Pan Am’s Sale of Routes to Close Today
United Airlines is expected to close its purchase of Pan American World Airways’ European routes today, but the deal could fall apart if the British government forbids transfer of Pan Am’s authority to use London’s Heathrow Airport.
Without the coveted access to Heathrow, “the deal is off,” Lawrence M. Nagin, general counsel of United’s parent, UAL Corp., said in an interview from London.
If the sale collapses, there could be other buyers in the wings.
Trans World Airlines Chairman Carl C. Icahn could renew his offer for Pan Am Corp., the airline’s parent. Icahn has offered $450 million for Pan Am, but his offer expires Friday and is good only if the United deal falls through.
It is also possible that American Airlines might still be interested in the Pan Am routes--even if it could not fly to Heathrow. Hans J. Plickert, an analyst with the Transportation Group in New York, noted that American--which has offered to outbid United for the routes--already flies to London’s less desirable Gatwick Airport.
United agreed two weeks ago to buy Pan Am’s European routes for $400 million and to merge the carriers’ frequent-flier programs. The agreement would make United an important player in Europe--its weakest market--and give Pan Am desperately needed cash and marketing strength.
Negotiations over transfer of the prized Heathrow authority got under way Tuesday in London and are expected to be tricky. The U.S. government contends that the rights--which are covered by treaty--are transferable. The British government believes that Pan Am’s Heathrow authority is transferable only if Pan Am is acquired.
United and Pan Am are pushing for a quick decision, because Pan Am needs cash from the sale to get through the usually slow winter season. Nagin said United wants a decision by the U.S. government favoring the deal by Dec. 31, but it wasn’t clear Tuesday whether there would be a decision by then.
“That is lightning speed for these kind of matters,” said Patrick Murphy, a deputy assistant secretary of transportation. Given Pan Am’s condition, he said, “it is possible we may act with lightning speed.”
