WESTERN AIR LINES, INC. 
1980 ANNUAL REPORT 
HIGHLIGHTS OF 1980 
(in millions of dollars) 
Operating revenues . ..... . . . .. ... . . . . .. . ... . ....... . . ....... . 
Operating expenses .... ... . . .... .... .. . . . .. . . . .. .. ... ...... . 
Operating income (loss) . . .. . . . . . ........ ..... . . . . .. . ... . . 
Other Income (Expenses): 
Interest expense, net . . . . .. . ... . . . . .. .. . . ......... .. ... . . . ... . 
Ga in on disposition of equipment .. ... . . ................. ... . . 
Other-net . ....... . . . .......... . . ........ . ... . . .. . . .. ...... . 
Earnings (loss) before income taxes ... . .... . . . . . . ... . .. . .... . 
Income taxes ........ . .... . .. .. . . . ....... . ............ .. . ... . . 
Net earnings (loss) . ...... . ........ . .. . . . ... . . .. . ... . ..... . 
Passengers carried (000) .. . ... ... ......... . . . . . .. . .. . ... . ..... . 
Available seat miles (000,000) ........... . ...... .. ........ . .... . 
Revenue passenger miles (000,000) .......... . ... ... ... .. ..... . . 
Passenger load factor-actual (%) . . ... . ..... . ....... .. ..... . 
-breakeven (%) ... . .... . ........... . ..... . 
-profit margin (point d ifference) ............ . 
"Not computed. 
Description of Business 
1980 
$ 995.7 
1,041.5 
(45.8) 
(38.5) 
32.1 
3.0 
(49.2) 
( 19.6) 
$ (29.6) 
9,130 
15,516 
8,832 
56.9 
62.0 
(5.1) 
1979 
932.1 
913.9 
18.2 
(24.9) 
31 .3 
14.8 
39.4 
(2.1) 
41 .5 
11,191 
16,630 
10,495 
63.1 
63.2 
(0. 1) 
%Change 
1980 
vs. 
1979 
7 
14 
55 
3 
( 18) 
(7) 
( 16) 
( 10) 
(2) 
Western Air Lines, Inc., is a certificated air carrier engaged in scheduled air transportation of passengers, 
cargo and mail and as such is not dependent on a single or few customers. The company was originally 
organized in 1925 and currently serves 40 cities in the United States, Canada, Great Britain, Mexico and The 
Bahamas. Western operates in competition with other airlines on nearly all route segments. The business of the 
company is seasonal in nature, with highest revenues of the year normally being reported in the third quarter. 
It is regulated by the United States and foreign governments. 
 LETTER TO SHAREHOLDERS 
Nineteen eighty was an extremely disappointing year for 
Western as the company experienced its first net loss since 
1970- $29.6 million, or $2.46 per share. 
The reasons were not unique to Western. The scheduled air- 
line industry, feeling the effects of the recession, experienced 
a five percent decrease in traffic for the year, the largest 
decline in history. When combined with continuing inflationary 
pressures on costs, especially fuel costs, the downturn in air 
travel produced a record loss for the industry. 
In Western's case, scheduled traffic, as expressed in revenue 
passenger miles, declined 14 percent from the 1979 level pri- 
marily for these reasons: 
.. . Western's markets are heavily leisure-oriented and such 
traffic is particularly vulnerable to changes in economic 
conditions; 
.. . As a consequence of deregulation, the carriers serving the 
western part of the United States, and especially Western, 
have been subjected to extensive competition and 
... The company eliminated or reduced service in a number 
of markets which no longer could support the level of service 
provided. 
Despite the decline in traffic, operating revenues increased 
seven percent because of fare increases which produced a 
25 percent increase in yield ( average revenue per passenger 
mile). 
The fare increases were needed to offset the continuing 
escalation in costs, particularly the price of jet fuel. However, 
yield did not increase to the same extent as fares because of 
greater use of discount fares by our passengers. Fifty-seven 
percent of all passenger traffic on Western's system moved on 
discount fares, compared with 39 percent in the previous year. 
For the most part, discount fares are offered by Western to 
match fares introduced by competitors who are new to our 
markets and who are attempting to obtain a foothold in these 
markets-or by existing carriers with unused fleet capacity 
who are seeking to increase their load factors. 
Operating expenses increased 14 percent and would have 
increased more had we not taken drastic action to reduce 
and control costs. More than 50 percent of the increase was 
caused by the escalation in the price of fuel. We spent 31 
percent more for jet fuel in 1980, although we used 14 percent 
fewer gallons than in 1979. Wages, salaries and benefits in- 
creased eight percent despite the fact that we reduced the 
number of employees by eight percent during the year. 
In addition to the elimination of certain flights and reduc- 
tion in the number of employees, the company accelerated 
its plan to dispose of older, fuel-inefficient aircraft and others 
that became surplus to our needs. During the year, we sold our 
one remaining four-engine 720B, four 707s and six 737s.AII of 
these aircraft were sold at prices in excess of book values. 
Our remaining 707 has been leased to an international carrier 
and is for sale. 
The sale of these a ircraft, plus the delivery of two DC-10s 
and five Boeing 727-200s in 1980, has provided Weste~n with 
one of the most modern and fuel-efficient fleets in the indus- 
try. In fact as of September 30, 1980, according to a Boeing 
report, Western's fleet had an average age of 6.35 years, the 
youngest of any U.S. trunkline. 
While attempting to reduce and control costs, we also 
devoted a great deal of our attention and effort to increasing 
revenues. Recognizing that profitable route expansion is diffi- 
cult to accomplish during a recession, we concentrated our 
efforts on our existing route system. 
Although evaluation of flight schedules is an ongoing pro- 
cess in the airline industry, in the second quarter- when it 
2 
Dominic P. Renda 
became apparent that the recession would be more severe 
than anticipated- we undertook an intensive study of our 
schedule pattern to determine how we might be more com- 
petitive in markets that had a potential for profit, and how we 
might reduce service in markets that were not profitable. 
As a result of this study, we immediately improved the timing 
and frequency of flights on high density routes and eliminated 
or reduced service on other routes. 
Although these efforts did not produce a return to profitable 
operations, they did provide noteworthy improvement in our 
operating performance and helped minimize our losses. In 
the fourth quarter of the year, our load factor showed a three 
percent increase and our operating loss was reduced by more 
than $5 million from the same quarter in 1979. It should be 
noted that 94 percent of our operating losses for 1980 occurred 
in the first six months. 
On October 27, Western inaugurated service to London from 
Anchorage and Honolulu, completing the first step in the 
company's lengthy effort to obtain routes to the United King- 
dom. On April 24, we will complete the second step of this 
expansion into long-haul international routes when we inaugu- 
rate the first nonstop service between Denver and London. 
These routes are developmental in nature and may not be 
profitable in the first full year of operation. However, we believe 
they are important to the future of the company. 
Last August we announced plans to once again attempt 
to merge Western and Continental Airlines. We took this action 
because we believed that the factors that may have led the 
CAB to disapprove the same merger in July 1979 no longer 
existed due to deregulation of the airline industry. 
 On February 6, 1981, the Civil Aeronautics Board Administra- 
tive Law Judge who heard the evidence recommended 
approval of the proposed merger and concluded that what- 
ever objections may have existed before no longer prevailed 
in the industry. 
On February 9, the next business day after the law judge's 
decision was announced, Texas International Airlines, Inc., a 
subsidiary of Texas Air Corp., announced plans to make a 
tender offer for a minimum of four million shares of Continental 
stock, with an option to purchase up to an additional two 
million shares. In its announcement, Texas International dis- 
closed that it already owned a total of 1,459,200 shares, or 
approximately 9.5 percent, of Continental's outstanding stock. 
On February 13, Texas International announced the com- 
mencement of its tender offer and stated that its purpose in 
making the offer was to acquire a significant minority interest 
in Continental and, subject to CAB approval, to exercise 
control over Continental's business and operations. 
Purchase of shares by Texas International was subject to 
a number of conditions, including the tender of at least four 
million shares and the approval by the CAB of Texas lnterna- 
tional's acquisition of up to 48.5 percent of the outstanding 
Continental stock and the deposit of such stock in a voting trust 
providing, among other things, that the trustee vote against 
the Continental-Western merger. 
On March 2, the Civil Aeronautics Board unanimously ap- 
proved the proposed Western-Continental merger, instructing 
its staff fo prepare an order that would be sent to the White 
House prior to March 31 for necessary presidential review. At 
the same meeting, the CAB also approved Texas lnternational's 
plan to attempt to purchase up to 48.5 percent of the shares 
of Continental stock and to place those shares in a voting 
trust, with authority in the trustee to vote the shares against the 
Continental-Western merger. 
Both Western and Continental had scheduled meetings 
of shareholders for March 12 for the purpose of voting on the 
proposed merger. However, after Texas International an- 
nounced on March 10 that it had acquired in excess of 43 
percent of Continental's outstanding stock, Continental can- 
celled its shareholders' meeting and Western, upon advice of 
counsel, held its meeting but did not take a vote on the 
proposed consolidation. 
The issues raised by the Texas International actions must be 
further studied by Western's board of directors and share- 
holders before any shareholder action could be taken on the 
Western-Continental merger. Shareholders will be advised of 
further developments in this matter at the appropriate time. 
On December 18, 1980, Western received an unsolicited 
request from UNC Resources, Inc. of Falls Church, Virginia, to 
negotiate a merger between Western and UNC.The request 
recognized that Continental and Western have an existing 
merger agreement with which a merger with UNC would be 
inconsistent. No definitive merger proposal has been sub- 
mitted by UNC, and no negotiations between Western and 
UNC for a merger of the two companies have taken place. 
Western is unaware of the intentions of UNC. 
The outlook for the airline industry in 1981 is not bright. Traffic 
for the first half of the year is expected to be down slightly 
from 1980. We hope there will be an upturn in the economy 
and traffic during the third quarter, but to date there are no 
positive signs that this will occur. Significant improvement in 
industry traffic may not come until late in 1981 or 1982. 
At the same time, we see no apparent relief in 1981 from 
the inflationary pressures on costs that have buffeted our indus- 
try in recent years. The decontrol of domestic oil prices and 
recently announced increases in the price of imported crude 
will escalate the price of jet fuel during the coming year. There 
has been no softening in the demands of labor unions for 
improvements in wages and benefits. Travel agency com- 
missions will be up as a result of the newly deregulated environ- 
ment which allows for individually negotiated commission 
rates. Interest expenses will be higher because of higher inter- 
est rates and increased borrowing to finance new aircraft. 
Despite this outlook, the management of your company is 
confident it can return Western to profitability. We now have an 
efficient fleet of aircraft. The actions taken in 1980 have 
improved our productivity. We are better able to compete. 
The task will not be easy, but we believe we have the company 
properly postured to take advantage of the turnaround in the 
economy which we hope will occur later this year. 
Your continued support and understanding will be 
appreciated. 
-4v~ 
~ 
3 
Arthur F. Kelly 
Chairman of the Board 
Marc h 13. 1981 
Dominic P. Renda 
President and Chief 
Executive Officer 
 MANAGEMENT'S DISCUSSION 
Results of Operations 
Results of operations during the last three years were 
seriously impacted by a combination of circumstances 
over which Western had no control. The factor which 
had the most direct effect on operating results in the 
1978-1980 period was the nationwide recession which 
became progressively worse during those three years. 
Western suffered a modest decline in traffic in terms 
of revenue passenger miles between 1978 and 1979 
but between 1979 and 1980 revenue passenger miles 
decreased by 16 percent. Western's markets are heavily 
leisure-oriented and such traffic is particularly vulner- 
able to changes in economic conditions. As a con- 
sequence Westem's revenue passenger load factor, 
which is an index of profitability in the airline business, 
declined steadily from 1978 to 1980. 
Inflation affected results in all three years, but infla- 
tionary pressures on costs were largely offset by traffic 
gains in 1978. In 1979 and 1980 the increases in wages, 
salaries and employee benefits and in the price of 
fuel ran far ahead of revenue growth. For example, 
wages, salaries and employee benefits increased by 
nearly 25 percent between 1978 and 1980 principally 
as a result of collective bargaining. Fuel expenses 
almost doubled during the same period although the 
amount of fuel consumed declined. Together these 
4 
Revenue Dollars Percent 
(dollars in thousands) of total 
Coach passenger service ....... $ 821 ,748 83% 
Deluxe passenger service . . . . . . . 66, 153 7 
Cargo . . . . . . . . . . . . . . . . . . . . . . . . 63,821 6 
Transport related . . . . . . . . . . . . . . . 32,158 3 
Charter . . . . . . . . . . . . . . . . . . . . . . . 2,538 
Other . . . . . . . . . . . . . . . . . . . . . . . . . 9,337 
$ 995,755 100% 
two items of expense accounted for more than 82 
percent of the increase in operating expenses during 
the period. Western is unable to predict when inflation 
in these two areas will be brought under control. Fuel 
expense is expected to increase substantially in 1981 
because of decontrol; the extent to which this can be 
offset by fare increases authorized by the CAB is 
presently unknown. 
Depreciation and interest expense also increased 
over the three year period which was the direct result 
of the acquisition of new aircraft at inflated prices. 
These purchases were financed largely by additional 
long-term debt which, coupled with escalating interest 
rates, produced substantial increases in interest 
expense. For further discussion of the impact of inflation 
on operating results see Note 12 to Financial Statements. 
Another factor which seriously impacted operating 
results in the 197 8 -1980 period was deregulation of the 
airline industry. Passage of the Airline Deregulation 
Act in November 1978 marked the transition from an 
era of controlled competition to an era of unrestricted 
entry. The Act also gave carriers complete freedom to 
reduce fares by as much as 50 percent and to increase 
fares by as much as five percent. As a consequence 
Western has been subjected to increased competition 
 on many routes and has been faced with the necessity 
to meet discounted fares put into effect by both old 
and new competitors. 
Since January 1, 1978, the Civil Aeronautics Board 
has granted periodic increases in excess of five per- 
cent in standard first class and coach fares designed 
to meet increases in operating expenses. These fare 
increases were the sole reason for the increase in 
passenger revenues in 1980. Nevertheless, the fare 
increases have not been sufficient to offset the decreas- 
ing load factors resulting from excessive competition 
and the dilutive effect on yield of low discount fares. 
Also affecting 1979 operating results was the ground- 
ing of all DC-10 aircraft for 38 days during the summer, 
the effect of which was partially offset by traffic gains 
realized as a result of interruption of service on United 
Airlines and Mexicano Airlines because of labor 
problems. 
Liquidity and Copital Resources 
As is characteristic of the airline industry Western oper- 
ates with very small, and often negative, working capital. 
Generally, the cash generated through operations is 
sufficient to fund current operations and amortization 
of long-term debt. Proceeds from long-term obligations 
5 
Expense Dollars 
(dollars in thousands) 
Wages, salaries and 
Percent 
of total 
employee benefits . . . . . . . . . S 384.201 37% 
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . 296,365 28 
Other . . . . . . . . . . . . . . . . . . . . . . . . . 106,644 10 
Material and services . . . . . . . . . . . 84,855 8 
Depreciation . . . . . . . . . . . . . . . . . . 61 ,310 6 
Commissions. . . . . . . . . . . . . . . . . . 57,672 6 
Food and beverages ........ . . . 28,419 3 
Rentals . . . . . . . . . . . . . . . . . . . . . . . 22,050 2 
$1,041 ,516 100% 
and the disposition of equipment, together with internally 
generated funds, have been relied on to finance the 
purchases of new aircraft. Purchases of aircraft at stead- 
ily escalating prices over the last ten years have resulted 
in substantial increases in Western's long-term debt. 
As additional aircraft have been acquired and 
additional long-term debt incurred, certain relevant 
ratios have been adversely affected, for example: 
Current assets to current liabilities .... 
Long-term debt to total capital . 
Long-term debt to equity ....... . . . 
1980 1979 1978 
.78 .86 1.01 
.69 .58 .57 
2.20 1.37 1.34 
With the addition of three 727-200s and one long- 
range DC-10 Western believes that its fleet of three- 
engine and twin-engine aircraft will be adequate to 
operate its system for the next two years. Nevertheless, 
Western like every other airline is constantly reviewing 
its need for new and improved types of aircraft, espe- 
cially the new generation of more fuel efficient aircraft 
which are now being developed. 
Western presently has on order three Boeing 727-200 
aircraft for delivery in the spring of 1981, and six of the 
new model Boeing 767 aircraft for delivery in 1983 and 
1984. Western's total commitment for the purchasing of 
 Passenger Revenue- 1976= 100% 
175% 
150% 
125% 
75% 
1976 1977 1978 1979 
these aircraft is $303,400,000 of which $30,100,000 has 
been recorded as advance deposits at December 31, 
1980. Equipment trust financing is contemplated for the 
purchase of these aircraft. Also available to Western is 
capital lease financing. Western will lease a long-range 
DC-10 aircraft which is required to operate nonstop 
between Denver and London. 
Another source of funds which might be utilized to 
finance a portion ofWestern's capital requirements is the 
$75,000,000 balance remaining under a $125,000,000 
revolving line of credit with a group of banks, although 
the amount actually available at any one time may 
be limited by certain lender restrictions. At December 
31, 1980 Western had borrowed $50,000,000 under 
this lineofcreditforgeneral corporate purposes.At June 
30, 1982 borrowings under the revolving line of credit 
must be repaid or replaced by a term note in an amount 
not to exceed $75,000,000, maturing in eight years. 
Shareholders and Stock 
Western's results for 1980 represented a loss of $2.46 
per common share, compared to earnings of $2.99 per 
share in 1979. 
Holders of common stock were paid 10 cents per 
share in each of the four quarters of 1979 and in both 
the first and second quarters of 1980 and five cents 
1980 
6 
The 25 percent increase in yield gave Western a 
seven percent increase in passenger revenues despite 
the drop in revenue passenger miles. Traffic moving on 
discounted fares increased to 57 percent of a ll 
passenger traffic . 
Passenger revenue 
Scheduled RPM's 
Yield 
% of discounted RPM's to 
total scheduled RPM's. 
per share in the third quarter. As a result of continuing 
losses, the board of directors voted following the third 
quarter not to pay a dividend on the company's com- 
mon stock. Certain agreements relating to Western's 
long-term debt limit the amounts available for payment 
of cash dividends. At December 31, 1980, the amount 
available for that purpose was $34,304,000. 
The 1980 net results brought shareholders' equity 
to $197,346,000 at the end of the year, compared to 
$232,625,000 at the end of 1979. Equity per common 
share ( or book value) was $12.85, compared to $15.56 
at the end of 1979. 
As of December 31, 1980, there were 13,030,915 shares 
of Western common stock outstanding. This stock was 
held byapproximately17,000 individuals and institutions. 
Western has 2,992,350 shares of common stock 
reserved for issuance upon conversion of its preferred 
stock and an additional 2,040,000 shares reserved 
for issuance upon conversion of its 5% Convertible 
Subordinated Debentures. Holders of the debentures 
receive interest payments on February 1 and August 1; 
as of December 31, 1980, the debentures were held 
by 511 individuals and institutions. The $2.00 Series A 
Cumulative Convertible Preferred Stock was held by 
1,651 individuals and institutions who are paid dividends 
quarterly. There were 1,196,940 shares of preferred 
 I 
.. 
Fuel Expense- 1976= 100% 
300% 
275% 
250% 
225% 
200% 
175% 
150% 
125% 
100% 
75% 
1976 1977 1978 
stock outstanding at December 31, 1980. 
1979 
Western's common and preferred stock were traded 
on the New York and Pacific stock exchanges at the 
following prices: 
Common Stock Preferred Stock 
1979 High Low High Low 
First Quarter 9 7 28% 23 
Second Quarter 9% 7 26 23% 
Third Quarter 12 8 30 24 
Fourth Quarter 11 Ya 7% 28 21  
1980 
First Quarter 11 % 6 29 19 
Second Quarter 7 6 23 19 
Third Quarter 8 6 24 21  
Fourth Quarter 10 6 25 20% 
Route Matters 
Western's long and determined efforts to seNe London 
were realized in 1980 as the Civil Aeronautics Board 
awarded the company new nonstop routes from 
Anchorage and Denver to London. 
The London-Anchorage route was inaugurated in 
October with two flights a week which continue on to 
Honolulu. Western's entry marked the first U.S. airline ser- 
vice between London and Anchorage and opened the 
Despite continued reductions in fuel consumption, 
fuel expense escalated as the price per gallon rose to 
8 7 cents in 1980. Availability of fuel continues to be 
dependent on national and international petroleum 
industry conditions and assurance of adequate future 
supplies cannot be given. 
Fuel expense 
Average cost per gallon 
Gallons consumed 
1980 
7 
shortest air route between Great Britain and the Pacific. 
Western's inauguration of Denver-London seNice on 
April 24 represents a significant move for both the com- 
pany and the State of Colorado as well as the Rocky 
Mountain area. This will give Denver its first nonstop 
seNice to and from Great Britain. Under terms of the 
bilateral agreement, Western's authority on this route 
will be exclusive for a three-year period 
In another international route case, Western was 
selected for authority between Texas, Alberta and 
Alaska.The initial phase of this seNice will be started 
April 26 with a daily round trip between Houston, Dallas/ 
Ft. Worth and Calgary. Concurrent with this, Western will 
discontinue the equipment interchange with Braniff 
International between Calgary, Denver and Dallas/ 
Ft.Worth . 
On its domestic routes, Western d id considerable 
restructuring during 1980 as costs escalated, traffic de- 
clined and competition increased. SeNice was sus- 
pended to Helena, Pocatello, Sheridan, Kodiak, Hilo, 
Milwaukee and Spokane, between San Diego and 
Honolulu and numerous schedule patterns were 
changed 
E 
arly in 1981, the company also dec ided to suspend 
seNice between Miami and Nassau, The Bahamas. 
The suspension will be effective April 26. 
 Load Factor- Actual vs.Breakeven 
70% 
65% 
60% 
55% 
1976 1977 1978 1979 
Since the passage of the Airline Deregulation Act of 
1978, Western and other certificated airlines have been 
given authority for literally hundreds of new routes 
throughout the United States. In that this authority is per- 
missive rather than mandatory, it provides opportunity 
for expansion into new areas or for the connection of 
areas currently served whenever it is deemed econom- 
ically appropriate. 
Marketing 
Selling Western's product in the face of a declining 
economy, new competition and escalation of basic 
fares represented a monumental challenge in 1980. 
The nationwide recession had a noticeable impact 
on leisure traffic, which is so important to Western. In 
the Hawaii market, which represented about 24 percent 
of Western's passenger business, the company's traffic 
was off 13 percent for the year. 
In the 48 states and Canada, which produced 
approximately 59 percent of Western's passenger traf- 
fic, new competition was experienced on every prime 
nonstop segment, and this along with a general decline 
in travel resulted in traffic over these segments declin- 
ing 18 percent, compared with 1979. Western's third 
largest market- Latin America- experienced a three 
percent decline in traffic, and Alaska, which repre- 
sented six percent of Western's traffic, was off 21 percent. 
1980 
8 
Western was able to achieve a two percent reduction 
in breakeven load factor in 1980 despite higher cost; 
however, actual load factors dropped 10 percent. 
Actual 
Breakeven 
Western moved aggressively to capture new business 
travel. In the summer of 1980, the company introduced 
a unique program in Travel Pass, a card which is vali- 
dated each time a customer flies over selected seg- 
ments. After five validations, the customer can redeem 
the card for $50 in travel anywhere on Western's system 
or 10 of the cards may be saved up for a total of $500 
off. This program, which is aimed at the frequent traveler, 
had been expanded by mid-February 1981 to 85 flights 
a day throughout Western's system. 
The inauguration of Honolulu-Anchorage-London 
service in October and the Denver-London nonstops 
being started in April, will give Western an advanta- 
geous position with the burgeoning influx of British and 
European travelers who are attracted to the United 
States by vacation values. Western also is using its 
leisure travel expertise to develop value vacations 
in Great Britain. 
Airline deregulation advanced a step farther in 
mid-1980 as the Civil Aeronautics Board ruled that the 
unified industry commission structure for travel agents 
was unacceptable and prescribed open commissions. 
Travel agents handled nearly 70 percent of Western's 
passenger business in 1980,and consequently,Western's 
commission rates must be competitive with other 
carriers. Initially, Western offered U.S. travel agents an 
eight percent commission on coach and economy 
travel and 10 percent on first class and promotional 
 Wages, Salaries & Employee Benefits- 1976= 100% 
175% 
150% 
125% 
100% 
1976 1977 1978 1979 
fares, compared with a four-tier structure ranging from 
seven to 11 percent just prior to the effective date of 
the new commission environment. In January 1981, com- 
petitive circumstances required an increase in the 
eight percent level to nine percent. 
Basic fares increased in all of Western's markets 
during 1980; the compound effect of those increases 
was approximately 43 percent. Western's yield, or aver- 
age revenue per passenger mile, however, increased 
only 25 percent, from 8.07 cents in 1979 to 10.10 cents 
in 1980. This discrepancy between fare and yield 
increases results from the proliferation of discount fares 
and their increased use during 1980. Discount fare 
traffic represented 5 7 percent of Westem's passenger 
traffic during 1980. 
Cargo, including mail and freight, represented six 
percent of Western's total revenues. It is an important 
market in that Western's cargo shipments move on 
scheduled passengerflights. Especially in wide-bodied 
DC-10s, considerable cargo capacity is available, and 
Western has developed strong marketing programs 
around its cargo capabilities. 
Deregulation of air cargo in late 1977 permitted 
all-cargo carriers to move into routes which had pre- 
viously been confined to passenger/cargo operations; 
this resulted in considerable new competition for 
Western and other passenger carriers. Additionally, it 
has made it possible for large freight forwarders to 
Reductions in seat-mile capacity and the number of 
employees made it possible to hold wages, salaries 
and employee benefits to an eight percent increase 
over 1979. 
Wages, salaries & employee benefits 
-------- Average number of employees 
1111111111111111111111111111111 
Available seat miles 
1980 
9 
develop their own air carrier capability. 
Western's Fleet 
In 1981 1983/84 
Operation Delivery Delivery Options 
DC-10-10 12 
DC-10-30 1 3 
727-200 44 3 
737-200 13 
767 6 6 
 As of March 15, 1981. Three DC-10s and twelve 727s are leased. 
Having completed the retirement of its four-engine jet 
fleet in January of 1980, Westem's fleet now is one of the 
most modem in aircraft technology and fuel efficiency. 
In early 1981, Western made preliminary arrange- 
ments for the lease of one DC-10-30 for use on the 
Denver -London route. Those arrangements included 
a lease-option for a second DC-10-30. 
The next step toward improved fuel efficiency in 
medium-to-long range commercial aircraft will come 
with the introduction of the Boeing 767 and 757. In 
preparation for this, Western has placed orders for six 
767 twinjets and taken options for an additional six. 
Deliveries of the 767 will begin in the Spring of 1983. 
Westem's present fleet is in compliance with federal 
noise regulations with the exception of the two-engine 
737s. An undetermined number of these aircraft will be 
 retrofitted at a cost of approximately $255,000 each in 
advance of the 1985 deadline for compliance. 
Recognition of Western's environmental conscious- 
ness as it relates to noise came in the form of an award 
of merit from the National Organization to Insure a 
Sound-Controlled Environment. In additon to its con- 
formance to federal noise regulations, Western has 
structured its take-off and landing patterns to lessen 
the noise impact on neighboring areas. 
Western's aircraft utilization remained at a high level 
in 1980, despite schedule cutbacks. Average daily 
hours flown on all aircraft during 1980 was eight hours, 
24 minutes, and as in the past several years, Western 
continued to lead all DC-10 Series 10 operators with a 
daily utilization of 10 hours, 46 minutes compared with 
an all-operators average of eight hours, 40 minutes. 
Ground Properties and Equipment 
Western's general offices and principal overhaul and 
maintenance base are located at Los Angeles Inter- 
national Airport. These facilities, including a DC-10 
hangar and a parking structure completed in 1975, 
have been built by the company as improvements on 
leased land. The lease on the land and buildings 
expires in 1993, subject to the right of the City of Los 
Angeles to terminate the lease on March 31, 1988, or 
any March 31 thereafter. 
Western also leases hangars at Seattle/Tacoma, 
Denver,San Francisco and Minneapolis/St. Paul, as well 
as terminal facilities at all airports served, plus ticket 
and administrative offices throughout its system. Public 
airports are utilized for flight operations under contrac- 
tual arrangements with municipalities or agencies 
controlling them. 
Western's People 
The challenges of a difficult 1980 touched every one of 
Western's employees. The company employed an 
average of 10,657 during 1980, down from the 11,256 
average in 1979. 
MANAGEMENT: The board of directors which heads 
Western's management organization represents the 
business and civic interests of the major areas the com- 
pany serves. Four of the 11 directors are Western officers. 
They are Arthur F. Kelly, 68, chairman of the board and 
chairman of the board's executive committee; Dominic 
P. Renda, 67, president and chief executive officer; 
Robert 0. Kinsey, 64, executive vice president and chief 
operating officer, and Richard P 
. Ensign, 62, executive 
vice president-marketing. 
Other principal officers of Western include Donald 
K. Hall, 62, senior vice president, general counsel and 
secretary; James L. Mitchell, 59, senior vice president- 
long range planning; Roderick G. Leith, 52, vice presi- 
dent- finance; Rick 0 . Hammond, 51, vice president 
and treasurer, and Glen L. Stewart, 38, vice president 
and controller. 
10 
Two of Western's principal officers have held positions 
outside the company within the last five years: Mr. Hall 
was elected to his present post in 1979, coming to the 
company from the Los Angeles law firm of Darling, 
Rae & Gute, where he had been since 1953. Mr. Mitchell 
was a vice president at Continental Air Lines between 
1968 and 1977. He had previously served as an officer 
of Western. 
EMPLOYEES: Western is committed to a policy of equal 
employment opportunity with hiring and advancement 
being determined on the basis of merit and ability. 
Results-oriented affirmative action plans are submitted 
annually to government agencies. Consistent with its 
policy of advancement from within, Western filled 68 
percent of its management and administrative or tech- 
nical job vacancies in 1980 with people already work- 
ing for the company. 
Labor unions represent approximately 93 percent of 
Western's employees. These unions include the Air Line 
Pilots Association, Air Transport Employees, Association 
of Flight Attendants, Brotherhood of Railway and Airline 
Clerks, International Brotherhood of Teamsters, Sindi- 
cato Nacional de Trabajadores de Aviacion y Similares, 
and the Transport Workers Union. 
Following is the contractual status of each of these 
collective bargaining groups: 
Number of 
Employees Contract Op en 
1-1-81 Union for Amendment 
Mecha nics & Related 
Employees and 
Stock Clerks 2,150 IBT Jan.1, 1981 
(In mediation) 
Pilots 1,515 ALPA Sept. 1. 1981 
Flig ht Attendants 1,917 AFA Dec.1.1981 
Agent & Clerical- 
U.S. 3,886 ATE June 30. 1982 
Canada 123 BRAC July 1. 1982 
Mexico 189 SNTA Jan.18, 1982 
Flight Superintendents 33 TWU Oct. 31, 1983 
Ground School Instructors 31 IBT Jan.1.1981 
(In mediation) 
Legal Proceedings 
Western and other airlines are parties to numerous 
actions in state courts wherein owners of property 
located in the vicinity of major airports, primarily Los 
Angeles International Airport, are seeking to enjoin cer- 
tain aircraft operations at the airport and/or to recover 
damages because of aircraft noise and engine emis- 
sions. Most of these cases have been brought in the 
Los Angeles County Superior Court against the City of 
Los Angeles, which in a number of these cases has in 
turn cross-complained against the airlines for indem- 
nification. The aggregate amount of damages sought 
in cases against the City has been reported by the City 
to be in excess of $57 million.The aggregate amount 
 of damages sought in actions to which Western is a 
party as cross-defendant is in excess of $36 million. 
Western and its counsel in these actions, O'Melveny & 
Myers of Los Angeles, believe that the damages 
claimed are not a realistic measure of the airlines' 
exposure and that in most cases the request for relief 
is wholly out of proportion to any actual damage that 
may have been suffered. Western's counsel in these 
actions, which also represents most of the other airlines, 
is of the opinion, based on the current state of the law, 
that the airlines have substantial defenses to the imposi- 
tion of any liability. Moreover, in each case to date in 
which the issue of the airlines' duty to indemnify the 
airport proprietor has been tried, the airlines have 
obtained favorable rulings. However, all the issues of 
law involved in these matters have not been finally 
settled, and, pending further judicial clarification, the 
relative rights and liabilities among such owners of 
adjacent areas, the airport operators, the air carriers 
and the federal, state and local governments are not 
entirely clear. Unfavorable decisions against Western 
in these actions could have a materially adverse effect 
on the company. Further, any liability of airport oper- 
ators, or the granting of any injunctive relief against 
them, could result in higher costs to a ir carriers, for 
example through higher landing fees. 
The California Supreme Court has decided that jet 
noise damage litigation is not appropriate for class 
action determination because of an insufficient com- 
munity of interest to sustain a class suit. This holding hds 
significance with respect to the Los Angeles situation 
where several of the cases purportedly are on behalf 
of classes. 
In light of this litigation certain communities which 
own and operate a irports, including Los Angeles and 
Son Diego, have imposed or are considering imposition 
of limitations on frequency and timing of airline flights 
or upon the proportion of an a irline's fleet which may 
continue to operate without complying with federa l 
noise standards. Enforcement of such restrictions at a 
major a irport served by Western could have a materia lly 
adverse effect upon its operations. 
Western, three other airlines and the Internationa l Air 
Transport Association are defendants in a n action 
brought on November 19, 1973, by a defunct tour 
operator-travel agency in the United States District Court 
in Sa n Fra ncisco in which the defendants are charged 
with having conspired and attempted to monopolize 
and with actually monopolizing the group leisure tour 
market in competition with said agency by packaging 
their own tours and appropriating tour packages devel- 
oped by said agency in violation of the Federal anti- 
trust laws. In 1980 summary judgment was entered dis- 
missing the action as to Western, which judgment is 
subject to appeal in due course. 
A number of actions have been filed, in both federal 
and state courts, against Western and other defen- 
dants seeking damages for death or injury suffered in 
11 
the October 31, 1979, crash of a Western aircraft at the 
Mexico City airport. Western has ample insurance cov- 
erage for this type of accident, although insurance 
may not cover liability for punitive damages which are 
sought in several of the actions premised on bodily 
injury. Western does not believe that such claims for 
punitive damages will result in any material liability to 
Western. 
Western is also involved in various other litigation, 
including cases alleging discrimination in employment 
practices. Western does not believe that any of such 
cases will result in material liability to Western. 
 Western/Continenta l interchanges _______ _ 
E 
ffective in April 
..... 
.............. 
.............. 
.............. 
...._ 
 (In millions excep l per shore amounts and other items indicoled by ") 
Summary of Operations 
Operating Revenues: 
Passenger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... . 
Cargo, charter, and other. . . . . . . . . ..... . .... . ..... . ... . ..... . 
Total operating revenues ... . 
1980 
$ 887.9 
107.8 
995.7 
1979 
827.7 
104.4 
932.1 
============================,.==== 
Operating Expenses: 
Wages, salaries, and employee benefits . . . . . . . . . . . . . . . . . . . ..... .. ..... . 
Fuel . . . . . . ... .. . .... . ... . . .. . .... . ....... . .. . .... . ... .. ..     
Other0 
 . . . .. . . . . .. . . . . . . . . .  .. . 
Total operating expenses . 
Operating income (loss) . .... . ......... . . ..... . ...... ... . .. . . 
Interest expense, net .. 
Other income, net . .. . . .. . .. . ... . . . . . .. . . . .. . . . ........... . . 
Earnings (loss) before income taxes and cumulative effect 
of changes in accounting principles . . . . . . . ..... .. ... . .... . . . .. . 
Income taxes.. .. ... ... .. . ...... . . . ... . ... . ... . . ... .. . .. . ...... . . 
E 
arnings (loss) before cumulative effect 
of changes in occounting principles . . . . . . . . . . ... .. .. .. . . .... .. . 
Cumulative effect of changes in accounting principles ... . ...... . . . 
Net earnings (loss) . .. .... .. .... . . . .. . .... . ........................... . 
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... . 
Net earnin s (loss) available for common stock ... . .. . .. . ..... . 
Earnings (Loss) per Common Share: 
Primary: 
Before cumulative effect of c hanges in accounting principles . . .... . . . . . . . 
Net earnings (loss) .. .. ..... . ... ...... . . . ... .. . . . . . ... . .... . . ... .. . . . 
Fully Diluted: 
Before cumulative effect of changes in accounting princip les .. . .... . . . . .. ... . 
Net earnings (loss) . ... . . .......... .. ..... . .. . . . . . .. ... . .. .... . . . 
Number of Shares Used to Compute Earnings (Loss) per Share: 
Primary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . ........... .. . .. . 
Fully diluted .. ... . .... .. .... . ... . . .. . . . . ...... . ......... . .. . . ... ... . ....... . ... . . 
Other Financial Data 
Cash dividends paid per share of common stock . . .. . .......... . . . .. .. . . . . 
Total assets . . .. . .... .. . . ............ . ....... . ........ . . . . . . . . . . . .. . ......... . . 
Property and equipment-net ...... . .... . .......................... .. .. . ........ . 
Long-term obligations ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . 
Shareholders' equity . . ........... .. .. . . . ..... . . .. .................... .. ........ . 
Return on investment(%)* .. ... ........ . ... . . ... .... . .. . ... . . . ....... . 
Operations 
Airplanes operated at end of year . . . . . .. . . ... . .......... . . . . .. ......... . 
Passengers carried .............. . . . ........... .. ....... . ... . .......... . 
Available seat miles ...... . ......... . .. .. ...... . ......... .. . .. ......... . 
Revenue passenger miles ......................... . .. . .. . .............. . 
Passenger load factor-actual(%)* . . ............ .. . . ....... . .. . . 
-breakeven point(%)* .. . ........ . .... . ... . 
-profit margin (point difference)* ............................... . 
Average revenue per passenger mile* . . . . . . . . . . . ... ... . .. ... . ............. . 
Average length in miles per passenger trip* . . .. ........................... . 
Operating expense per available seat mile* .. . ............ ... . . ........... . 
Cargo revenue ton miles .......... . .. . .......... . ...... .. .................. . ...... . 
Average number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . .......... . 
(in millions of dollars except per share amounts) 
$ 
$ 
$ 
384.2 
296.4 
360.9 
1,041.5 
(45.8) 
(38.5) 
35.1 
(49.2) 
(19.6) 
(29.6) 
(29.6) 
2.4 
(32.0) 
(2.46) 
(2.46) 
$ (2.46) 
$ (2.46) 
13.0 
13.0 
$ 0.25 
$ 917.0 
$ 718.8 
$ 435.1 
$ 197.3 
(4.0) 
71 
9.1 
15,515.6 
8,832.1 
56.9 
62.0 
(5.1) 
$ .1010 
965 
$ .0671 
163.2 
10,657 
( a) Changes in the estimated useful lives of certain aircraft were implemented in 1978 and 1976. These changes increased net 
income in 1978, 1977 and 1976 by approximately S 
1.5, or S 
0.12 per share (primary), S 
2.4, or S 
0.19 per share (primary), and S 
0.6, 
or S 
0.04 per share (primary), respectively. 
14 
356.6 
225.7 
331 .6 
913.9 
18.2 
(24.9) 
46.1 
39.4 
(2.1) 
41.5 
41.5 
2.4 
39.1 
2.99 
2.99 
2.31 
2.31 
13.1 
18.2 
0.40 
821.4 
634.6 
318.3 
232.6 
13.2 
76 
11 .2 
16,630.5 
10,494.8 
63.1 
63.2 
(0.1) 
.0807 
926 
.0550 
162.0 
11 ,256 
1978 
734.0 
100.5 
834.5 
309.4 
154.9 
315.3 
779.6 
54.9 
(20.2) 
10.7 
45.4 
6.9 
38.5 
16.2b 
54.7 
2.4 
52.3 
2.82 
4.09 
2.15 
3.04 
12.8 
18.2 
0.40 
710.1 
519.7 
265.7 
198.5 
14.0 
78 
10.4 
16,254.9 
10,634.8 
65.4 
61 .1 
4.3 
.0720 
994 
.0480 
176.3 
10,787 
1977 
614.6 
76.9 
691 .5 
263.1 
138.0 
260.9 
662.0 
29.5 
(17.5) 
7.8 
19.8 
7.1 
12.7 
12.7 
.5 
12.2 
0.96 
0.96 
0.85 
0.85 
12.7 
15.9 
0.40 
574.9 
427.9 
214.5 
147.4 
9.1 
77 
8.8 
14,963.8 
8,588.8 
57.4 
56.1 
1.3 
.0734 
966 
.0442 
157.3 
10,413 
1976 
544.2 
61 .0 
605.2 
226.4 
108.3 
235.1 
569.8 
35.4 
(16.3) 
3.1 
22.2 
8.2 
14.0 
14.0 
14.0 
1.03 
1.03 
0.92 
0.92 
13.6 
16.1 
0.40 
515.1 
378.6 
192.5 
112.1 
9.5 
75 
8.1 
13,450.4 
7,833.8 
58.2 
56.0 
2.2 
.0705 
963 
.0424 
135.0 
9,799 
1975 
465.1 
53.9 
519.0 
201.7 
93.1 
211.1 
505.9 
13.1 
(14.4) 
4.3 
3.0 
( 1.5) 
4.5 
7.2 
11.7 
11 .7 
0.30 
0.77 
0.29 
0.70 
15.2 
17.6 
0.47 
488.3 
367.6 
175.4 
133.9 
5.9 
75 
7.5 
11 ,696.5 
7,102.9 
60.7 
59.7 
1.0 
.0665 
942 
.0433 
108.6 
9,357 
=== 
1 
974 
437,3 
51 .1 
488.4 
182.3 
71.4 
192.5 
446.2 
42.2 
(15.3) 
13.8 
40.7 
17.2 
23.5 
23.5 
23.5 
1.55 
1.55 
1.38 
1.38 
15.1 
17.6 
0.39 
448.8 
350.3 
167.4 
129.3 
12.4 
72 
7.4 
11 ,123.5 
6,747.5 
60.7 
56.1 
4.6 
.0660 
902 
.0401 
95.2 
9,696 
1973 
376.7 
44.6 
421 .3 
165.4 
44.5 
168.3 
378.2 
43.1 
(13.0) 
4.2 
34.3 
14.4 
19.9 
19.9 
19.9 
1.32 
1.32 
1.18 
1.18 
15.1 
17.5 
0.23 
431 .7 
316.4 
178.0 
110.8 
11 .9 
74 
7.4 
11 ,175.5 
6,476.1 
57.9 
52.5 
5.4 
.0593 
877 
.0338 
76.5 
9,826 
~== 
1 
972 
342.9 
31 .1 
374.0 
147.3 
40.1 
160.8 
348.2 
25.8 
( 11.8) 
2.7 
16.7 
5.9 
10.8 
10.8 
10.8 
0.72 
0.72 
0.66 
0.66 
15.0 
17.5 
0.08 
372.7 
262.1 
158.6 
94.4 
8.5 
71 
6.9 
10,300.2 
5,995.9 
58.2 
54.6 
3.6 
.0578 
865 
.0338 
76.2 
9,383 
1 
971 
295.8 
32.2 
328.0 
127.1 
38.7 
144.1 
309.9 
18. 1 
( 14.2) 
4.5 
8.4 
2.6 
5.8 
5.8 
5.8 
0.39 
0.39 
0.38 
0.38 
15.0 
17,5 
372.0 
242.0 
181 .6 
84.5 
6.8 
70 
6.2 
9,776.9 
5,252.0 
53.7 
52.4 
1.3 
.0577 
846 
.0317 
73.2 
8,951 
(b) Effective January 1, 1978, Western c hanged its method of accounting for post 1971 investment credits for financial reporting 
purposes from the deferral to the flow-through method. The cumulative effect of the change, amounting to S 
1 
6.2, has been 
included in net earnings for 1978. 
15 
 December 31, 1980 and 1979 
(In thousands of dollars) 
ASSETS 
Current Assets: 
Cash (Note 6) . . ... ........ .. ... ......... . .. ... ... . .... . . .. . .. ..... . 
Temporary investments . . ...... ..... . .... . . .. ... . ..... .. . . ... .... .... . 
Receivables (less allowance for doubtful accounts 
of $2,379-1980 and $2,078-1979) ..... . . . .... ....... ... .... .. ... .. . 
Flight equipment expendable parts at average cost 
(less allowance for obsolescence of $14,062-1980 
and $13,228-1979) ......... .. ......... .. ....... . . . ...... .. .. .. .. . . 
Prepaid expenses and other current assets . ... .. . . .... .. ..... . . .. ..... . 
Total current assets . .. .. . .. .. ..... .. . .. ... .... . . . ...... . ... ... . 
Properties and Equipment at Cost (Notes 2, 3, and 6): 
Flight equipment .... ... . ..... . . . .. . ..... . ....... . ............. . .... . 
Facilities and ground equipment . .. ......... . ........................ . 
Deposits on equipment purchase c6ntracts ... . .. . ............. . ...... . 
Less allowance for depreciation and amortization ............. . ........ . 
Deferred char es and other assets . ... . ... ..... .. . . . . . ............... . 
See accompanying notes to financial statements. 
16 
1980 1 
979 
$ 8,759 11,110 
25,579 39,203 
34,338 50,313 
121,859 105,291 
26,908 20,021 
8,025 5,769 
191,130 181 ,394 
848,111 764,592 
130,703 127,710 
37,966 50,981 
1,016,780 943,283 
297,962 308,642 
718,818 634,641 
7,100 5,405 
$ 917,048 821,440 
 LIABILITIES AND SHAREHOLDERS' EQUITY 
Current Liabilities: 
Accounts payable .................................. . ....... . .. . ... . 
Salaries, wages, and vacation benefits payable .......... .. ........... . 
Accrued liabilities . ..... . . . ........ . .... . . . ................ . . . ...... . 
Airline traffic liability .. . . . . . . ............ .. . . .......... . ......... .. . . . 
Current portion of debt (Note 6) .. . .. .. ... ..... . ... ...... . . . ... . . . .... . 
Current portion of capital leases (Note 2) ... . ... . . . . . . . . . ... ... ..... .. . . 
Total current liabilities . ......... . ...... . ..... .. ............... . 
Long-term Obligations: 
Debt (Note 6) .. . ..................................... . ... ... ..... . . . 
Capital leases (Note 2) ............ . .... ........ . .. . . ..... . . .. .. . ... . 
Deferred Credits and Other Liabilities: 
Deferred taxes on income (Note 5) . ... ........ ..... .. .. . . . .... .. .. . .. . 
Other ....... . ....................................... .. .. .. ... ..... . 
Shareholders' Equity (Note 6, 7, and 9): 
Preferred stock-authorized 25,000,000 shares 
$2.00 Series A Cumulative Convertible 
$25.00 stated value per share 
Issued 1,197,000 shares-1980 and 1979 ........ . ................. . .. . 
Common stock-authorized 35,000,000 shares 
$1.00 par value per share 
Issued 13,031,000-1980 and 13,030,000-1979 . .. . .. ... .............. . 
Additional paid-in capital ................... .. ................ . .... . 
Retained earnings .................. . ... . ........ .. . . . . .. .. .. . ..... . 
Commitments and Contingent Liabilities (Notes 2 and 3) 
17 
1980 
$ 58,965 
43,624 
22,947 
90,058 
23,756 
7,183 
246,533 
353,525 
81,526 
435,051 
29,067 
9,051 
38,118 
29,923 
13,031 
30,963 
123,429 
197,346 
$917,048 
1979 
54,353 
40,438 
22,980 
71,014 
16,217 
6,380 
211,382 
229,337 
89,000 
318,337 
49,727 
9,369 
59,096 
29,923 
13,030 
30,959 
158,713 
232,625 
821,440 
 Years ended December 31, 1980, 1979 and 1978 
(in thousands of dollars except per share amounts) 
Operating Revenues: 
Passenger ... ... ..................................... . . 
Cargo . .. . ........... . ...................... . .......... 
Charter and other ........... .. .... ..... .. ........ ....... 
Operating Expenses: 
Wages, salaries, and employee benefits (Note 4) ............ 
Fuel ...... . . . ......... ... .... ... . .. .. ...... ..... . .. . ... 
Depreciation and amortization ........................... 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 
Operating income (loss) .. .... ..... . .. .. ...... .. . 
Other Income (Expenses): 
Interest, principally on long-term obligations .. .... ... . ...... 
Interest capitalized ............ ... ... . .. . .... ..... ....... 
Interest income ......................................... 
Gains on disposition of equipment . ....................... 
Settlement with vendor ................................... 
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Earnings (loss) before income taxes and cumulative 
effect of a change in accounting principle ........ 
Income taxes (Note 5) ..................................... 
Earnings (loss) before cumulative effect 
of a change in accounting principle ......... . ... 
Cumulative effect of a change in accounting 
principle (Note 5) .... ... ...... ........... ........... .. . . 
Net earnings (loss) ... ........... .. .. ...... ..... . 
Earnings (Loss) per Common Share (Note 8): 
Primary: 
Earnings (loss) before cumulative effect 
of a change in accounting principle ............. 
Cumulative effect of a change in 
accounting principle ........................... 
Net earnin s (loss) ................................ 
Fully Diluted: 
Earnings (loss) before cumulative effect 
$ 
$ 
$ 
$ 
of a change in accounting principle . . . . . . . . . . . . . $ 
Cumulative effect of a change in 
accounting principle .......................... . 
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 
See accompanying notes to financial statements. 
18 
1980 
887,901 
63,821 
44,033 
995,755 
384,201 
296,365 
61,310 
299,640 
1,041,516 
(45,761) 
(43,507) 
4,940 
3,168 
32,099 
(178) 
(3,478) 
(49,239) 
(19,607) 
(29,632) 
(29,632) 
(2.46) 
(2.46) 
(2.46) 
(2.46) 
1979 
827,675 
61,209 
43,235 
932,119 
356,621 
225,682 
50,058 
281,522 
913,883 
18,236 
(29,600) 
4,706 
4,957 
31,332 
10,000 
(192) 
21,203 
39,439 
(2,101) 
41,540 
41,540 
2.99 
2.99 
2.31 
2.31 
1978 
734,005 
56,936 
43,572 
834,513 
309,445 
154,876 
47,094 
268,242 
779,657 
54,856 
(23,089) 
2,910 
3,666 
6,754 
258 
(9,501) 
45,355 
6,808 
38,547 
16,201 
54,748 
2.82 
1.27 
4.09 
2.15 
0.89 
3.04 
 ~~;;,\,Ll..l,,;;l.A~. 
Years ended December 31, 1980, 1979 and 1978 
(In thousands of dollars) 
Sources of Working Capital: 
Earnings (loss) before cumulative effect of a change 
in accounting principle .. . .. . .. ... . . .. . .... . .. ........ . 
Add (Deduct) Items Which did not Affect Working Capital: 
Depreciation and amortization . . ... .. ............ . ..... . 
Deferred income taxes ............... .. ... . . .. . .. ..... . 
Amortization of deferred investment credits ....... . ... . .. . 
Gains on disposition of equipment . .. ..... . .... . . .. . . .. . 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 
Total provided (used) by operations (the cumulative 
effect of a change in accounting principle did not 
affect working capital) . . . . ....... . . . ..... .. ...... . . 
Reimbursements of deposits and capital expenditures 
upon acquisition of aircraft .... ... ........ ..... . ... .. .. . 
Proceeds from disposition of equipment ... .. ... . ... ... . . . . 
Proceeds from issuance of Ion -term obli ations .... . ..... . . 
Total sources .... . . .. . . .......... .. . .. .. . .. .. ... . . . . . 
Applications of Working Capital: 
Purchase of and deposits on property and equipment ...... . 
Reduction of long-term obligations including transfers 
to current liabilities ...... . .... . ... . ... . ...... .. ..... . . . 
Cash dividends . .. .. . . ..... . . .... ... ... .... .. . ... . .. . .. . 
Other, net .. . ... ... .... . . .. . .. ..... . .. . . . .. . . . ... . ..... . 
Total a lications ........ . . . ....................... . 
Increase (decrease) in working ca ital . ............. . 
Summary of Increases (Decreases) in Working Capital: 
Cash and temporary investments ......................... . 
Receivables ... . .. . ..... .. .. .. ... . .... . .............. . . . 
Expendable parts and prepaid expenses ................. . 
Current liabilities ....... . .. .. ........................... . 
*Reclassified to conform to the 1980 presentation. 
See accompanying notes to financial statements. 
19 
1980 
$ (29,632) 
60,146 
(20,660) 
(559) 
(32,099) 
(3,557) 
(26,361) 
10,746 
50,120 
198,350 
232,855 
171,123 
81,667 
5,652 
(172) 
258,270 
$ (25,415) 
(15,975) 
16,568 
9,143 
(35,151) 
$ (25 415) 
1979 
41,540 
49,581 
(4,225) 
(563) 
(31,332) 
4,706 
50,295 
10,563 
50,950 
104,941 
216,749 
182,752 
52,402 
7,604 
5,097 
247,855 
(31 ,106) 
(21 ,147) 
13,252 
3,718 
(26,929) 
31 ,106 
1978 
38,547 
46,715 
5,552 
(558) 
(6,754) 
2,246 
81 ,256 
12,633 
10,794 
71,785 
176,468 
150,747 
20,540 
7,524 
(4,867 
173,944 
2,524 
19,799 
21,249 
2,048 
(40,572 
2,524 
  
Years ended December 31, 1980, 1979 and 1978 
(In thousands of dollars) 
Preferred 
Stock 
$25.00 Stated 
Value 
Balance at January 1, 1978 .......... $30,000 
Exercise of stock options ........... 
Conversion of debentures ......... 
Conversion of preferred stock .. . . .. (77) 
Net earnings . . ................... 
Cash Dividends: 
Preferred stock ................. 
Common stock ........ ........ . 
Balance at December 31, 1978 ....... 29,923 
Exercise of stock options ... . .... .. . 
Conversion of debentures ......... 
Net earnings ..................... 
Cash Dividends: 
Preferred stock ................. 
Common stock ................. 
Balance at December 31, 1979 .. .... . 29,923 
Conversion of debentures ......... 
Net loss .. ......... .. .......... .. 
Cash Dividends: 
Preferred stock .. ... , .... ... .... 
Common stock ................. 
Balance at December 31, 1980 
(Notes 6, 7, and 9) ................ $29,923 
See accompanying notes to financial statements. 
(In thousands of dollars except per share amounts) 
Note 1. Summary of Significant Accounting Policies 
Property and Equipment 
Common Stock 
S1.00 ParValue 
12,659 
33 
310 
8 
13,010 
17 
3 
13,030 
1 
13,031 
Additional Total 
Paid-in Retained Shareholders' 
Capital Earnings Equity 
27,227 77,553 147,439 
256 289 
3,240 3,550 
69 
54,748 54,748 
(2,397) (2,397) 
5,127 (5,127) 
30,792 124,777 198,502 
132 149 
35 38 
41,540 41,540 
(2,394) (2,394) 
(5,210) (5,210) 
30,959 158,713 232,625 
4 5 
(29,632) (29,632) 
(2,394) (2,394) 
3,258 3,258) 
30,963 123,429 197,346 
Owned property and equipment, exclusive of residual values, are depreciated over the estimated useful lives by the 
straight-line method. Assets recorded under capital leases are depreciated over the life of the lease by the straight-line 
method. The estimated useful lives and residual values of owned aircraft are as follows: 
DC-10 . 
727 
737 
20 
Estimated 
Useful Life 
16 years 
15 years 
14 years 
Residual 
Value 
10% 
15% 
15% 
 Estimated useful lives of ground equipment range from four to ten years. Buildings and improvements on leased property 
are depreciated over the life of the lease. Depreciation expense for assets recorded under capital leases is included in 
depreciation and amortization expense. 
Interest Capitalized 
Certain interest costs, primarily related to deposits on aircraft purchase contracts, are capitalized and amortized over the 
lives of the related assets. 
Investment Credits 
Investment credits are accounted for by the flow-through method. 
Obsolescence of Expendable Parts 
An allowance for obsolescence of expendable parts is accrued over the estimated useful lives of the related aircraft types. 
Airline Traffic Liability 
Passenger ticket sales are recorded as a current liability until recognized as revenues for services provided by Western, 
refunded, or billed by other carriers for transportation provided by them. 
Note 2. Lease Commitments 
Western leases certain flight equipment and facilities and ground equipment. Lease terms for flight equipment range from 
11 to 15 years for 727 aircraft and from 15 to 18 years for DC-10 aircraft. Lease terms for facilities and ground equipment range 
up to 29 years. Interest expense is accrued on the basis of the outstanding obligations under capital leases. Leased equip- 
ment under capital leases is included in the balance sheets at December 31, 1980 and 1979, as follows: 
Flight equipment ........................ . 
Ground equipment . 
Less allowance for depreciation . 
1980 
$113,219 
2,006 
115,225 
49,028 
$ 66,197 
At December 31, 1980 minimum lease payments under leases expiring after December 31, 1981 were as follows: 
1981 . 
1982 ........... . 
1983 . 
1984 ............ . 
1985 . 
Thereafter . .......... . 
Total minimum lease payments . 
Less amount representing interest .... 
Present value of obligations-capital leases ... , . 
Less current portion of capital leases . 
Long-term obligations-capital leases . 
Capital 
Leases 
15,270 
15,270 
15,270 
14,886 
10,757 
66,541 
137,994 
49,285 
88,709 
7,183 
S 81 ,526 
Rental expense for operating leases amounted to $22,050, $17,384 and $15,239 in 1980, 1979 and 1978, respectively. 
Note 3. Commitments and Contingent Liabilities 
1979 
113,219 
3,278 
116,497 
42,638 
73,859 
Operating 
Leases 
13,516 
13,331 
12,694 
12,010 
11,843 
104,489 
167 883 
At December 31, 1980 Western had on firm order flight equipment which included three 727-200 aircraft scheduled for 
delivery in 1981, six 767-200 aircraft scheduled for delivery in 1983 and 1984 and three 767 engines scheduled for delivery in 1983. 
Western recorded advance deposits on these orders which amounted to $30,100 as of December 31, 1980. The balance of 
the purchase price payable on delivery will be approximately $273,300. 
Western has options to purchase six 767-200 aircraft for delivery in 1984 and 1985, and three DC-10-30 aircraft for delivery 
by 1984. Deposits on these options amounted to $1,400 at December 31, 1980. Outstanding commitments for flight equipment 
modification and spare parts amounted to approximately $4,000 and for facilities and ground equipment amounted to 
approximately $5,100 as of December 31, 1980. 
For information regarding the status at December 31, 1980 of legal proceedings, see "Legal Proceedings" on page 10 
of this report. 
21 
 Note 4. Retirement Plans 
Western has retirement plans, including a union-sponsored plan, which cover substantially all employees. Western's con- 
tributions to the Company-sponsored plans, together with the participants' required contributions, are sufficient to fund 
current seNice costs annually and prior seNice costs over ten to twenty years. Actuarial gains and losses are amortized 
over ten year periods. 
Western participates in a collectively bargained multi-employer pension plan and is therefore subject to the provisions of 
the recently enacted Multi-employer Pension Plan Amendments Act of 1980. 
Under this complex law the union plan Board of Trustees, as sponsor, is required to obtain an actuarial valuation of the 
present value of vested and nonvested accumulated plan benefits. Western will be provided with an estimate of its share of 
the liability for unfunded vested benefits in this plan. Western has been advised that this information is not available at this 
time. Accordingly, the table that follows excludes data applicable to this multi-employer pension plan. 
A comparison of accumulated plan benefits and plan net assets for the Company-sponsored defined benefit plans is 
as follows: 
Actuarial Present Value of Accumulated Plan Benefits: 
Vested . 
Nonvested .... 
Net assets available for benefits. 
1980 
$137,246 
9,876 
$147,122 
$139,000 
January 1, 
1979 
114,597 
9,015 
123,612 
111,559 
The weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits 
was six percent for both years. 
The cost of the retirement plans, including the union-sponsored plan, charged to operating expense, was $34,193, $30,304 
and $26,606, for 1980, 1979 and 1978, respectively, which included amortization of prior seNice costs over periods ranging 
from ten to twenty years for certain of the plans. 
Note 5. Income Taxes 
Income taxes are summarized as follows: 
Current: 
Federal: 
Provision. 
Investment credits applied .. .. . 
State. 
Deferred: 
Provision 
Tax loss carryforward . 
Investment Credits: 
Applied . 
Transferred to current . 
Amortization of deferred investment credits ........... . 
1980 
$ (3,647) 
5,751 
2,104* 
(492) 
(5,073) 
(15,533) 
5,697 
(5,751) 
(20,660) 
(559) 
$(19,607) 
1979 1978 
18,901 23,447 
(17,792) (23,447) 
1,109* 
1,578 1,814 
(5,597) (2,655) 
(16,420) (15,240) 
17,792 23,447 
(4,225) 5,552 
(563) (558) 
(2,101) 6,808 
'The Tax Reform Act of 1976 provided for 100% application of unapplied investment credits against Federal income tax liabilities for 1978. This 
100% application was reduced 10% annually until 1980. Under the Revenue Act of 1978 the application remains at 80% in 1981 and returns to 
90% for 1982 and beyond 
Effective January 1, 1978 Western changed its method of accounting for post-1971 investment credits from the deferral to the 
flow-through method. The cumulative effect of the change on years after 1971, amounting to $16,201, has been included in 
net earnings for 1978. The effect of the change on the results for 1978 was to increase net earnings by $29,107, or S2.27 per 
common share. 
Deferred income taxes arise from timing differences between financial and tax reporting. The effects of these differences 
on income taxes are as follows: 
1980 1979 1978 
Depreciation . 
' ' ' ' 
... ' ' . 
$(3,454) (4,825) 109 
Capital leases .. .. ' . ' . ' ' 
.. ''. ' ' 
...... ' ' 
(1,084) ( 114) (1,108) 
Interest Gapitalized . ..... '.'. . 
. ' 
. . . ' 
. . 1,140 1,903 1,124 
Employee benefits . (718) (1 ,626) (2,201) 
Preoperating expense. (393) (383) (502) 
Other. . ' ' ' ' 
..... ' . ' ' ' ' . ' ' ' . 
(564) (552) (77) 
$(5,073) (5,597) (2,655) 
22 
 Reconciliations of income taxes at the United States statutory rote to the provision for income taxes follow: 
Income taxes at the United States statutory rate. 
Inc reases (reductions) in taxes resulting from: 
Amortization of deferred investment credits .. 
Investment credits recognized on flow through method . 
State income taxes net of federal income tax benefit . 
Capital gains .. 
Other . 
Income taxes .......... . 
1980 
$(22,650) 
(559) 
5,697 
(266) 
(1,829) 
$(19,607) 
1979 
18,142 
(563) 
(16,420) 
852 
(3,800) 
(312) 
(2,101) 
1978 
21,770 
(558) 
(15,240) 
943 
( 107) 
6,808 
Investment credits available to reduce future years' Federal income tax liability for financial and tax purposes amount to 
$22,000 at December 31, 1980. For income tax purposes, $5,800 expires in 1986 and $16,200 expires in 1987. 
Note 6. Debt 
At December 31, 1980 and 1979 long-term debt included: 
Secured: 
9.55% equipment trust certificates due May 1, 1993, with semi-annual 
principal payments of $3,458 starting November 1, 1979 . , ....... . 
10% equipment trust certificates due April 1, 1994, with quarterly 
principal payments of $1,000 starting September 30, 1980 . 
Floating-rate equipment trust certificates due June 30, 1995, with 
semi-annual principal payments of $2,609 starting June 30, 1984 .. 
13.29% installment notes due May 1, 1995, with semi-annual principal 
payments of $1,100 starting November 1, 1980 . 
Unsecured: 
Senior: 
Revolving credit notes . . . . . . . . . . . . . .......... . 
5% installment notes due September 1, 1981, with annual principal 
payments of $4,000 on September 1 . 
6%% installment notes due September 1, 1984, with annual principal 
payments of $2,000 on September 1 which will increase to $7,000 in 1982 . 
7% installment notes due May 4, 1986, with semi-annual principal 
payments of $352 starting November 4, 1981 ..... 
Notes payable to manufacturers, 8% and % above prime, payable 
in varying installments to 1985 . . .............................. . 
Subordinated: 
5% convertible subordinated debentures due February 1, 1993, with 
annual sinking fund payments of $1,500 starting in 1983 .. 
10% subordinated sinking fund notes due April 15, 1984, with annual 
sinking fund payments of $2,300 . . . . . . . . ..... 
======================== 
Less current portion ...... . 
============================= 
1980 
$ 86,440 
52,991 
60,000 
31 ,900 
231,331 
50,000 
4,000 
23,000 
2,869 
29,844 
109,713 
23,562 
12,675 
36,237 
377,281 
23,756 
$353,525 
1979 
93,355 
54,991 
148,346 
10,000 
8,000 
25,000 
15,362 
58,362 
23,817 
15,029 
38,846 
245,554 
16,217 
229,337 
The revolving credit notes represent borrowings under a $125,000 revolving line of credit. The line of credit extends to June 30, 
1982, at which dote it con be replaced by term notes in amounts not to exceed $75,000. The term notes would mature on June 
30, 1990 with quarterly principal payments beginning September 30, 1982. The interest rote on funds borrowed is equal to the 
agent bank's prime commercial rote until June 30, 1982, then increasing by Ya of a percentage point over prime each year 
until June 30, 1989, and then remaining at prime plus one percentage point until maturity. 
The commitment fee under the agreement is % per year on the lesser of $75,000 or the overage unused portion of the 
revolving line of credit. Although the bank loon agreement does not require compensating balances, Western has informally 
agreed to maintain on deposit overage balances equal to 5% of the total line of credit plus 10% of borrowings.The 
balances maintained at December 31, 1980 were $11,250. 
Western's various debt agreements limited amounts available for payments of cash dividends to $34,304 at December 31, 
1980. These agreements also contain, among other things, requirements pertaining to cash and working capitol levels and 
provisions which may restrict additional borrowings. 
Floating-rote equipment trust certificates totaling $60,000 and 13.29% installment notes totaling $33,000 were issued during 
1980 for the purchase of flight equipment. The total obligations under equipment trust certificates and the 13.29% installment 
23 
 notes are secured by aircraft and engines with a net book value of $270,108. 
The following schedule shows the amount of long-term debt due in each of the five following calendar years: 
1981 .. S23.756 1984 . 
1982. 29,3 17 1985. 
1983 . 43,541 
44,045 
31,862 
At December 31, 1980, 2,040,000 shares of common stock were reserved for conversion of debentures at a conversion price 
of S11.55 per share. 
Note 7. Stock Options 
Western had a qualified stock option plan for officers, which was adopted in 1964 and expired in 1974. The 75,611 options 
(average price $10.93) still outstanding under that plan expired on April 30,1978. The Company presently has a non-qualified 
stock option plan adopted in 197 4 for officers and key personnel. This plan provides for options to purchase a maximum of 
1,030,000 shares of Western's common stock at prices not less than the fair market value of the stock at date of grant. The 
options are exercisable in equal annual increments over a five-year period. The options expire ten years after the date of 
grant. A summary of activity in the 1974 plan follows: 
Options granted and outstanding at December 31, 1977 . 
Options granted . 
Options exercised . 
Options cancelled or expired .. 
Options granted and outstanding at December 31, 1978 . 
Options granted . 
Options exercised . 
Options cancelled or expired. 
Options granted and outstanding at December 31, 1979 . 
Options granted . . . . . ........ . 
Options cancelled or expired . 
Options granted and outstanding at December 31, 1980 . 
Options Exercisable at: 
December 31, 1980 ... 
December 31, 1979 . 
Number of 
Shares 
724,420 
116,280 
(33,315) 
(16,550) 
790,835 
71,000 
(17,630) 
(6,550) 
837,655 
21,500 
(12,500) 
846,655 
683,493 
585,887 
Average 
Price 
S8.68 
7.81 
8.69 
8.54 
8.56 
8.62 
8.47 
9.12 
8.56 
7.27 
8.65 
S8.53 
S8.63 
S8.70 
At December 31, 1980, 128,280 shares (137,280 shares at December 31, 1979) were reserved for the issuance of future grants. 
Note 8. Earnings (Loss) per Common Share 
Earnings (loss) per common share are calculated as follows: 
Adjustment of Net Earnings (Loss): 
Primary: 
Net earnings (loss). 
Preferred dividends . 
Net earnings (loss) available for common stock .. 
Fully Diluted: 
Net earnings (loss) .. . ........ . 
Preferred dividends . 
Reduction in interest expense, net of income 
taxes, for the assumed conversion of 5 % 
convertible subordinated debentures ... 
Adjusted net earnings (loss) assuming full dilution ..... 
========================== 
24 
1980 
Net 
(Loss) 
$(29,632) 
(2,394) 
$(32,026) 
$(29,632) 
(2,394) 
$(32,026) 
1979 
Net 
Earnings 
41,540 
(2,394) 
39,146 
41,540 
653 
42,193 
1978 
Earnings Before 
Cumulative Effect 
of a Change in 
Accounting Principle 
38,547 
(2,397) 
36,150 
38,547 
680 
====-iiiiiiiiiiiiiii 
39,227 
Net 
Earnings 
54,748 
(2,397) 
52,351 
54,748 
680 
55,428 
 1980 1979 1978 
Earnings Before 
Cumulative Effect 
Net Net of a Change in Net 
(Loss) Earnings Accounting Principle Earnings 
Adjustment of Shares Outstanding 
(in thousands): 
Weighted overage sho res outstanding . . . ' 
. . . . ' ' ' 
. ' ' ' 
13,031 13,026 12,795 12,795 
Assumed exerc ise of stock options . 58 
T 
ota l overage common shares for prima ry . 13,031 13,084 12,795 12,795 
Adjustment Assuming Full Dilution 
(in thousands): 
Weighted overage shares outstanding . . . ' ' ' 
. ' ' 
. . . ' 
. . .. ' ' ' . ' 
.. 13,031 13,026 12,795 12,795 
Assumed conversion of subordinated d ebentures . . .. ' . . . '. ' 
2,073 2,31 2 2,31 2 
Assumed conversion of preferred stock .. 2,992 2,997 2,997 
Assumed exercise of stock options .. 146 111 111 
T 
otal overage common shares assuming full dilution . 
'  0 I  I  > o  o   I  I 
13,031 18,237 18,215 18,2 15 
Earnings (Loss) per Common Share: 
Primary . . . ' 
. ' ' 
. . . . 
' 
$ (2.46) 2.99 2.82 4.09 
Fully diluted . . ' 
. . . . . ' 
.. ... .. ' ' 
.. . ' 
. ' 
. . . . ' ' ' 
$ (2.46) 2.31 2. 15 3.04 
The exercise of stoc k options and conversion of the convertible subordinated debentures and/or the preferred stock into common shares 
hos not been assumed, since the effect of suc h on assumption would be anti-dilutive. 
Note 9. Preferred Stock 
The shares of preferred stock are convertible into common stock at the rate of 2.5 shares of common stock for each share 
of preferred stock, subject to adjustment under certain conditions, and may be redeemed in whole or in part at any time at 
the option of Western. The redemption price at December 31, 1980 was S 
26.40 per share. The redemption price decreases 
periodically until 1987 after which it remains at S 
25.00 per share. The preference on liquidation is at the stated value. 
Note 10. Proposed Consolidation 
The Company hos entered into on Agreement of Consolidation with Continental Air Lines, Inc., to consolidate the two 
companies into a new company The Boards of Directors of both companies hove approved the Agreement, and it is now 
subject to approval by the stockholders of both companies, certain of their lenders, the Civil Aeronautics Board and the 
President of the United States. For information regarding further developments, see Letter to Shareholders on page 2. 
Note 11. Quarterly Financial Data (Unaudited) 
Summarized quarterly financial data (unaudited) for 1980 and 1979 is as follows: 
1980 
Operating revenues . 
Operating income (loss) 
Net (loss) ... 
Net (Loss) per Common Share: 
Primary .. . 
Fully diluted .......... . 
1979 
Operating revenues . 
Operating income (loss) 
Net earnings . 
Net Earnings per Common Share: 
Primary . . ..................... . 
Fully diluted . 
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii===iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii= 
' 
... . ' 
.. . 
March 31 
$232,153 
(23,006) 
(8,868) 
s (0.72) 
(0.72) 
$210,601 
3,503 
12,652 
s 0.93 
0.71 
Three Months Ended 
June 30 September 30 December 31 
237,707 273,720 252,175 
(20,177) 7,658 (10,236) 
(5,379) (6,397) (8,988) 
(0.46) (0.54) (0.74) 
(0.46) (0.54) (0.74) 
241 ,305 251,080 229,133 
21 ,870 8,350 (15,487) 
14,013 6,477 8,398 
1.03 0.45 0.60 
0.78 0.36 0.47 
Changes in estimdtes of employee benefit costs increased net income during the second throug h the fourth quarters of 
1979 by S780 (S0.06 per share), S 
1,110 (S0.08 per share), and S 
1,147 (S0.09 per share). Western normally p rovides taxes qua rterly 
based on the statutory rote less a pro rota portion of the estimated annual investment c redit. In the third quarter of 1980 
Western reversed previously recorded investment credits of S 
12,507 (S 
0.96 per share) since they would not c urrently be utilized. 
25 
 Note 12. Description of Impact of Inflation (Unaudited) 
Statement of Financia l Accounting Standards No. 33 (SFAS No. 33) prescribes 1wo supplementary income computations 
for estimating the impact of inflation. These computations estimate the effects of general inflation (constant dollars) and the 
effects of changes in specific prices ( current cost). 
SFAS No. 33 defines constant dollar accounting as a method of reporting financia l statement elements in dollars each of 
which has the same general purchasing power. Current cost accounting is defined as a method of measuring and reporting 
assets and expenses associated with the use or sale of assets at their current cost or lower recoverable amount at the balance 
sheet date or at the date of use or sale. Both methods involve the use of assumptions and estimates. Therefore, the resulting 
measurements should be viewed as estimates rather than as precise indicators of the effects of inflation. 
The amounts reported in the primary financial statements have been adjusted for depreciation and amortization expense. 
Revenues and all other operating expenses are considered to reflect the average price levels and have not been adjusted. 
Further, there have been no adjustments made to provisions for income taxes. 
Constant dollar values were determined by restating historical costs, accumulated depreciation and amortization, and 
depreciation and amortization expense of property and equipment into average 1980 dollars using the Consumer Price 
Index for all urban consumers (CPI-U) published by the Bureau of Labor Statistics. Current costs of flight equipment were 
determined by the direct pricing method for those aircraft still in production. Current costs for aircraft no longer in production 
were determined by using the recoverable amount based on net realizable values expected to be derived from the sale 
of the assets. Current costs for spare engines and capital ratable spares and assemblies were computed based on the 
ratio by which the current cost of aircraft fleets exceed the historic cost of such fleets. Current cost for other properties and 
equipment were determined by indexation using the CPI-U. 
An estimate of net (loss) adjusted for changing prices for the year ended December 31, 1980, follows: 
Net (loss) as reported in the statement of operations . . ........ . 
Adjustment to Restate Costs for the Effect of General Inflation: 
Depreciation and amortization expense .. 
Net (loss) adjusted for general inflation .. . ............... . 
Adjustment to Reflect the Difference Between General Inflation and Changes in Specific Prices (current costs): 
Depreciation and amortization expense . . . . . . . . . . . . .......... . 
Net (loss) adjusted for changes in specific prices .. 
Gain from decline in purchasing power of net amounts owed . 
Increase in specific prices (current cost) of properties and equipment held during the year . 
Effect of increase in general price level . . ............... . 
Excess of increase in specific prices over increase in the general price level .. 
At December 31, 1980 current cost of properties and equipment, net of accumulated depreciation and amortization, was $1,177,709. 
S (29,632) 
27,126 
(56,758) 
14,260 
S (71,018) 
S 46,847 
$240,784 
(126,705) 
$114,079 
A five-year comparison indicating the effect of adjusting historical revenues, purchasing power gains or losses on net 
monetary items, cash dividends, and common stock market price to dollar amounts expressed in terms of average 1980 
dollars as measured by the CPI-U follows: 
Year Ended December 31, 
1980 1979 1978 1977 1976 
Operating revenues .... $995,755 1,062,616 1,051,486 940,391 877,547 
Historical Cost Information Adjusted for General Inflation: 
Net earnings (loss) ... . . . ' 
. . . . ' 
. . ' 
. (56,758) 23,860 
Net earnings (loss) per common share . $ (4.54) 1.62 
Net assets at year-end . ........... . . . . . ' 
. . . . . . . . . . . . 439,568 478,042 
Current Cost Information: 
Net earnings (loss) . ' ' 
. . ......... ' 
..... ' ' 
.. '. (71 ,018) 12,680 
Net earnings (loss) per common share . . . . . . ' ' 
. ' ' 
. ' 
. . . . $ (5.63) 0.76 
Excess of increase in specific prices over increase in 
the general price level . ' 
.. ' ' 
. ... ' 
114,079 6,528 
Net assets at year-end . . 671 ,939 611,433 
Gain from decline in purchasing power of 
net amounts owed . 46,847 41,904 
Cash dividends declared per common share . $ 0.25 0.46 0.50 0.54 0.58 
Market price per common share at year-end . $ 9.13 11 .83 10.40 10.37 14.50 
Average Consumer Price Index . ... 246.8 217.4 195.4 181 .5 170.5 
26 
 Peat, Marwick,Mitchell &Co. 
The Board of Directors 
Western Air Lines, Inc.: 
Certified Public Accountants 
555 South Flower Street 
Los Angeles, California 90071 
We have examined the balance sheets of Western Air Lines, Inc. as of December 31, 1980 and 1979 and the related 
statements of operations, shareholders' equity and changes in financial position for each of the years in the three year 
period ended December 31, 1980. Our examinations were 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 position of Western Air Lines, Inc. at 
December 31, 1980 and 1979 and the results of its operations and the changes in its financial position for each of the years 
in the three year period ended December 31, 1980, in conformity with generally accepted accounting principles consistently 
applied, during the period subsequent to the change, with which we concur, made as of January 1, 1978, in the method of 
accounting for investment credits as described in note 5 of notes to financial statements. 
January 30, 1981, except for Note 10 
which is as of March 13, 1981 
Notice to Stockholders. 
A rule adopted by the Civil 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 beneficially 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 information 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 stockholder who believes that 
he may be required to file such a report may obtain further information by writing to the Director, Bureau of Pricing and 
Domestic Aviation, Civil Aeronautics Board, Washington, D.C. 20428. 
Form 10-K: Stockholders may obtain free of charge a copy of the company's annual report on form 10-K as filed with the 
Securities and Exchange Commission by writing to the Secretary, P 
.O. Box 92005, World Way Postal Center, Los Angeles, 
California 90009. 
27 
 Miguel M. Blasquez 
President 
Inter-American Commercial 
Arbitration Commission, 
Mexico City, Mexico 
Victor L. Brown 
Presiding Bishop, 
The Church of Jesus Christ 
of Latter-day Saints, 
Salt Lake City, Utah 
Richard P. Ensign 
Executive Vice President- 
Marketing, 
Western Air Lines, Inc., 
Los Angeles, California 
Hugh W. Darling 
Attorney-at-Law, 
Darling, Rae & Gute, 
Los Angeles, California 
Leo H. Dwerlkotte 
Las Vegas, Nevada 
James D. Garibaldi 
Attorney-at-Law, 
Los Angeles, California 
Gerald Grinstein* 
Attorney-at-Law, 
Preston, Thorgrimson, 
Ellis & Holman 
Seattle, Washington 
Walter J. Hickel 
Chairman of the Board, 
Hickel Investment Company, 
Anchorage, Alaska 
Arthur F. Kelly* 
Chairman of the Board and 
Chairman of the Executive 
Committee, 
Western Air Lines, Inc., 
Los Angeles, California 
Dr. Donald H. Mclaughlin 
Chairman of the Board, 
Homestake Mining Company, 
San Francisco, California 
John H. Myers 
Assistant to the President, 
St. John's University, 
St. Paul, Minnesota 
Edwin W. Pauley 
Chairman of the Board, 
Pauley Petroleum, Inc., 
Los Angeles, California 
28 
Robert 0. Kinsey 
Executive Vice President and 
Chief Operating Officer, 
Western Air Lines, Inc., 
Los Angeles, California 
Bert T. Kobayashi, Jr. 
Attorney-at-Law, 
Kobayashi, Watanabe, Sugita 
and Kawashima, 
Honolulu, Hawaii 
Arthur G. Linkletter 
Television Producer and 
Broadcaster, 
Chairman of the Board, 
Linkletter Management, Inc., 
Costa Mesa, California 
Vernon 0. Underwood 
Chairman of the Board and 
Chief Executive Officer, 
Young's Market Company, Inc., 
Los Angeles, California 
Harry J. Volk 
Union Bancorp, Inc., 
Los Angeles, California 
Dominic P. Renda* 
President and 
Chief Executive Officer, 
Western Air Lines, Inc., 
Los Angeles, California 
Robert H. Volk* 
President, 
Martin Aviation, Inc. 
Santa Ana, California 
Member, Executive 
Committee 
John M. Wallace 
Walker Bank & Trust Company, 
Salt Lake City, Utah 
Arthur G. Woodley 
Bellevue, Washington 
 Arthur F. Kelly 
Chairman of the Board and 
Chairman of the Executive 
Committee 
Dominic P. Renda 
President and Chief Executive 
Officer 
Robert 0. Kinsey 
Executive Vice President and 
Chief Operating Officer 
Richard P. Ensign 
Executive Vice President- 
Marketing 
Donald K. Hall 
SeniorVice President, 
General Counsel and Secretary 
James L. Mitchell 
SeniorVice President- 
Long Range Planning 
Willis R. Balfour 
Vice President- 
Passenger and Cargo Marketing 
Anthony Colletti 
Vice President- 
Maintenance and Engineering 
Paul V. Donahue 
Vice President- Procurement 
Richard 0. Hammond 
Vice President and Treasurer 
Paul R. Harding 
Vice President-Central Division 
William J. Grant 
Managing Director- 
United Kingdom and Europe 
Allen F. Hoss 
Vice President-Hawaii 
Registrar/Transfer Agent- 
Common & Preferred Stock 
David E. Holt 
Vice President-Passenger Sales 
Lawrence H. Lee 
Vice President- 
Passenger and lnflight Services 
Roderick G. Leith 
Vice President-Finance 
Fred E. Luhm 
Vice President- 
Data Processing and Communications 
Bert D. Lynn 
Vice President- 
Advertising and Sales Promotion 
William E. Newell 
Vice President- 
Flight Operations 
Lawrence A. Nichols 
Vice President-Northern Division 
Charles F. Schlatter 
Vice President-Financial Planning 
Ray Silvius 
Vice President-Corporate Affairs 
Jack M. Slichter 
Vice President-Field Management 
Glen L. Stewart 
Vice President and Controller 
Neil S. Stewart 
Vice President- 
Government and Industry Affairs 
Harry L. White 
Vice President-Southern Division 
Grant G. Murray 
Vice President-Los Angeles 
Luis Pasquel L. 
Vice President-Mexico 
Raymond M. Waters 
Vice President-Alaska 
Bank of America National Trust & Savings Assn. 
Ticker Symbols 
Common Stock 
Preferred Stock 
5% Debentures 
10% Notes 
555 South Flower St., Los Angeles, California 90071 
Lynn D. Zumbrunnen 
Vice President-Eastern Division 
Howard L. Culver 
Assistant Vice President- 
Regulatory Law 
Donald F. Drews 
Assistant Vice President- 
Properties and Facilities 
John I.Good 
Assistant Vice President- 
Cargo Sales and Service 
Thomas J. Greene 
Assistant Vice President- 
Corporate Law and Assistant 
Secretary 
Wayne B. lichtgarn 
Assistant Vice President- 
Consumer Affairs 
Richard G. Peterson 
Assistant Vice President- 
Schedule Planning 
W. Jeffrey Terrill 
Assistant Vice President- 
Route Planning 
Donald W. Vena 
Assistant Vice President- 
Personnel Relations 
WAL 
WALA 
WALK 
WAL. 
Debenture and Subordinated Note Trustee 
The Chase Manhattan Bank 
1 NewYork Plaza, New York, New York 10015 
Independent Accountants 
Peat, Marwick, Mitchell & Co. 
Exchange listing-Common & Preferred Stock 
Debenture and Subordinated Notes 
New York Stock Exchange 
Pacific Stock Exchange 
555 So. Flower St., Los Angeles, California 90071 
Annual Meeting 
Fourth Thursday in April