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- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:17 pm
These extracurriculars proved profitable, particularly a New York real estate deal involving the construction and leasing of the Pan Am building, which was dedicated in 1963.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:17 pm
But as the 1960s wore on, the company again lapsed into poor performance as a result of overextension. By the time Juan Trippe announced his plans to retire in the latter years of the decade, his goal of having a plane in every airport in the world had brought about a sprawling 81,430-mile route system.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:18 pm
Competition from government-subsidized overseas airlines intensified. Trippe chose Najeeb Halaby, former head of the Federal Aviation Administration, to succeed him in 1969. Halaby found himself presiding over a firm so decentralized that he characterized it as “an airline without a country.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:18 pm
Worse, Pan Am was nearly bankrupt. Some thought the system could not be maintained without the award of a government subsidy or a compensatory monopoly, neither of which were likely. The fuel crises of the 1970s only exacerbated existing problems. Pan Am chalked up losses of $364 million from 1969 through 1976, and accumulated over $1 billion in debt.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:18 pm
With the help of tax-loss credits, Pan Am made its first profit in nearly a decade in 1977. The man responsible for this was William Seawell, who was brought in to replace Halaby in 1972.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:18 pm
Unable to obtain subsidy relief from either the Civil Aeronautics Board or the White House in 1974 and 1975, or possible funding from the Shah of Iran, Seawell instituted austerity measures in 1976 and renegotiated the company’s debt. Abandoning Trippe’s grand strategy, he reduced the system 25 percent by severing money losing services.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:19 pm
He reduced personnel by approximately 30 percent and approved an offer by employees to accept a wage cut. By these measures complete financial ruin was averted.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:19 pm
Late in 1979 Pan Am received approval for the $437 million acquisition of National Airlines, with which Seawell hoped to bolster Pan Am’s relatively weak domestic operations. But the purchase, later criticized as too expensive, was also poorly timed.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:19 pm
The early 1980s ratification of Airline Deregulation Act triggered sometimes cutthroat competition from new domestic and foreign carriers. The company was once again on the brink of financial ruin, this time as a result of fiscal overextension. Only by selling a large portion of its assets, including the Pan Am building headquarters, was it able to avoid bankruptcy.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:19 pm
Edward Acker became chairman of Pan Am in September of 1981. This cautious but optimistic manager continued to divest Pan Am’s assets. On September 14, 1984, Pan American Airways created a holding company called Pan Am Corporation to assume ownership and control of the airline and the services division.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:19 pm
Although the fast-growing Pacific market was one of the few profitable areas Pan Am could rely on, the company was so strapped for cash that it sold its Asian routes to United Airlines for $715.5 million in 1985.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:20 pm
In spite of the divestment of most of the firm’s most important assets, Pan Am’s domestic division alone lost over $1 billion from 1980 to 1987 and accumulated $914 million in long-term debt at the same time. Several groups—including Kirk Kerkor-ian, a Beverly Hills financier; Chicago’s Pritzker family; and a group of investors led by former Navy Secretary John Lehman—made takeover overtures, but a new chairman, Thomas G. Plaskett, turned them away.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:20 pm
In 1988, Plaskett negotiated $180 million in concessions from Pan Am’s five unions— enough to get the airline through what would become the harshest winter of its history.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:20 pm
On December 21 of that year, Pan Am’s flight 103 en route from London to New York, was demolished by the blast from a terrorist-planted bomb over the town of Lockerbie, Scotland. All 243 passengers and 16 crew members were killed and another eleven people on the ground were crushed by debris.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:21 pm
This human tragedy soon began to make a significant impact on the already-struggling airline. Lawsuits on behalf of the victims’ relatives found Pan Am and its subsidiary, Alert Management Systems Inc., guilty of willful misconduct in 1992
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:21 pm
Damages, which would be assumed by the airline’s insurer (the United States Aviation Insurance Group), totaled hundreds of millions. But Pan Am’s insurers continued to appeal the decision into late 1994 and refused to make any compensation to the victims’ families.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:21 pm
In the meantime, rising fuel costs and increasing competition in the United States and abroad forced Plaskett to layoff 2,500. To raise the cash necessary for continued operation, Plaskett and the board of directors decided to sell the firm’s only consistently profitable subsidiary, Pan Am World Services, as well as an important German route, in 1990.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:22 pm
That fall, Plaskett worked to open all Pan Am’s options. Although he was, by this time, actively seeking a merger partner, he also optimistically announced an eight-point plan to improve service, marketing, liquidity, and employee relations with the ultimate goal of turning a profit in 1990. The divestment of hubs at Heathrow Airport in London and Washington, D.C.’s Dulles International Airport brought in $290 million, but were not enough to keep the company from seeking bankruptcy protection on January 8, 1991.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:22 pm
After decades of struggling to survive, let alone prosper, Pan Am was by this time left with few options. Having sold most of its assets, opportunities for divestments were seriously limited. In spite of his weakened bargaining position, Chairman Plaskett resolved to sell all the airline, including its employees, or none of it.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:22 pm
But after months of negotiations involving most of the industry’s largest players, Pan Am’s creditors lost patience with Plaskett’s pace. Midway through 1991, they voted to accept an offer of $621 million in cash and the assumption of $668 million of Pan Am’s liabilities from third-ranking Delta Air Lines Inc.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:22 pm
Delta’s acquisition of the majority of Pan Am’s international route system catapulted it from a 1990 ranking of 23rd among the world’s airlines to a position among the top ten. The addition of most of Pan Am’s North Atlantic routes as well as its American and German hubs gave Delta more European destinations than any other American carrier.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:23 pm
The purchase also gave Delta a serious case of “corporate indigestion:” it posted a $500 million loss that year. Still, Delta chairman and chief executive officer Ronald Allen stood behind the decision.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:23 pm
In August of 1992, he told Terry Maxon of the Journal of Commerce and Commercial that “A lot of people may point to the Pan Am acquisition and say, ’Oh, that’s why Delta’s having so many problems.’ That’s not true. We had some surprises with that, but overall that’s gone very well.”
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:23 pm
Instead, Allen blamed the same industry forces that brought about Pan Am’s December 4, 1991 demise: high costs, fare wars, and inadequate traffic due in part to economic recession and fear of terrorism. By the time Pan Am filed for bankruptcy protection, two other major competitors, Eastern and Continental (both subsidiaries of Continental Airlines Holdings) were also in the midst of Chapter 11 reorganizations, and Trans World Airlines, Inc. joined that list early in 1992.
- Aditya992000
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Re: Tell about PAN American Airlines ?
Fri Jan 11, 2019 2:24 pm
United Airlines, American Airlines, and Delta were able to take advantage of their competitors’ weaknesses and together amassed over half of the U.S. market in the early 1990s. Some analysts surmised that Pan Am’s failure even benefited struggling carriers like TWA and Continental by reducing industrywide overcapacity.
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