Pan Am Objects to Eastern’s Sale of Routes

Pan American World Airways said Thursday that it would vigorously fight the planned sale to American Airlines of Eastern Airlines’ routes in Latin America.

Meanwhile, Eastern announced that it planned to cut 600 jobs, mostly managerial, in connection with the proposed transaction. It also announced wage cuts.

The objection by Pan Am was not surprising given that it is a major competitor in Latin America of Eastern and American.

A spokeswoman for the Justice Department said Thursday that the agency is looking into the proposed sale on antitrust grounds and will listen to any third parties who oppose it.

“We strongly object to the further concentration of American’s market dominance in Latin America and the Caribbean through the purchase of government route authorities and facilities,” said Pamela Hanlon, a Pan Am spokeswoman. “With its already significant operations in the Caribbean and Latin America, American’s purchase of these routes is clearly anti-competitive.”

Hanlon said three U.S. carriers currently serve the area--American, Pan Am and Eastern. “With the American-Eastern agreement, there will be, in effect, only two competitors.”

Eastern announced on Dec. 19 that it would sell its Latin American routes and a number of other facilities for $471 million. It needs the funds to operate while in bankruptcy proceedings and to pay its creditors. The Miami-based carrier filed for bankruptcy protection in March, five days after it was struck by its machinists, pilots and flight attendants. It plans to file a reorganization plan and emerge from bankruptcy proceedings early next year.

Hanlon said Pan Am planned to file its objections with both the Transportation and Justice departments.

Hal Paris, a Transportation Department spokesman, said neither Pan Am nor anyone else had yet filed in opposition to the proposed sale. But, he said, if there were such a filing, “we would make a careful review of the sale of any international routes to see if it would have any effect on competition.”

A Justice spokeswoman said that agency also had not heard anything from Pan Am.

American declined comment on the Pan Am objection.

Eastern also said it would implement employee wage reductions of 20% for six months and 10% the following six months, mostly for non-union workers. Although it plans to reduce its 19,000-person work force by 600, it will try to find positions elsewhere for these people.