L.A. Executive Ray Gets Top Posts at Pan Am : * Transportation: The former aerospace executive is facing serious money woes, an aging fleet and a demoralized work force.
Russell L. Ray Jr., a Los Angeles aerospace executive and the former head of defunct Pacific Southwest Airlines, Friday was named president and chief executive of Pan American World Airways.
Ray, 56, succeeds Thomas G. Plaskett, who agreed to resign in exchange for a $1.25-million severence payment. Plaskett, who joined Pan Am as chairman in 1988 and orchestrated the sale of most of the airline’s routes, however, will remain chairman until the end of the year. Also stepping down were Pan Am Chief Financial Officer Richard Francis and Peter McHugh, chief operating officer. Pan Am will pay more than $1 million to cover severance payments to both executives.
Ray will take the helm of a deeply troubled airline that is operating under bankruptcy court protection with an aged fleet, demoralized work force and a bruising competitor--American Airlines--on its remaining routes to Latin America and the Caribbean. Despite the deep pockets of Delta Air Lines, which owns 45% of Pan Am, Ray has been handed one of the toughest tasks in his 30-year career, industry observers say.
“He will have to make a lot of tough and bitter decisions,” said George Pearson, vice president of information services at Avitas, a Reston, Va-based airline consulting firm. “It’s a real leadership challenge.”
May, a vice president and general manager of commercial marketing for Douglas Aircraft in Long Beach, will replace Plaskett as the head of Pan Am on Oct. 1.
The executive change had been approved by Delta, Pan Am’s creditors and a bankruptcy court judge.
Ray, who was also a marketing official at now-defunct Eastern Air Lines, has been described by former colleagues as a highly demanding executive who is known for analyzing issues intently.
Ray was not available for comment Friday.
The Los Angeles native has firsthand knowledge of the dramatic changes triggered by the deregulation of the airline industry.
In 1988, he lost his job as president of PSA when the San Diego-based airline was purchased by USAir as part of a wave of mergers that have swept the industry.
“I really thought PSA could survive as a niche player,” said Ray in a 1988 interview with The Times as he prepared to leave the airline. “That might sound naive, but that’s how fast things (have changed) in the airline industry.”
Ray must once again come to grips with the forces of deregulation that have battered Pan Am and forced it into bankruptcy court earlier this year.
His marketing experience will be urgently needed at Pan Am, said George M. Shortley, a former PSA executive who worked for Ray. “That’s his expertise and getting bodies into the Pan Am seats is going to be critical.”
The Latin American and Caribbean markets Pan Am depends on are also familiar to Ray, who was at Eastern when it expanded into South America.
Ironically, Eastern sold those Latin American routes last year to American Airlines--now Pan Am and Ray’s biggest competitor.
“American will be the main threat,” said Edward Starkman, an airline industry analyst at Paine Webber.
Pan Am will also have to carefully coordinate its flight schedule, routes and reservations systems to tap into Delta’s extensive domestic route network.
One of the main reasons for Pan Am’s long decline was its lack of a large number of domestic routes to feed into its international flights.
Despite massive layoffs and wage concessions in recent years, some analysts say Pan Am will need to trim its work force again to remain competitive with other airlines.
“While nobody wants to see people get hurt and lose their jobs, from Pan Am’s standpoint, they just have to do it to make a go of it,” Pearson said.
Russell L. Ray Jr.
Ray was named the new president of Pan American World Airways.
Education: Received a bachelor’s degree from Occidental College; a graduate of the Management Policy Institute at USC.
Family: He is married and the father of three children.
Resume: After leaving the Air Force, Ray worked at Lockheed Aircraft until 1971, when he became head of marketing at Eastern Airlines. He was named president of Pacific Southwest Airlines in 1985. After PSA was purchased by USAir, Ray joined McDonnell Douglas in 1988 as a vice president of commercial marketing.
What’s Left of Pan Am
International service: Routes to Mexico, Central and South America and the Caribbean from Miami and New York.
Domestic service: Route to Miami from Los Angeles
Revenues: $1 billion
Fleet: 60 jet aircraft
Ownership: Delta Air Lines will own 45%; creditors get the remainder.