NWA Inc., the Northwest Airline parent company owned by Los Angeles investor Alfred A. Checchi, has proposed a purchase of the lucrative Boston-Washington-New York shuttle owned by Pan Am Corp., an informed source confirmed Monday.
A subsidiary of PacifiCorp., a utility based in Portland, Ore., would finance the arrangement. Northwest reportedly would operate the shuttle with an option to buy it from PacifiCorp., the holding company for Pacific Power of Portland and Utah Power of Salt Lake City.
Neither airline would comment on the purported deal. “These reports are speculative,” said Douglas Miller, a spokesman for Northwest.
A spokeswoman for PacifiCorp., Caroline Petrich, declined Monday to confirm that her company is involved in the reported Northwest-Pan Am deal. A subsidiary, PacifiCorp. Financial Services--with $1.7 billion in assets--finances airplane purchases for airlines and freight operators. “We have worked with all of the major carriers,” Petrich said.
A number of competing carriers have sought roles recently in the dismemberment of Pan American World Airways, which has been losing money for years.
Pan Am has agreed to sell its London routes and other assorted assets to United Airlines for $400 million. The reports of a deal with Northwest emerged just days after Pan Am expressed interest in a merger with Trans World Airlines.
TWA Chairman Carl C. Icahn, in his second bid in a month, proposed last week to buy floundering Pan Am for $375 million in cash and notes. It was unclear how a deal with Northwest would affect TWA’s proposed purchase.
Analysts say New York-based Pan Am probably needs cash from some source to survive the winter. United came through with a small chunk Monday, advancing $20 million for some facilities in San Francisco as part of the London deal. Pan Am is expecting another $10 million soon from United for spare parts.
“This eases our crunch a bit,” said Jeffrey Kriendler, a Pan Am vice president.
Kriendler said Pan Am hopes to get the bulk of the $400 million from United in January. But closing of the deal, he conceded, faces a significant stumbling block. Talks between U.S. and British authorities over allowing American carriers--including Pan Am--to transfer their landing rights at London’s Heathrow Airport fell apart late last week.
A spokesman for the U.S. Department of Transportation said both sides were “reasonably sure” that there would be another round of talks, but none has been scheduled. An agreement also is crucial to completion of American Airlines’ proposed $500-million acquisition of TWA’s London routes. Neither American nor United wants to operate out of London’s less attractive Gatwick Airport.
Pan Am last month pulled its shuttle off the market, primarily because it had not received adequate offers for it. Pan Am wanted at least $200 million for the shuttle. The Associated Press contributed to this story.