Pan Am Closes Year With a $462.8-Million Net Loss

Pan Am Corp., the struggling parent of Pan American World Airways, said it lost $197.5 million in the fourth quarter of 1986 compared to a year-earlier profit of $241.4 million.

The company said Friday that it also would report a loss for the current quarter, but that the deficit would be “substantially less” than the $118 million it lost in the first quarter of last year.

The fourth-quarter net loss included $65 million in one-time charges, including costs related to Pan Am’s launching of a shuttle service in the Northeast. The company’s loss from operations in the quarter was $168.7 million.

In the fourth quarter of 1985, Pan Am’s profit, which equaled $1.79 a share, included a $341-million gain from the sale of the airline’s Pacific operations, which erased an operating loss of $73 million.

Fourth-quarter revenue fell 12% to $797.3 million from $906.7 million.

For all of 1986, Pan Am suffered a net loss of $462.8 million, and its loss from operations totaled $323.6 million. In 1985, the gain from the Pacific division’s sale gave Pan Am a profit of $51.8 million, or 45 cents a share.

Annual revenue dropped 13% to $3.04 billion from $3.48 billion.

The company said several factors contributed to its problems last year, including a downturn in passenger traffic that was partly caused by the public’s concern over terrorism abroad, the Chernobyl nuclear accident in the Soviet Union and the dollar’s decline against other currencies.

Pan Am posted currency exchange losses of $46.8 million last year, up from losses of $11.1 million in 1985.

However, Pan Am said it was encouraged by figures showing gains in its passenger traffic so far this year, as well as future booking trends.

Pan Am also is attempting to further cut its costs by up to $275 million a year. The company said $95 million of the reduction would come from reduced mangement employment costs and other expenses controlled by management.

Pan Am hopes to attain the remaining $180 million in lower costs from its unionized employees, and has asked to begin negotiations with the company’s labor unions.