Talks That May Save Pan Am to Resume Today : Airlines: The U.S. and Britain discuss transfer of landing rights in London. Pan Am needs transfer approval to obtain cash from United.
As British and American negotiators late Sunday adjourned their marathon talks over the transfer of landing rights at London’s Heathrow Airport, Pan American World Airways remained in jeopardy of being forced to stop flying. But observers predicted that the bankrupt carrier still had some breathing room before a major bank and other creditors might pull the plug.
“I think there is going to be pressure from Pan Am’s creditors not to call (their) loans as long as the two countries are talking and it looks as if there is a possibility that they can resolve their differences,” said airline analyst John W. Mattis.
At issue in the talks, which have been going on in both London and Washington for several months, is whether landing rights at highly congested Heathrow Airport can be sold by Pan Am to United Airlines and by Trans World Airlines to American Airlines. The sales are contingent upon the buyers retaining access to Heathrow.
Pan Am said it has enough money to continue operations but declined to say for how long. “It is vital that we get approval of the British so we can get the $290 million from United Airlines” for the London routes, spokesman Jeffrey Kriendler said Sunday.
The talks--between British aviation authorities and representatives from both the State and Transportation departments--began Thursday and continued throughout the weekend in Washington. They are scheduled to resume at 8:30 this morning. Transportation Secretary Samuel Skinner had said recently that a deadlock could force both Pan Am and Trans World Airlines out of business.
If the British don’t agree to make changes in a treaty signed 20 years ago, United and American would receive permission only to fly to less-congested Gatwick Airport, which is not as convenient to London and offers fewer connecting flights to other European cities.
Pan Am is to get $290 million for the routes. United had already advanced $20 million of that before Pan Am filed for Chapter 11 bankruptcy protection. After the filing, Bankers Trust Co. loaned $100 million to Pan Am and United advanced another $20 million. The Bankers Trust loan was to have been paid back by Friday.
Because Bankers Trust made its loan after the Jan. 8 bankruptcy filing, it has a special status and must be paid before the airline’s other creditors. In addition, Pan Am is in arrears on payments on its leased aircraft, and a bankruptcy judge last week gave those creditors permission to seize the aircraft. Pan Am spokesman Kriendler said the airline was appealing the ruling.
Observers feel that United and Pan Am’s other creditors will apply pressure on the bank not to call the loan.
“Pan Am has a name and important routes and a franchise of tremendous value,” Mattis said. “The creditors don’t want this airline shut down. It is certainly not the time to liquidate an airline.”
Analysts say that if the bank or the companies that have leased planes to Pan Am repossess their aircraft, they will not have much opportunity to sell them. The market for used aircraft is glutted, due partly to the recent liquidation of Eastern Airline. In addition, many of the world’s more prosperous carriers are taking delivery of new planes, so more used ones are coming on the market.
The talks between the British and Americans took several turns over the weekend. By Friday night they were described as “tense.” On Saturday, the talks were going so well that Transportation Department publicists began to plan a news conference in Washington for Sunday afternoon--but the conference was not held.
In return for allowing the two U.S. carriers to sell their landing rights, Britain wants to serve more American cities from Heathrow. It also wants the right to serve certain American cities from other American cities. This change, however, would require congressional action.
