Advertisement
  1. Archive

United buys Atlantic routes from Pan Am

Financially ailing Pan Am Corp. will sell its flagship trans-Atlantic routes and other assets to larger rival UAL Corp. for $400-million, the companies said Tuesday. The agreement came months after fruitless efforts by Pan Am to find a merger partner or buyer for Pan American World Airways, which pioneered world air travel but has lost hundreds of millions of dollars over the past decade.

It also marks a major global expansion by UAL, the parent of United Airlines, which bought Pan Am's prized Pacific routes five years ago but had lacked a London gateway to Europe.

In addition to acquiring Pan Am's rights to fly between London's Heathrow Airport and five U.S. cities _ New York, Washington, San Francisco, Los Angeles and Seattle _ UAL would acquire Pan Am's route from Washington's Dulles International Airport to Paris and several routes between London and other European cities.

The deal also provides for UAL to buy Pan Am's facilities at Dulles and San Francisco International Airport and two Boeing 747 jets.

Pan Am would keep its London routes from Miami and Detroit, although it would move its London operations from Heathrow to the smaller Gatwick Airport.

The deal still faces a hurdle.

Under an agreement with the British government, Pan Am and Trans World Airlines are the only American carriers allowed to serve London's Heathrow Airport because of congestion there.

But UAL chairman Stephen M. Wolf said he does not foresee a problem gaining British approval for United to use Heathrow.

United's entry in the lucrative London market follows by one week its bolstering of Pacific operations with approval to fly non-stop from Chicago to Tokyo.

Analysts said the acquisition could give United a substantial lead over its competitors, American Airlines and Delta Air Lines, in the growing European market. United already is the dominant U.S. carrier in the Pacific.

Pan Am's protracted losses have been compounded by the recent rise in jet-fuel prices, as well as a simmering dispute with union employees seeking a new contract.

Pan Am spokesman Jeff Kriendler said the sale will not have any negative effect on service at Tampa International Airport.

Officials said Pan Am will concentrate on one major European hub, Frankfurt, Germany, and add flights to other European cities.

In addition, Pan Am chairman Thomas G. Plaskett said, the airline plans to increase flights from Miami International Airport to South America and to coordinate West Coast and Miami service to Latin America with United.

Analysts said that will set up a showdown between United and American for dominance in Miami, where American acquired a hub and Latin American routes from Eastern Airlines last year.

Up next:DOW FALLS

YOU MIGHT ALSO LIKE

Advertisement
Advertisement