Judge Approves Plan to Sell Pan Am to Guilford
A U.S. Bankruptcy Court judge Monday approved a plan to sell the remnants of Pan Am Airlines to New England railroad operator Guilford Transportation Industries Inc. for $29 million.
“We’re all praying you’ll keep the Pan Am logo flying,” Judge A. Jay Cristol, a private pilot, said after signing confirmation papers to wrap up the reorganization.
Guilford, which is controlled by the Mellon banking family of Pittsburgh, plans to continue flying charter operations, which were launched after regular flights were canceled Feb. 27. Scheduled passenger service may resume in about a year.
The original Pan Am World Airways began flying in 1927 and grew into one of the world’s largest airlines before it shut down in 1991 in the wake of the terrorist bombing over Lockerbie, Scotland.
The discount carrier that followed never turned a profit serving 14 cities in Florida, the Northeast, the Midwest and Puerto Rico before filing for bankruptcy protection.
Guilford bought the airline’s name, jets, parts and flight certificates for $28.5 million in a plan that also settled or erased Pan Am Corp.'s $94-million debt.
NationsBank Corp., the largest secured creditor, settled for $20.5 million, the biggest chunk of money coming out of the bankruptcy case. Lawyers and accountants were paid $1.26 million for four months’ work.
Ticket holders who paid cash for recreational travel have until Aug. 11 to settle their claims for $100, to be paid out of a $500,000 fund. Shareholders get nothing. The filing of claims by creditors is incomplete, but they are likely to have about $5 million to divide.
Each group of creditors approved the reorganization plan by votes of at least 90%.
Once one jet comes out of maintenance, Pan Am will be flying three Boeing 727s and is in the market for more, said Timothy Mellon, who controls North Billerica, Mass.-based Guilford.