Advertisement
  1. Archive

United buys Pan Am trans-Atlantic routes

Pan Am Corp., one of the oldest but financially weakest U.S. airlines, will sell important trans-Atlantic routes and other assets to larger rival UAL Corp. for $400-million, the companies announced 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 50 years ago but has lost hundreds of millions of dollars over the past decade of heightened competition.

It marks a major global expansion by UAL, the Chicago-based parent of United Airlines, which bought Pan Am's prized Pacific routes five years ago for $750-million but has lacked a London gateway to Europe.

In addition to acquiring Pan Am's rights to fly between London's Heathrow Airport and five United States 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.

Pan Am would keep its London routes from Miami and Detroit.

It also provides for UAL to buy gates, hangar and office space at Dulles and San Francisco International Airport, two Boeing 747 jumbo jets and spare parts.

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

"This alliance is consistent with our "right-sizing' strategy and provides us with the financial resources to pursue our strategic objectives," said Thomas G. Plaskett, Pan Am chairman. Pan Am recently announced staff and route cutbacks.

United's entry in the lucrative London market followed 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 race to the growing European market. United already is the dominant U.S. carrier in the Pacific.

UAL _ which is the No. 2 airline outside the Soviet Union, behind American _ recently put a yearlong union-led takeover attempt behind it, promised to negotiate new contracts and filed a record aircraft order with Boeing.

Pan Am's problems have been compounded by protracted losses preceding the recent rise in jet-fuel prices, as well as a simmering dispute with unionized employees who took a pay cut in 1988 and have been seeking a new contract.

Pan Am officials said the airline will concentrate on one major European hub, Frankfurt, Germany, and strengthen schedules to other European cities from New York, Los Angeles and San Francisco.

In addition, Plaskett said, Pan Am will increase its Miami presence by adding long-haul flights from that city to South America.

YOU MIGHT ALSO LIKE

Advertisement
Advertisement