Pan Am Sues Delta Air Lines

Pan American World Airways and its creditors filed a lawsuit seeking more than $2.5 billion from Delta Air Lines, two days after Delta backed out of a deal to rescue Pan Am.

The suit on Friday charges Delta with failing to deal in good faith and breaching obligations made to Pan Am and its creditors’ committee during Delta’s negotiations to buy Pan Am this fall.

Delta spokesman Neil Monroe said Sunday that the airline had expected Pan Am to file suit against it, but was disappointed that it had.

“We feel we had done everything possible to make it viable for the new Pan Am to be created,” he said. “We reached the point when we decided not to advance them any more money because there was no possible way the company could survive.”

The 22-page complaint was filed in U.S. Bankruptcy Court in New York, where the new, smaller Pan Am based in Miami was to have been born Wednesday.

Delta bought Pan Am’s European routes and Northeast shuttle this summer for $460 million, and later put up $115 million in financing to keep Pan Am in the air for about the last six weeks.

The idea was to help Pan Am reorganize as a smaller carrier to be held 45% by Delta and 55% by Pam Am creditors.

But Delta on Tuesday announced in U.S. Bankruptcy Court that Pan Am’s losses and sharply lower bookings had changed Delta’s mind about the deal.

Pan Am shut down Wednesday.

According to the suit, Delta approached Pan Am “to acquire (Pan Am’s) most valuable assets--their European routes--and to cherry-pick from other assets, for Delta’s own economic benefit.”

Delta lawyer Larry Handelsman last Wednesday denied similar charges, saying Delta had tried to make the deal succeed.

Spokesmen for Pan Am and its creditors could not be reached for comment Sunday.

A hearing on the lawsuit was set for Jan. 30.