Pan Am Puts 1987 Loss at $265.3 Million

Pan Am Corp. said Thursday that it lost $245.5 million in the 1987 fourth quarter and $265.3 million for the year, blaming the results on labor costs, poor marketing, uncollectible bills and the airline’s frequent-flier program.

Pan Am’s losses, reported against a background of labor-management feuding, an executive shake-up and an impending strike this weekend, bring the venerable airline company’s losses to more than $883 million in the past four years.

The quarterly loss was 24% higher than the $197.5-million loss in the same quarter of 1986, although the yearly loss was about 43% lower than the 1986 loss of $462.8 million. Still, Pan Am officials expressed alarm.

Need to Cut Costs

“Last year’s results are terribly disappointing for the company,” said Thomas G. Plaskett, who was elected chairman of Pan Am last month.

“A loss of this magnitude underscores the urgent need for Pan Am to lower its current operating costs and revitalize its marketing and revenue generating programs,” Plaskett said in a statement.

Fourth-quarter revenue totaled $877.1 million, up 9.8% from $798.6 million in the same quarter of 1986. For the year, revenue totaled $3.59 billion, up 18.2% from $3.04 billion in 1986.

Aside from blaming its labor costs, which are among the highest in the industry, Pan Am said the losses last year were aggravated by $42 million in “increased allowances for inventory obsolescence, uncollectible receivables and costs associated with the WorldPass frequent-flier program.”