Pan Am Seeks Buyer for Its Latin Routes : Move Seen as Effort to Put Pressure on Union

Pan Am Corp., which has been forced to sell off large chunks of its assets in the past to raise cash and keep flying, said Thursday that it was looking to sell its Latin American routes.

Pan Am said it would retain an investment banking firm to help explore the sale prospects, but would not elaborate.

The announcement was seen as an effort to put pressure on the airline’s Transport Workers Union, which represents ground staff. Last week, the union rejected a contract that would have invoked $27 million in annual savings.

In June, Pan Am threatened to sell off major pieces of Pan American World Airways if cost cuts were not won from the airline’s unions.

The company would not say if the whole Latin American division or only selected routes were up for sale, but the possibility of a route sale sent Pan Am’s stock higher. It closed up 25 cents at $2.75 a share.

17% of Seat Capacity

The airline’s Latin American division serves eight cities in South America and five cities in Central America from New York, Miami and Los Angeles. The division accounts for about 17% of Pan American’s seat capacity.

Pan Am has been in tenuous financial condition for years and has been forced to sell off a number of valuable properties. In 1985 it sold its entire Pacific division to United Airlines for $750 million. The sale and the emergence of ever-larger competitors has sent Pan Am, at one time the biggest U.S. airline, down in the table of top carriers and it now ranks 8th.

In previous years it sold the profitable Intercontinental hotel chain and the Pan Am building in mid-town Manhattan, one of the city’s most valuable real estate properties.

The company said Pan Am Chairman Thomas Plaskett told leaders of the Transport Workers on Tuesday that the company had begun exploring sale of the routes.

According to a union official who was at the meeting, Plaskett said Pan Am was critically short of cash and had to sell the routes to raise funds.

“Plaskett said the company would have to move forward quickly with the sale of Latin American routes and that he had four interested parties,” the official said.

The company would not say if the whole Latin American division or only selected routes were up for sale.

Plaskett said at the meeting that the Latin American routes were very profitable, according to the union official, who spoke on condition that he not be identified.

Pan Am, plagued by large losses, has been seeking cost cuts from its unions. The pilots and flight engineers have agreed to concessions totaling $90 million. But the flight attendants have rejected a contract calling for givebacks and are due to start talks again next month.

The Transport Workers, Pan American’s largest union, represents more than 5,000 mechanics and other employees.

Largest Route Network

After posting a profit of $52 million in 1985, Pan Am lost $463 million in 1986 and $265 million last year. In the first six months of 1988, it has lost $88 million on revenue of $1.98 billion.

Pan Am has the largest network of routes between North America and Europe and also flies to the Middle East. In 1986, it began a Northeast shuttle linking New York with Boston and Washington, providing the first major competition to the Eastern Air Lines shuttle service.