Pan Am Needs a Partner to Survive, Chief Says : Lacking Domestic Routes, Carrier Seeks Consolidation to Feed Overseas Flight

Pan American World Airways must seek a partnership with another carrier to survive in the competitive international market, according to Thomas G. Plaskett, chairman of the airline’s parent firm.

In a speech to institutional investors at a dinner in Florida on Wednesday and reported by the airline Thursday, Plaskett, head of Pan Am Corp., mentioned several ways that such a consolidation could be accomplished.

“Pan Am could be acquired by another carrier,” he said. “Pan Am could acquire another carrier; a new investor could acquire both Pan Am and another carrier; or a business combination could take place between Pan Am and a foreign carrier or carriers.” Pan Am spokesman Jeffrey Kriendler said Thursday that while Plaskett has said the same thing at private meetings within the company, this is the first time he has made such predictions publicly. Industry observers said Plaskett was really putting out the word that Pan Am is available.

No ‘Substantive’ Talks

Plaskett, who has headed the financially troubled carrier for a year, said some kind of linkage is needed for a number of reasons. But he said no “substantive” talks concerning any of the possibilities are going on.

He said a combination would be aimed, among other things, at balancing the severe seasonal swings of the transatlantic air travel market, at increasing domestic connections to Pan Am’s international flights and at replacing traffic being lost to airlines that fly overseas from airports in the interior of the United States. Pan Am’s major U.S. hubs are at Miami and New York City.

The lack of domestic routes to feed its overseas flights has long been a major problem for Pan Am. Before deregulation a decade ago, most American carriers generally flew within the United States and not abroad. During that era, Pan Am was the major American overseas carrier.

After deregulation, however, many U.S. airlines developed overseas routes, while Pan Am did not expand domestically.

Analysts agreed that Plaskett’s comments represent the only viable course for Pan Am. For example, Kevin C. Murphy, airline analyst with the New York investment firm of Morgan Stanley, called them “realistic.” After selling numerous assets in the past few years, he said, the airline is in the position of having “no ancillary sources of liquidity” to enable it “to try to remain as a going concern.”

In its struggle to maintain cash flow, Pan Am has had to sell its New York headquarters building, its hotel chain and its Pacific division (to United Airlines). Recently it sold to Braniff its delivery position of a large number of new airliners and said it was putting up for sale its profitable World Services unit, which performs maintainance services for airlines.

Foreign Partner Possible

Murphy said a marriage of Pan Am and a foreign carrier is quite possible. He noted that SAS, the Scandinavian carrier, has purchased 9.9% of the Texas Air holding company that owns Eastern and Continental airlines and that United Airlines and British Airways have a marketing agreement.

The price of Pan Am stock rose 50 cents Thursday in New York Stock Exchange trading to close at $3.875.