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Pan Am Sells Its to Pacific United Operations Airlines:
Ailing PanAm stunned the avia- sion world during April when it announced the sale of its Pacific operations to the free world’s largest airline, United. The deal will nett PanAm some $US750m which it desperately needs to liquidate much of its accumulated deficit which in the past five years has exceeded SUS1bn. PanAm undertook similar cashing-up operations in 1980 when it sold its prestigious New York corporate headquarters, the following year it sold its share in the giant Intercontinental Hotel chain and earlier this year sold off its money making food preparation unit. The sale of its Pacific routes will allow PanAm sufficient capital to acquire 28 new technology Airbus jets with which to rebuild its balance sheet in the years ahead. Loss of the Pacific market will ultimately reduce PanAm in size by about one quarter while United will grow to around 50,000 employees and 350 aircraft.
The deal also includes 18 Boeing 747s, of which 11 are SPs. United will, it is believed, now compete directly with Qantas SPs on the Sydney/Los Angeles non-stop route in place of PanAm. PanAm had a bad 1984, losing some $US220m or four times more than it did during the previous year. Despite a major refurbishment of both First and Business classes (which now account for a third of total revenue) the carrier was too far from profit to ever climb back into the black. Major surgery in the form of selling its pioneering routes was essential for the eventual viability of the once-great PanAm.
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