Bankrupt Pan Am weighs Offers From United, Delta

In a move that may foreshadow the demise of Pan American World Airways, the bankrupt carrier Wednesday reviewed offers from United and Delta airlines that would carve up the once proud airline to pay off creditors.

United Airlines’ offer Wednesday to purchase Pan Am’s Latin American routes and other operations comes on the heels of an offer made earlier this month by Delta Air Lines. Delta wants Pan Am’s money-making Northeastern shuttle--which operates between Washington, New York and Boston--and for many of its European operations and some airplanes.

The acceptance of both offers would leave little of Pan Am, its name and white and blue planes once as recognizable around the world as Coca-Cola and Kodak as symbols of American commercial might. But the New York-based carrier, which filed for Chapter 11 bankruptcy protection in January, fell on hard times a decade ago when the skies were opened for all American carriers to fly overseas.

Some of the routes and assets being sought by Delta and United overlap. Thus, analysts say, a bidding war might ensue, which would be good news for Pan Am’s creditors who will be paid off from the proceeds of sale of routes, equipment and other operations.

As expected, United Airlines issued a statement on Wednesday that said it “proposed to purchase” Pan Am routes to South and Central America, the Caribbean and Mexico. It was also offered to buy transatlantic routes from New York and Miami.

Analysts said the move into Latin America would make United a truly global airline and enable it to compete with its archrival American Airlines, which bought bankrupt Eastern Airlines’ Latin American routes last year.

Chicago-based United also made an offer for 21 of Pan Am’s Airbus aircraft and said it plans to offer employment to a number of Pam Am employees.

In a letter to Pan Am Chairman Thomas G. Plaskett, United Chairman and President Stephen M. Wolf said: “We believe that our proposal will make a very positive contribution to vital interests of key Pan Am constituencies--Pan Am’s creditors, the traveling public, certain localities in which Pan Am’s operations are situated and Pan Am employees.”

“We have received the proposal from the folks at United,” said a Pan Am official. “And we are currently reviewing them along with other proposals received from other parties.”

The airlines did not disclose a sales price, but Scott Hamilton, editor of Commercial Aviation Report, a Dallas-based newsletter, estimated that Pan Am’s Latin American routes alone were worth about $600 million.

However, Hamilton said the Latin American routes might fetch somewhat less because the airline’s assets are being disposed of in what he termed a “distress” sale. “The liquidation is under way,” he said.

Delta’s offer, which does not include Pan Am’s Latin American operations, has been estimated to be worth between $200 million and $300 million.

Pan Am’s Plaskett had for several years opposed selling the airline piece by piece and had pressed to have a single suitor acquire the carrier and operate it as an independent entity.

But after Delta made an offer for only portions of Pan Am, Plaskett agreed that the carrier could not be held together.

Analysts maintain that Pan Am has no choice but to sell its assets piecemeal. Like all other carriers, it suffered from the Gulf War and the recession and its business was also severely hurt after the bombing of a Pan Am jet over Lockerbie, Scotland, two years ago.

The carrier is said to be $1 billion in debt and is running out of cash. Helane Becker, airline analyst with Shearson Lehman Bros., estimates that Pan Am has only about $30 million left in its treasury.

Carving Up Pan Am United Airlines wants:

* Pan Am’s routes between the United States and South America, Central America, Caribbean and Mexico; Miami to Europe, and New York to Paris.

* Employees: United plans to offer employment “to a number” of Pan Am’s workers.

* Equipment: 21 Airbus A-310s.

Delta Airlines wants:

* Pan Am’s routes between the United States and Europe; Frankfurt hub operations and Northeast shuttle between Washington, New York and Boston.

* Employees: Delta might hire as many as 6,000 Pan Am workers.

* Equipment: 21 Airbus A-310s and 24 Boeing 727s.