2 Airlines Plan $310-Million Bid for Pan Am

Trans World Airlines and American Airlines today will announce a joint bid for a major portion of bankrupt Pan American World Airways, sources close to the deal said Sunday.

Under a written proposal expected to be delivered to Pan Am this morning, TWA and American will offer $310 million for Pan Am’s African, Asian and European routes, its lucrative shuttle between Boston, New York and Washington, and 45 planes.

Delta Air Lines has already offered $260 million for the same assets in a deal approved by Pan Am. A federal bankruptcy judge will ultimately determine which offer is accepted.

TWA, however, also will offer a $140-million partial-ownership investment in what would be a scaled-down Pan Am that would continue to fly, primarily to Latin America. Ownership of the reconstituted airline would be shared by Pan Am, its creditors, TWA and outside investors, sources said.

Spokesmen for TWA and American declined comment on the expected offer late Sunday. Delta spokesman Neil A. Monroe said his company would continue to pursue a deal.

“We feel we have put together a solid package,” Monroe said. “We have been working with Pan Am and have a proposal to hire Pan Am employees.”

Pan Am spokeswoman Elizabeth Hlinko said that she had not heard about the expected offer and refused to comment.

If accepted, the TWA-American offer would deal a sharp blow to Delta, which had hoped to use the Pan Am route purchase to significantly enhance its international presence and catch up with archrivals United Airlines and American, which have greatly expanded their worldwide flights in recent months.

The offer also would hurt United, which had hoped to acquire Pan Am’s lucrative Latin American routes. Those routes have been Pan Am’s only profitable division in the last two years.

However, it remains unclear whether TWA can afford its share of the deal. TWA Chairman Carl C. Icahn has said that his airline might be forced to seek bankruptcy protection as a result of significant losses and other problems.

Pan Am filed for bankruptcy protection in January after a decade of decline and hundreds of millions of dollars in losses. Those losses continue to mount, totaling $249.2 million for the first quarter of this year alone.

Failing to find a merger partner or buyer, Pan Am has been trying to sell remaining assets.

Under the expected joint deal, American would put up $250 million to acquire Pan Am route authorities and facilities in Italy, Spain and Portugal, as well as the Pan Am shuttle.

TWA would acquire Pan Am routes to London from Miami and Detroit, its hub in Frankfurt, Germany, its Eastern European route authorities, additional slots at LaGuardia, John F. Kennedy and Washington National airports and aircraft, engines, ground equipment and facilities.

TWA and American estimate that their offer would salvage 14,000 to 15,000 Pan Am jobs. Delta’s proposal calls for offering jobs to 6,000 of Pan Am’s 22,000 employees.

Sources said that the TWA-American proposal offers the same basic business terms as those proposed by Delta, including an offer to loan Pan Am $60 million until the deal is finalized.

TWA and American will seek a 45-day period to work with Pan Am and its creditors on a reorganization plan.

Earlier, Northwest Airlines said that it wants to buy up to two international routes from Pan Am and will challenge Delta’s plan. Northwest said that it would pay $20 million for the right to fly Pan Am’s route from Detroit to London’s Gatwick Airport. Alternatively, it said it will pay $35 million to Pan Am for both the Detroit-London route and one between Los Angeles and Mexico City.

Staff writer Robert E. Dallos in New York contributed to this story.