Business: Pegged Profits

As a “deliberate policy,” the No. 2 U.S. aircraft maker announced last week that it is holding its profits down to their “pre-emergency level” in dollars, regardless of the tremendous emergency boom in its business. Explained United Aircraft in its annual report: “It is not in the public interest to allow the greatly increased volume of business resulting from the war effort to increase aggregate profits.”

To “stabilize” its profits, humming United used two main devices: 1) by reducing its prices to the U.S. Navy (despite fixed-price contracts), it gave up some $10,000,000; 2) by setting up a $5,000,000 charge against earnings, it made provision for “going out of war production.” Even so, United earned $16,721,000, or 5.4% on gross sales of $307,152,000 (v. $15,443,000, or 12.2% on $126,058,000 last year), after a whopping tax bill of $61,863,000 (v. $18,199,000 in 1940).

United, like Douglas (TIME, March 9), warned its stockholders that this year it will have less trouble holding profits down, since most of its present sales are on limited U.S. profit orders, not to foreign governments, which have afforded much larger profits in the past. Last year 58% of United’s business was with the U.S. (v. 23% in 1940); this year, 80-90% will be domestic.