Pan Am Narrows Loss in Quarter but Sees Problem

Pan Am Corp., the struggling international airline, said Thursday that its 1988 fourth-quarter loss shrank to a relatively small $51.7 million, but the company said its outlook for the first quarter of this year was poor.

The shortfall was much smaller than the $245.5 million Pan Am lost in the same 1987 period.

For the year, Pan Am lost $72.7 million, a much better showing than its $265.3-million deficit in 1987. The 1988 figures included a one-time gain of $89.1 million on the sale of its right to purchase advanced Airbus aircraft. The rights were sold to Braniff Airways, which was keen to get early delivery of the popular planes.

“While we are not satisfied with our financial results, we do believe that significant progress has been made in 1988 toward the stabilization and improvement of our principal subsidiary, Pan American World Airways,” Pan Am Chairman Thomas Plaskett said in a statement.

Pan Am, which has suffered losses at the hands of larger and more-diversified rivals, has been looking hard for a buyer or merger partner but has been unsuccessful. Plaskett acknowledged earlier this month that the airline needed to merge in order to survive.

Pan Am has lost more than $2 billion over the last five years, primarily because it lacks the domestic network needed to bring passengers to its large transatlantic network of routes.

The company said Thursday that it hopes its full-year 1989 financial results will show improvement over 1988’s, but its first quarter is expected to show a greater loss than in the same period last year, when it lost $83.3 million.

“While we remain optimistic that for the full year 1989, we will again improve our financial results over last year, the first quarter of 1989 will show a loss greater than the first quarter of 1988,” Plaskett said.

Pan Am’s stock has risen sharply from a low of $2.25 a share last month to a close of $4 on Thursday due to the possibility of a merger.

Pan Am said its World Airways loss for the year was $118.3 million, down from $274.6 million in 1987. Its Northeast shuttle operation, begun in October, 1986, broke into profitability with a gain of $20.6 million, contrasted with a loss of $11.2 million in 1987.

In the quarter, Pan Am took a one-time charge of $25.7 million on the expected sale of a subsidiary that is responsible for the disposal of excess aircraft parts.

Company revenue rose to $839.9 million from $753.9 million in the fourth quarter of 1987. For the year, revenue rose 17% to $3.57 billion.