MIAMI — In 1991, two iconic U.S. carriers flew into the proverbial sunset, Eastern Air Lines on January 18 and Pan American World Airways (Pan Am) on December 4, a few days after the demise of Midway Airlines.
On the 25th anniversary of Pan Am’s demise, let’s fly back in time and check factors that led to the end, and share the memories from those affected.
A Long End in the Making
The end of Pan Am, founded in 1927, was long in the making. The first signs of trouble for the 40,000-strong employee company appeared as early as 1973 with the oil crisis. The airline found itself in overcapacity, with a large fleet of Boeing 747s and a low passenger demand. Moreover, the management hoped to grow a domestic network, which included the acquisition of National Airlines in 1980, but the Airline Deregulation Act of 1978 fueled competition instead.
With the red ink growing in 1980, Pan Am began a slow sale of assets, beginning with the sale of the Pan Am building to MetLife for $400 million. Then, in 1981, sold its Intercontinental Hotels subsidiary for $500 million, and four years later, in 1985, Pan Am had to sell its Pacific network to United Airlines for $750 million.
Low on cash, the airline’s next asset up for sale was the Pan Am Shuttle serving Washington-New York-Boston in 1990, and one the same year, United Airlines acquired the London routes for $400 million. In December 1990, TWA made a bid for Pan Am valued at $375 million, but one month later, Pan Am declared bankruptcy.
Delta bought some of the valuable spoils including the European network – Frankfurt hub plus aircraft, Shuttle, and the historic Terminal 3 “Worldport” at New York JFK Airport for $460 million.
Also two major events exacerbated Pan Am precarious situation. The 1988 bombing of Flight 103 over Lockerbie, Scotland, resulting in a negative name recognition, and the Iraqi invasion of Kuwait in August 1990, which caused a spike in oil prices. The leadership envisioned a small operation serving the Caribbean, Central, and South America, with a cash infusion for Delta. This Miami-based network had a 45% ownership by Delta, and the remaining 55% by creditors.
This reorganization only amounted to additional cash losses in October and November 1991, which resulted in Delta no longer financing what was left of Pan Am. TWA flirted briefly to sustain the remnants, but the carriers’ management could not reach a deal. On December 4, 1991, Flight 436 from Bridgetown, Barbados to Miami, a Boeing 727-200 (Clipper Goodwill • N368PA • MSN 22540 • LN 1796), would be the last flight for the once mighty industry giant.
Pan Am’s remaining workforce of 7,500 employees found itself unemployed, many of them in the middle of preparations to move from New York to the new headquarters in Miami. Miami had already taken a big economic hit with the Eastern Air Lines shutdown, and this meant up to 9,000 more jobs lost, including those dependent on the airline. Fifty-eight airplanes wound up parked in Miami and New York’s JFK.