7-8.6
If (for purposes of disclosure required by regulations of the Securities and Exchange Commission) (i) all of the
above " financing " leases were capitalized, (ii) the related property rights were amortized on a straight-line basis,
and (iii) interest costs were accrued on the basis of the outstand ing present value lease commitments, amortization
would have been $3,832 and interest would have been $5,452 for 1973 ($3,104 and $4,517 respectively, for 1972).
Therefore, net earnings for 1973 would have been reduced by $644 or $0.04 per share (primary) and $615 or
$0.04 per share (primary) for 1972.
The interest rates used in these computations are based on the interest rates of the underlying debt.
At December 31 , 1973 Western had on order seven Boeing 727-200 aircraft and two McDonnell Douglas DC-10
aircraft. The Boeing 727-200 aircraft are scheduled for delivery in March, April (2), May (2), June and July 197 4
at a total purchase price, including related spares and two spare engines, estimated to be $58,000, of which
approximately $14,200 had been paid in advance deposits. The DC-1 O aircraft are scheduled for delivery in May
197 4 and June 1975 at a total purchase price, including spare parts and three engine modules, estimated to be
$46,000, but which could exceed such amount since the purchase price is based upon a formula which provides
for escalation. Approximately $8,700 had been paid in advance deposits on the DC-1 O aircraft.
24
Western also had outstanding commitments for fl ight equipment modifications which amounted to approximately
$6,800 and for ground facilities and equipment which amounted to approximately $3,700. A long-term lease of
a DC-10 hangar and an employee parking structure, which together will cost approximately $11,000 and are now
under construction at the Los Angeles International Airport, is being finali zed .
At December 31, 1973, various legal actions were pending against the City of Los Angeles (damages sought
are reported by the City to involve an aggregate more than three billion dollars) and various actions and cross
actions were pendi ng against Western and other airlines alleging excessive aircraft noise in the vicinity of the 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. In three such actions
against the City of Los Angeles, judgments (one of which is being appealed) have been entered against the City
for damages aggregating $1 .25 million to approximately 600 property owners on the theory of inverse condem-
nation. In another action wherein the plai ntiff was awarded judgment against the City for fourteen thousand
dollars, the trial court decided in favor of the airline cross-defendants on the issue of indemnification and the City
has appealed such ru ling.
Note 5. Retirement Plans: Retirement plans cover all classes of employees except mechanics and related
employees who are covered by a union-sponsored plan toward which the company makes monthly contributions.
Costs of company-sponsored plans are funded annually as benefits accrue. Actuarial gains and losses and costs
of changes in benefits are amortized over ten-year periods. The cost of retirement plans charged to operating
expense amounted to $11 ,572 in 1973 and $9,622 in 1972. The additional costs in 1973 were caused primarily by
increased payrolls, enrollments and benefits. Western 's actuaries are of the opinion that the assets under the
plans exceed the related liabilities for the accrued vested benefits.
Note 6. Stock Options: The qualified stock option plan adopted in 1964 for officers is summarized as follows
(adjusted for stock splits and stock dividends, includ ing the five percent 197 4 stock dividend) :
Granted
Exercised
Exercisable at end of year
Outstanding at end of year
Shares
76,384
433
310,291
402,759
1973 1972
Average per share
$11 .21
8.68
9.32
9.77
Shares
18,251
26,819
191 ,914
326,810
Average per share
$14.48
8.81
9.18
9.43
An additional 119,768 shares were reserved at December 31 , 1973 for the issuance of add itional options. However,
no options may be granted under-this plan after March 31 , 1974.
Subject to the approval of the shareholders, the board of directors on January 21 , 197 4 adopted the 197 4 Stock
Option Plan (nonqualified) for elected officers and key personnel and granted options for 302 ,000 shares. The
number of shares to be reserved under the plan is 1,000,000.
Note 7. Mutual Aid Agreement. Western is a party to the Mutual Aid Agreement wh ich provides for fin ancial aid
in the event that any of the participating carriers is forced to suspend operations because of certain types of
strikes. Operations of a trunk carrier were suspended from November 5 to December 18, 1973. Operations of
competing carriers were substantially suspended from June 30 to October 2, 1972, and from January 1 to April
10, 1972. These carriers were parties to this agreement.
Note 8. Stock Split and Stock Dividends: On September 13, 1972, the authorized capital stock was increased
from 10,000,000 to 25,000,000 shares and a two and one-half for one stock spl it was effected . On April 10, 1973
a three percent stock dividend was paid. On January 21 , 197 4 a five percent stock dividend was declared payable
on March 20, 197 4 to shareholders of record on February 20, 197 4. The dividend wi ll be recorded in 197 4 by a
charge to retained earnings of $6,528. For the 692,000 additional shares to be issued , common stock will be
credited by $692 and capital in excess of par value will be cred ited by $5,794. Cash in the amount of $42 will be
paid in lieu of issuing fractional shares.
Note 9. Depreciation and Amortization: The estimated useful lives over wh ich costs of operati ng property
and equipment are amortized are as follows : for the two McDonnell Douglas DC-10 aircraft acquired in 1973,
16 years to a residual value of 10% ; for the five Boeing 707-320 aircraft acquired in 1968, the twenty-nine
Boeing 737-200 aircraft acquired in 1968 and 1969, and the five Boeing 727 aircraft acqu ired in 1972, 12 years
to a residual value of 15%; for the seventeen Boeing 7208 aircraft acqu ired du ring 1961 to 1965, 10 to 15 years
to become depreciated to residual values of $100 per aircraft on December 31, 1975; and for the eight Boeing
7208 aircraft acquired in 1966 and 1967, 1 O years to a residual value of $100 per aircraft. For ground equipment
the useful lives range from four to ten years. For buildings and improvements on leased property the estimated
useful lives are generally the periods of the leases.
The costs of airframe and engine overhauls for flight equipment are charged to the reserves for overhauls of fl ight
equipment. Improved engine overhaul practices were implemented late in 1972 by converting from a comp lete
25
overhaul every 8,400 hours for engines on Boeing 727-200 and 737-200 aircraft and every 15,200 hours for
engines on Boeing 707-320 and 720B aircraft to a scheduled maintenance visit with regular inspection and over-
haul as needed, every 6,000 hours for 727 and 737 engines and every 8,000 hours for 707 and 720B engines. As
a result, engine maintenance reserves (substantially all of which were accrued in prior years under the former
overhaul program) were reduced based on revised estimates of costs. Reserves in excess of these revised
estimates, amounting to $7,900 ($3,950 or $0.27 per share (primary) after taxes), were applied to reduce mainte-
nance expense during 1973.
Note 10. Earnings per Share: Earnings per common share are based on the weighted average number of shares
of common stock outstanding during the respective periods adjusted when appropriate to give retroactive effect
to stock splits and stock dividends including the 5% stock dividend declared on January 21, 1974. Earnings per
common share assuming dilution from conversion of the debentures are calculated as if the debentures were
converted at the beginning of the period with related adjustments to interest and income tax expense. Outstanding
stock options have no material dilutive effect on earnings per common share.
Accountants' Report
26
PEAT, MARWICK, MITCHELL & Co.
CERTIFIED PUBLIC ACCOUNTANTS
555 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
The Board of Directors
Western Air Lines, Inc.:
We have examined the balance sheet of Western Air Lines, Inc. as of December 31, 1973
and 1972 and the related statements of earnings, shareholders' equity, and changes in
financial position for the respective 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, the aforementioned financial statements present fairly the financial posi-
tion of Western Air Lines, Inc. at December 31, 1973 and 1972, and the results of its
operations and changes in its shareholders' equity and financial position for the respec-
tive years then ended in conformity with generally accepted accounting principles
applied on a consistent basis.
Los Angeles, California
February 25, 197 4
Board of Directors
James D. Aljian
Senior Vice President-Finance, Metro-Goldwyn-Mayer Inc., Culver City, California
Fred Benninger
Chairman of the Board, Western Air Lines, Inc., Los Angeles, California
Chairman of the Board, Metro-Goldwyn-Mayer Inc., Culver City, California
Chairman of the Board, MGM Grand Hotel, Inc., Las Vegas, Nevada
Miguel M. Blasquez
President, Blamsco, S.A., Bia, S.A., and Maic, S.A., Mexico, D.F.
Hugh W. Darling
Senior Partner, 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
Actor-Producer, Beverly Hills, California
Director and Executive, Faberge, Inc., New York, New York
Walter J. Hickel
Chairman of the Board, Hickel Investment Company, Anchorage, Alaska
Arthur F. Kelly
President and Chief Executive Officer, Western Air Lines, Inc., Los Angeles, California
Peter M. Kennedy
Chairman of the Board, Dominick & Dominick, Inc., New York, New York
Kirk Kerkorian
Vice Chairman of the Board and Chief Executive Officer, Metro-Goldwyn-Mayer Inc.
Sole Proprietor, Tracinda Investment Company, Culver City, California
Arthur G. Linkletter
Radio and Television Performer
Chairman of the Board, Linkletter Enterprises, Inc., Irvine, California
Dominic P. Renda
Executive Vice President, Western Air Lines, Inc., Los Angeles, California
Walter M. Sharp
President, Community Bank, Huntington Park, Cal ifornia
William Singleton
Attorney-at-Law, Beckley, Singleton, Delanoy & Jemison, Chtd. , Las Vegas, Nevada
J. Judson Taylor
Vice Chairman of the Board, Western Air Lines, Inc., Los Angeles, California
Vernon 0. Underwood
President, Young's Market Company, Inc .. Los Angeles, California
Harry J. Volk
Chairman, Union Bancorp., Inc., Los Angeles, California
Chairman, Union Bank, Los Angeles, California
Arthur G. Woodley
Bellevue, Washington
Dr. Donald H. McLaughlin
Chairman of the Board, Homestake Mining Company, San Francisco, California
Edwin W. Pauley
Chairman of the Board, Pauley Petroleum, Inc., Los Angeles, California
John M. Wallace
Walker Bank & Trust Company, Salt Lake City, Utah
Sidney F. Woodbury
President, Pine Street Company, Portland, Oregon
Richard W. Wright
President, Mountain States Employers Council , Inc., Denver, Colorado
27
Corporate Officers
Fred Benninger, Chairman of the Board
Arthur F. Kelly, President and Chief Executive Officer
J. Judson Taylor, Vice Chairman of the Board
Dominic P. Renda, Executive Vice President
Charles J. J. Cox, Senior Vice President-Finance
Arthur F. Gardner, Senior Vice President-Operations
Philip E. Peirce, Senior Vice President-Marketing
Ray Silvius, Vice President-Corporate Affairs and Assistant to the President
Administration Division
Dominic P. Renda, Executive Vice President
Gerald P. O'Grady, Senior Vice President-Legal and Secretary
Robert 0. Kinsey, Vice President-Corporate Planning
Charles S. Fisher, Vice President-Schedule Planning
H. S. Gray, Vice President-Financial Planning
Lawrence H. Lee, Vice President- Industrial Relations
Dan A. Zaich, Vice President-Labor Relations
Jack M. Slichter, Vice President-Government and Industry Affairs
Henry M. deButts, Vice President-Washington, D. C.
Carl M. Anderson, Assistant Vice President-Economic Planning
Thomas J. Greene, Assistant Secretary
Neil S. Stewart, Assistant Vice President-Government Affairs
Ray M. Waters, Assistant Vice President-Alaska Projects
Finance Division
Charles J. J. Cox, Senior Vice President-Finance
Richard 0. Hammond, Vice President and Treasurer
Roderick G. Leith, Vice President and Controller
Jack P. Maginnis, Vice President-Procurement
Eugene D. Olson, Vice President-Data Processing and Systems
Marketing Division
Philip E. Peirce, Senior Vice President-Marketing
Willis R. Balfour, Vice President-Marketing, Passenger Sales
Robert Leinster, Vice President-Marketing, Passenger Services
Bert D. Lynn, Vice President-Marketing, Advertising and Sales Promotion
J. S. Neel, Vice President-Marketing, Pacific Rim Division
Harry L. White, Vice President-Marketing, Central-Hawaii Division
Luis Pasquel, Vice President-Sales and Service, Mexico
John I. Good, Assistant Vice President-Marketing, Cargo Sales and Service
David E. Holt, Assistant Vice President-Marketing for Travel Agency and Vacation Sales
S. J. Rogers, Assistant Vice President-Marketing, Pricing/Budget
Operations Division
Arthur F. Gardner, Senior Vice President-Operations
Anton 8. Favero, Senior Vice President-Maintenance
Richard B. Ault, Vice President-Engineering
Harold W. Caward, Vice President-Flight Operations
Peter P. Wolf, Vice President-Communications
Joseph M. Fogarty, Assistant Vice President-Maintenance
Robert V. Johnson, Assistant Vice President-Flight Operations
28
Western Air Lines Route System
ANCHORAGE
JUNEAU *
SE
TAC
EAPOLIS
PORT __ ...,,.:,,_.-r!.!!!!!!l5~ST. PAUL
LS
* Service Temporarily Suspended by Order Civil Aeronautics Board
General Offices Debenture Listing
Stock Registrars/Transfer Agents
General Counsel
Independent Accountants
Debenture Trustee
Annual Meeting
Stock Listing