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Why Did Pan Am Sell Pacific Division..........  
User currently online727LOVER From United States of America, joined Oct 2001, 6637 posts, RR: 21
Posted (10 years 8 months 1 week 11 hours ago) and read 6836 times:

.....as opposed to the Latin America division or the European division.

Just wondering what was the decision process that ultimately led to Pacific being sold instead of one of the others.

 Smile


I feel woozy....what did you put in that Pudding Pop?
16 replies: All unread, jump to last
 
User currently offlineAa757first From United States of America, joined Aug 2003, 3350 posts, RR: 7
Reply 1, posted (10 years 8 months 1 week 11 hours ago) and read 6757 times:

I guess that the Pacific routes were more lucrative. All they wanted was quick cash, right?

AAndrew


User currently offlineDeltaflyertoo From United States of America, joined Nov 2000, 1664 posts, RR: 1
Reply 2, posted (10 years 8 months 1 week 11 hours ago) and read 6752 times:

Yes quick cash.......

User currently offlinePicarus From United States of America, joined exactly 14 years ago today! , 302 posts, RR: 1
Reply 3, posted (10 years 8 months 1 week 10 hours ago) and read 6694 times:

Not only was it a "fire-sale" to United to raise quick cash for valuable routes, but it also allowed PA to unload its costly fleet of L1011-500s.

Truly, one of the greatest strategic moves by an airline (UA) of all time. Dick Ferris did at least one thing right.

Picarus


User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 4, posted (10 years 8 months 1 week 10 hours ago) and read 6655 times:

Pan Am CEO C. Edward Acker gave United one hell of a good deal. The Pacifc was profitable for Pan Am, whereas the Atlantic at that time was not. A very poor tactical move by the part of Acker. As far as aircraft, United also got a lone DC10, some 747SP's, and the before mentioned L1011-500's. Not only did he cut off Pan Am's true lifeline (the Pacific), he also did a good job dismantling Pan Am's domestic route structure which they had acquired just a few years prior from National.


Steve/MSY


User currently offlineMxCtrlr From United States of America, joined Nov 2001, 2485 posts, RR: 35
Reply 5, posted (10 years 8 months 1 week 5 hours ago) and read 6514 times:

Those of us who worked at PA through to the end, were convinced that the Pacific Fleet was lost on a golf game. Acker and the UA people played golf quite a bit and PA had always resisted selling the Pacific Routes, then suddenly, they were sold (and for only $500 million)! That was the last year PA made money...

MxCtrlr  Smile/happy/getting dizzy
Freight Dogs Anonymous - O.O.T.S.K.  Smokin cool



DAMN! This SUCKS! I just had to go to the next higher age bracket in my profile! :-(
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 6, posted (10 years 8 months 1 week 4 hours ago) and read 6480 times:

How the hell that a**hole Acker became CEO of an incredible airline like PA is beyond me. Why was he appointed and what, if anything, did he do to deserve it? Way back when I heard rumors he was using the PA JFK-BDA flights as his personal delivery vehicles to build his house there!

Lots of posts on this subject of despotic airline CEO's and the damage they inflicted. Not much on him though. Curious?


User currently offlineHikesWithEyes From United States of America, joined Jan 2004, 816 posts, RR: 7
Reply 7, posted (10 years 8 months 1 week 2 hours ago) and read 6410 times:

Scotron11:

Try to get ahold of "Skygods:The fall of Pan Am" by
Robert Gandt. It is a very good read and devotes some time to
Acker and others who contributed to Pan Am's demise.




First, benzene in my Perrier, and now this!
User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 8, posted (10 years 8 months 6 days 22 hours ago) and read 6313 times:

Acker replaced Seawell, who was responsible for taking over National Airlines and leaving Pan Am with a "diversified" fleet to say the least, not to mention TONS of debt! Instead of letting National slowly integrate into the Pan Am system, he made sure it was all done nearly overnight. The crew transition from National to Pan Am was anything but smooth. Overall, just a very very poor business decision. Seawell did get Pan Am its domestic routes, but it cost the company dearly. The board of directors had enough with him, so they brought Acker in, who was successful with Air Florida, but obviously had no idea how to run the world's most prestigious airline. Acker wanted to keep Pan Am alive by cutting off its right arm (the Pacific) and by dismantling the domestic network, while they shiuld have been expanding domestic service and probably discontinuing many unprofitable routes to Europe.

The sad truth is that after Juan Trippe left, none of its CEO's had the vision or the business sense to see the company succeed...to take it to that next level. Sad, very very sad. I mourn (and honor) Pan Am everyday.


Steve/MSY


User currently offlineNeptunescar From Maldives, joined Dec 2003, 104 posts, RR: 0
Reply 9, posted (10 years 8 months 6 days 20 hours ago) and read 6184 times:

Firesale indeed. in the Skygods book it estimates the true value of the routes to be closer to $3 billion dollars. What makes me furious at Ackers decision was that they could have invested $1 billion dollars into upgrading the Pacific fleet (refurbishment etc) as the economies there were taking off in the mid 80's, virtually guarateeing a cash flow to stave off other losses in their sustem....while they decided instead to sell the Pacific and to invest $1 billion in A320's to feed the European routes which were already squeezed by intense competition. Very bad decision and one that started the end for PA.

I wasnt very old when the routes were sold, but as a huge fan of Pan Am as a kid, I remembed very sadly seeing the number of Pan Am Clippers at SFO drop overnight to just a few flights a day to AB) (FRA / FRF / EDDF), Germany">FRA and LON....It was always awesome in the late 70's to see up to a dozen 747's lined up for the afternoon departures to Asia at SFO. Even today when I see UA planes in Asia I am not impressed...they did NOTHING to develop them Asia routes, they only bought them. Im with you MSYTristar, I honor that airline everyday as well. (and every time I see a 747 too).



You call it the world, we call it home. Pan Am.
User currently offlineOrd From United States of America, joined Jul 1999, 1390 posts, RR: 1
Reply 10, posted (10 years 8 months 6 days 19 hours ago) and read 6106 times:

One of the main reasons the Pacific was sold rather than the Atlantic or Latin America was the domestic route system. Pan Am had already developed hubs in New York and Miami but had little feed in Los Angeles and San Francisco. As somebody mentioned, the cost to develop the domestic feeder system (among other upgrades) would have cost too much money for Pan Am to invest.



User currently offlineSrbrenna From United Kingdom, joined Apr 2004, 100 posts, RR: 0
Reply 11, posted (10 years 8 months 6 days 19 hours ago) and read 6095 times:

As far as I can remember Pan Am were in trouble throughout the 70's much like all the other airlines. They were the launch customer for the 747 and that couldn't have come at a worse time as they were struggling to fill their 707s and then the oil crisis happened which drove up costs.

Seawell did nothing throughout the 70s which seemed to be the right strategy but as the 80s came Pan Am started to make profits and have money in the bank. This is when things started to go wrong:

They bought National for way way over the odds (I think they were particularly stung by speculators driving the National share price up)

Having spent all their cash and having the costs of integrating National they then sold the Pan Am building but were still losing money by the bucketload so sold the Intercontinental Hotels to Grand Met which meant their costs were driven up even higher as they now had to pay rent and, more expensively, accommodate their pilots.

Selling the pacific was the final nail in the coffin. It was their most profitable route network as opposed to the Atlantic which was losing money due to increased competition.

All in all most of their disposals (Pan Am building, Intercon Hotels, Pacific routes etc etc) were sold for a song as everyone knew that they were desperate for the cash. Its the same old story - CEOs ruin a company and make loads of money in the payoff. Still happens today


User currently offlineOrd From United States of America, joined Jul 1999, 1390 posts, RR: 1
Reply 12, posted (10 years 8 months 6 days 19 hours ago) and read 6072 times:

"It was always awesome in the late 70's to see up to a dozen 747's lined up for the afternoon departures to Asia at SFO. Even today when I see UA planes in Asia I am not impressed...they did NOTHING to develop them Asia routes, they only bought them."

I completely disagree with this statement. For one thing, there was not a dozen 747s at SFO departing for Asia. Looking at Pan Am's route map from January 1, 1980, you see that the only trans-Pacific flights offered by Pan Am (not including Hawaii) were to Tokyo and Hong Kong. Two cities, that's it. Look at United today from SFO...they have nonstops to far more cities, including Beijing, Shanghai, Osaka, Sydney and Seoul in addition to Tokyo and Hong Kong.

Let's go one step further and take a look and the rest of Pan Am's Pacific routes from the mainland US at the time (1980). They only had seven routes total:

Tokyo - JFK
Tokyo - SFO
Tokyo - LAX
Osaka - LAX
Hong Kong - SFO
Sydney - LAX
Auckland - LAX

United has grown this market tremendously. Yes, Osaka - LAX and Auckland - LAX are gone. But United flies nonstop to Asia from Seattle, has four routes from Chicago - Asia, has greatly expanded into China and Hong Kong and flies from SFO to the South Pacific. Not to mention the way they fully developed the domestic feed into both LAX and SFO.

To say that United only bought the routes and did nothing to develop them is complete and utter nonsense.


User currently offlineNeptunescar From Maldives, joined Dec 2003, 104 posts, RR: 0
Reply 13, posted (10 years 8 months 5 days 21 hours ago) and read 5898 times:

I meant that UA didnt develop the Asia routes from the beginning as Pan Am did, in the 1930's, with the China Clippers, the hotels built on Wake Guam etc. If you read Airlines of Pan American you can see the tremendous amount of efforts put pit by Pan Am into developing routes in China, etc. of course UA developed these routes AFTER they bought them, and very well actually, as u mentioned they fly to alot of cities now from more gateways that PA ever did.





You call it the world, we call it home. Pan Am.
User currently offlineOrd From United States of America, joined Jul 1999, 1390 posts, RR: 1
Reply 14, posted (10 years 8 months 5 days 21 hours ago) and read 5864 times:

Neptunescar...A misunderstanding on my part on the meaning of what you wrote. Thanks for clarifying.

User currently offlineB747stripper From , joined Dec 1969, posts, RR:
Reply 15, posted (10 years 8 months 5 days 21 hours ago) and read 5854 times:

Dear 727LOVER -
Pan Am sold its Pacific division because we needed money.
xxx
Sure it was a sad day but all of us in the shop at least agree it would've been even sadder should we have taken pay cuts! ha ha ha
xxx
(s) Stripper  Smile


User currently online727LOVER From United States of America, joined Oct 2001, 6637 posts, RR: 21
Reply 16, posted (10 years 8 months 5 days 21 hours ago) and read 5802 times:

Dear 727LOVER -
Pan Am sold its Pacific division because we needed money.


I figured that. My question was WHY the Pacific instead of Europe or Latin America.


Would Pan Am still be here today if they'd sold Europe instead of Pacific?

 Smile



I feel woozy....what did you put in that Pudding Pop?
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