Pan Am’s Stock Buoyed by Talk of NWA Merger

Pan Am Corp. shares surged Monday amid speculation that a merger with NWA Inc. was imminent.

The rise was attributed to comments by a Teamsters union official who said Pan Am plans a major announcement--probably a merger with NWA--after a Pan Am board meeting today.

Pan Am shares closed at $3.75, up 75 cents, in heavy trading on the New York Stock Exchange.

Spokesmen for NWA, which owns Northwest Airlines, and Pan Am, parent of Pan American World Airways, refused to comment Monday on talk of an impending merger. However, two people familiar with the situation said while there had been discussions between Northwest and Pan Am executives, no transaction between the two airlines is planned.

However, William F. Genoese, director of the Teamsters’ airline division, said in an interview Monday that NWA plans to buy Pan Am. As part of a merger, Genoese said Northwest would pare Pan Am’s size by two-thirds.

Northwest would absorb Pan Am’s domestic routes but would operate Pan Am as a separate unit for transatlantic flights, Genoese said. In Europe, Pan Am’s network would connect with routes operated by KLM Royal Dutch Airlines, which owns a stake in Northwest.

Genoese said he learned of the proposed transaction from a former Pan Am executive. He said Northwest negotiators met with Pan Am officials over the weekend in New York to discuss the deal.

Genoese said Pan Am’s Teamsters would strike if workers’ rights were not protected in a merger. Pan Am’s reservation clerks, sales clerks and cargo clerks are represented by the Teamsters. Northwest’s employees are members of unions other than the Teamsters.

Airline industry analysts said they doubt that Northwest will buy Pan Am, its one-time suitor. Northwest was acquired in a leveraged transaction last June by Alfred A. Checchi, a Los Angeles investor, and its financial condition is being monitored by the Department of Transportation.

Pan Am has continued to look for a merger partner since losing last spring’s bidding contest for Northwest to Checchi. It has talked with most major U.S. airlines as well as some foreign carriers. Pan Am is losing money and its chairman, Thomas Plaskett, said it cannot survive independently.