1/07/1980: Pan Am Acquires National Airlines

1/07/1980: Pan Am Acquires National Airlines

DALLAS – Today in Aviation, Pan Am (PA) completed the purchase of the “Coast-to-Coast-to-Coast” carrier National Airlines (NA) in 1980.

Pan Am had desperately tried to build a domestic network across the US for many years. There were even discussions of a merger with United Airlines (UA) or American Airlines (AA). However, their attempts were constantly rejected. This left the airline with no feed for its long-haul network, which impacted its financial performance.

National advertised itself as a more glamorous alternative to staid rival Eastern Air Lines, with slogans like “Airline of the Stars” and “Fly Me,” and painted their aircraft with orange and grapefruit colored stripes to reflect their Florida roots. In 1970, National was chosen over Pan Am and TWA to operate nonstop service between Miami (MIA) and London (LGW), making it the United States’ third transatlantic airline.

Then in 1978, the Airline Deregulation Act led many US carriers who had previously only operated domestically to add international routes to their networks.

Pan Am began discussions to acquire MIA-based National in early 1979. Texas International Airlines (TI) and Eastern (EA) also attempted to take over NA. But it was PA who would emerge the winner.

For many years, PA had NA in its sights. National would link Pan Am’s main gateways of New York City, Miami, Los Angeles, and San Francisco.

The US government finally approved the US$437m takeover on December 22, 1979. The combined carriers would employ 35,000 staff and become the country’s fourth-largest airline.

National did not have the extensive domestic network PA required. Photo: Jon Proctor.

Pan Am’s Downward Spiral

Despite an optimistic outlook that the takeover would improve Pan Am’s fortunes, it had the opposite effect. Many believed that PA paid far too high a price for NA. Integration of both the fleet and staff proved incredibly challenging. 

Pan Am agreed to raise the wages of National’s unionized employees to the much higher salaries earned by Pan Am’s staff as part of the process of combining the two airlines’ workforces, which meant that flights that were profitable at National’s low-cost levels became unprofitable at Pan Am’s higher costs. 

And in reality, National did not have the extensive US domestic network PA desperately required. Alas, in the late 1970s, unrest in the Middle East prompted oil prices to skyrocket, significantly raising the costs of the merged airlines.

A year after the purchase, Pan Am had lost US$18.9m. In a bid to stay in the air, management began to sell off assets, starting with its iconic Manhattan head office for US$400m. This was followed by its Pacific routes to United Airlines (UA).

Tragically, the bombing of Pan Am Flight 103 over Lockerbie, Scotland, on December 21, 1988, was the airline’s final nail in the coffin. PA limped on until December 4, 1991, when it ceased operations.

Featured Image: National put the DC-10 into service on the Miami-New York route on December 15, 1971. Photo: Dean FaulknerCC BY-SA 2.0, via Wikimedia Commons.

European Deputy Editor
Writer, aviation fanatic, and Airways European Deputy Editor, Lee is a plant geek and part-time Flight Attendant for a UK-based airline. Based in Liverpool, United Kingdom.

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