Delta agrees to buy Pan Am routes, shuttle

July 12, 1991|By Agis Salpukas | Agis Salpukas,New York Times News Service

NEW YORK -- Pan Am, the struggling carrier that was the nation's pioneer in commercial aviation, all but gave up its long fight for survival yesterday by agreeing to sell the routes to Europe, Asia and Africa that helped make it famous, as well as its East Coast shuttle.

The buyer is Delta Air Lines, the nation's third-largest carrier behind American and United. If the $260 million deal is completed, Delta will join a handful of carriers with vast international route networks that should allow them to dominate the industry in the next decade.

And Delta's acquisition of the shuttle, which flies from New York to Boston and Washington, would make the airline a much greater threat to the smaller carriers that now dominate the Northeast market, including Northwest Airlines, which is in the process of buying the competing Trump Shuttle, and Continental Airlines, the biggest carrier in the New York market.

Travelers coming through New York may therefore see intensified competition that results in improved service. And the replacement of Pan Am by a vigorous carrier like Delta could mean a similar change for service across the Atlantic.

The sale is a blow to the approximately 10,000 Pan Am workers in the New York metropolitan area. Delta said that it would offer jobs to about 6,000 of Pan Am's 22,000 workers. But most of these are expected to be workers overseas, at the other end of the international routes.

If Pan Am is forced to shut down this fall, as expected, ticket holders are protected under an earlier agreement between Pan Am and United that provides $100 million for reimbursement for unused tickets.

And Delta said it would honor Pan Am tickets on the routes it acquired for travel through next Feb. 1.

Analysts called the $260 million price a great bargain for Delta; the deal includes 45 airplanes, the coveted shuttle routes and an international network of routes that includes cities in Europe, the Soviet Union, Africa, the Middle East and Asia. For Pan Am, the sale means the end of the carrier is near.

If the routes are sold to Delta as negotiated, all that will remain of the carrier will be its Latin American routes and a small system within the United States.

United Airlines has been negotiating with Pan Am to buy the Latin American routes; other bidders are also on the scene.

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