Pan Am to Defer $32 Million in Payments

A scrimping Pan American World Airways said Tuesday that two of its major creditors, Airbus Industrie and United Technologies, had allowed it to defer $32 million in payments to help it survive the current surge in fuel prices.

The carrier, which has been financially troubled for a decade, said it had also asked the Internal Revenue Service to allow it to postpone $30 million in payments to a pension fund.

Although Pan Am warned in an announcement that it could face “materially adverse” consequences if it fails to obtain long-term deferrals from its creditors, a spokesman vehemently denied that it was in the throes of bankruptcy.

“We are not short of cash for the winter,” said Jeffrey Kriendler, vice president for public relations. “We want to maintain a strong cash position because of the volatility of the cost of fuel.”

Specifically, what the carrier did was defer some of the payments that, by previous agreement, were to have been made to Airbus and United Technologies from asset sales. Without the agreement, Pan Am would have had to pay out a portion of the $150 million it received last week from Lufthansa German Airlines for the sale of the service that it had operated between Berlin and a number of West German cities since World War II.

Kriendler said Airbus, an aircraft manufacturer, and United Technologies, which makes engines, each had given waivers on $16 million in payments. No agreement has been reached with the IRS about payments to Pan Am pension plans due on the sale of the German routes. In all, the airline owes $53 million to its pension funds.

In its announcement, Pan Am said that “if agreements cannot be reached on the long-term deferral of the payments due, the creditors have remedies available to them which, if exercised, could have a material adverse effect on Pan Am.”

Pan Am said the waivers were granted pending government approval of sale of its London routes and two Boeing 747-200s to United Airlines. When that deal, for $400 million, was announced last week, American Airlines said almost immediately that it would seek to outbid United for the routes.

“They are clearly making a disclosure that things are very bad,” said Daniel A. Hersh, an airline analyst at Bateman Eichler, Hill Richards in Los Angeles. “Or they are putting pressure on the regulatory agencies to speed up approval of the United Airlines deal.”

Hans Plickert, an airline analyst with the Transportation Group, which is affiliated with the investment firm Paine Webber, said Pan Am is having to pay $30 million a month more for fuel than anticipated because of the Persian Gulf crisis.

“It is very clear that unless they get more cash, they are going to face a credit crunch this winter,” Plickert said.