United Airlines to Buy Pan Am Pacific Division

Associated Press

United Airlines will buy the Pacific division of Pan American World Airways for $750 million in cash under an agreement announced today by both carriers.

The agreement, which is subject to approval by the Department of Transportation and the President, would enable United to provide service to all Pacific points now served by Pan Am, including Australia, China, Hong Kong, Japan, Korea, New Zealand, the Philippines, Singapore, Taiwan and Thailand.

Pan Am would continue to own and service its business between Hawaii and the U.S. mainland.

In addition to Pan Am’s Pacific routes, United is acquiring 18 airplanes, parts, property and facilities to operate the division. United said it would offer jobs to about 2,700 Pan Am employees to operate the business.

Wanted Cash Infusion

Pan American World Airways, which recently created a parent holding company called Pan Am Corp., said its finances and operations would be strengthened by the cash infusion. It said the payment would help modernize its fleet in order for the carrier to remain competitive with other airlines that are adding new aircraft.


Pan Am said it would be able to make more efficient use of its resources by concentrating on routes to Europe, Africa, the Middle East, India, the Caribbean and South America.

Pan Am sustained net losses totaling $762 million from 1980 through 1984, including a $206.8-million loss last year on revenue of $3.68 billion.

The losses would have been much worse if the firm had not sold off assets, including a hotel chain and its headquarters building in New York City, which it now leases.

Hurt by Strike

Further hobbling the company earlier this year was a monthlong strike by its ground workers that forced Pan Am to suspend temporarily more than half of its operations, including all of its domestic service.

By contrast, UAL Inc., the parent of United, enjoyed a 1984 profit of $282.4 million on revenue of $6.97 billion. The earnings of United Airlines itself more than doubled in 1984 to $258.9 million from $120.7 million in 1983, while revenue rose 15% to $6.22 billion.

UAL also has interests in hotels, real estate and business services.

Neither UAL nor Pan Am has reported first-quarter 1985 results.