N202PA From United States of America, joined Jun 2000, 1550 posts, RR: 4 Posted (12 years 7 months 5 days 13 hours ago) and read 1833 times:
Knowing Pan Am's financial position in 1991, I know that such a turnaround might not have been very likely or even possible. However, Gordon Bethune worked wonders with Continental starting in 1994, an airline that had been all but marked for death at one point. According to his book, this miracle was accomplished by 1.) Hiring a team of incredibly competent managers, 2.) Getting the employees back on the same team as management by *listening* to them, being up front with them, and making upper management available to them, and 3.) Renegotiating aicraft leases with the leasing companies.
My question is, if Bethune had been hired, let's say, by Pan Am in 1991, could he have saved our Clippers by employing the same strategy as he did with CO--or were there factors affecting PA (such as the leases on the 747s, let's say) that constrained them more than CO, and forced them into Chapter 7?
As an additional question, if Delta had continued to feed PA cash to keep the airline running in December, instead of pulling the plug, could PA have been restored to strength as a South American/Caribbean carrier? After the sale of the Atlantic route structure in 91, PA moved HQ down to Miami and refocused itself as a carrier serving just the Caribbean, Latin America and South America, for those who don't know. The A310s were gone, only a few 747s remained, and most routes were either these Caribbean routes, or feeder routes within the U.S. to get people to Miami.
Theoretically, couldn't PA have brought in an even smaller type, such as the 737-200, to serve routes in the Carribbean with smaller loads? It seems that doing these runs with smaller, more efficient aircraft than their glut of 727s would have saved some money and brought a more efficient operation. Couldn't there also have been some way that PA could have turned in the 747s for leases on 767-200 ER's or something similar? Or was the ER even available in 91? It seems that a smaller, more efficient aircraft on these long range runs would have saved some more money.
It seems to me that if PA had been able to survive, they might have been able to transform themselves into what CO is today, especially as a Delta partner. What do you think?
Matt D From United States of America, joined Nov 1999, 9502 posts, RR: 51 Reply 1, posted (12 years 7 months 5 days 13 hours ago) and read 1783 times:
Interesting question. There can be no arguing the miracle work that ol' Gordo did with CO. But hiring him to save Pan Am in 1991? That may have been a case of too little too late. If Pan Am was to ever have any shot at survival, steps would certainly needed to have been taken long before 1991.
As anyone in here will attest, Pan Am's problems went way longer and deeper than the economic woes of the end of the 80's/early 90's. And of course, Lockerbie did nothing to help. Most PA fans agree that PA #103 was the death knell for Pan Am.
Arguably, the beginning of the end for Pan Am went all the way back to 1980, with the purchase of National. A short sighted management bought NA for way too much more than they were worth to get a domestic system that PA could've built for basiclly nothing. Plus that route system they got did not complement PA's International gateways very well. The fleets were all but a total mismatch, and Pan Am did a piss poor job of assimilating the former National employees.
So to answer your question....could Bethune saved PA in 1991? Very highly unlikely. Could PA have been saved at all?
Absolutely. Hindsight is a funny thing.
DesertJets From United States of America, joined Feb 2000, 7677 posts, RR: 18 Reply 2, posted (12 years 7 months 5 days 13 hours ago) and read 1768 times:
I think the writing on the wall for PAA went back to the 1970's. The large initial purchase of the 747s followed closely by the oil crunch hit many airlines badly. Most majors posted sizeable losses in the early/mid 70's. Combine that with PAA's lack of a domestic feed network, aside from the DL interchanges. Then the National merger was a killer. I heard that they basically kept the NA and PAA employees seperate and did little to intergrate them. Certainly as Matt said after dereg PAA could have built a successful domestic system, purchased newer more fuel efficient aircraft (MD-80) to serve it. Throw in the fact that they flew routes just for the hell of it that were unprofitable, and you had a recipe for disaster. I think the turning point was the NA merger, had they gotten a better price and had a better management team they may still be around, but in bad shape.
Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
N202PA From United States of America, joined Jun 2000, 1550 posts, RR: 4 Reply 3, posted (12 years 7 months 5 days 11 hours ago) and read 1761 times:
I think anyone know knoews anything about the Pan Am situation up until the bitter end knows that PA could have been saved at some point. Incompetent, wasteful management and the piss-poor decision to buy out National were what ultimately sunk PA. I think that PA could have been saved, even after the sale of the Pacific in 1985. The terrorist destruction of PA 103 all but destroyed PA's credibility as the "World's Most Experienced Airline" and cost PA passengers to Europe. In the end, the inability of PA to adapt to the new face of the airline industry, via deregulation, was what put PA in bankruptcy.
But I think that, theoretically, PA could have been saved in 1991 they had been a little more savvy with their fleet mix early on in the year and had gotten the second loan of cash from Delta to keep operating in December. Obviously, if Bethune had been brought in after Thanksgiving, 1991, he would have been powerless to do anything. But if he had been brought in around January, or even late 1990, he might have been able to change things. This is, of course, in my opinion.
I think the key question to answer here is whether PA's leases on the 747s were ironclad, or if they could have gotten out of them. I recall many times around 1989-1990 where PA was operating near-empty 747s when they could have flown A310's on those routes. Obviously, they did switch a lot of services from 747 to A310 between 1986 and 1990; foremost among these were DTW-LHR, IAD-LHR, JFK-LHR, IAD-CGY, etc. It seems to me that if PA had been able to ditch many of these 747s, they could have theoretically leased more A310s for these routes and operated more efficiently. Complicating things, however, also might've been that PA just didn't have the cash or the credibility with the lessors to get these aircraft. However, Bethune overcame this same problem with CO, so I see no reason why it could not have been overcome at PA. It just seems ridiculous that PA was still flying 747s on routes like LAX-HNL when a smaller and more fuel-efficient A310 could have done the job.
If PA had been able to downsize the fleet in early 1991, dumping many of the 727s and 747s in favor of A310s and 737s, they might have been in a better position to survive after December as a Latin America/Caribbean carrier. Partnerships with resorts in these areas, a strategy similar to the one TWA is currently pursuing, might have furthered PA's chances in this form. If they could have kept running, I see no reason why they couldn't have gone up against AA in the Caribbean, as the PA name and logo were known extremely well in this region, and could have evolved into the chosen carrier for Americans going into this region--a position that American holds today.
Of course, these are just my opinions--there could have been mitigating factors that kept PA management from doing this. If there were, however, I wonder what they were and how they affected the decisions that Tom Plaskett and his group made. Anyone have any answers?
Matt D From United States of America, joined Nov 1999, 9502 posts, RR: 51 Reply 4, posted (12 years 7 months 5 days 10 hours ago) and read 1747 times:
If Pan Am was drifting downward in the 70's and early 80's, then president Ed Acker sent it into a freefall with his "ALERT" Security system hoax.
Some who feels more passionate about PA want to explain for those who may not know exactly what it was about?
It was a MESS!!!
N863DA From United States of America, joined Sep 2004, 48 posts, RR: 6 Reply 6, posted (12 years 7 months 5 days 10 hours ago) and read 1738 times:
There are so many things that aided to eventually bring down Pan American... but a few of the things that could have saved it were... (apologies if these have already been covered)
· Had their failed attempt to take over NWA in 1988 succeeded (god bless Tom Plaskett) then they may have survived. But after that, he sold all their transatlantic routes, starting with London, so there was little to build on even had the airline been successful.
· Had they not taken over National... to paraphrase a book about PanAm, the 'laidback cowboy' attitude of Miami-based National Airlines flight crews did not mesh well with the military precision of PanAm. Image had always been a PanAm #1 priority - and to maintain that image while flying the 'hinterlands' (I sort of resent that one...!) between Tallahassee and Tampa took too much.
· Had PA103 not fallen out of the sky. This was the straw that broke the camel's back - but it must be said, that just before this, the airline was starting on a long trip 'upward' again. It was going to be a tough ride, but the 747s were refurbished and plans were on the books to immediately hire 1,000 new FAs. All these plans went up in smoke on December 21st 1988. Americans flew on other, neutral airlines to avoid the panic. (eg BA)
· Had any one of the CEOs after Trippe been even a patch on him. Najeeb Halaby was acceptable, but every other CEO was WEAK. Not one of them shared Trippe's passion, and thus things didn't get done the 'Pan American way' anymore. (For example the FAs went on strike in 1985 - something very un-Pan American.)
AerLingus From China, joined Mar 2000, 2371 posts, RR: 0 Reply 7, posted (12 years 7 months 5 days 9 hours ago) and read 1721 times:
As far as aircraft purchases, the 747 wasn't the big defining factor. If you ask me, the major problem was the purchase of the A300. Really, they were in no position to place a large order for new widebody jets.
I think that they should have payed more attention to financial detail from the early seventies onward. In theory, they could have been saved in the early ninetees through a drastic overhaul of management and spending.
They should have pulled some of their inter-Eurpore services and sold or leased out some of their A300s and some of the 727s they used within Europe.
Blink182 From Azerbaijan, joined Oct 1999, 5431 posts, RR: 19 Reply 8, posted (12 years 7 months 4 days 14 hours ago) and read 1693 times:
I was only a 4 year old sprout when PA went out of business but from what I have heard was it had focused too much on International flights and not enough on domestic flights, it eventually got to the point that they did not have enough connecting pax for intl' flights. Meanwhile AA,DL,UA had built up and were continuing to build up their domestic routes and then focused more on international routes, people found this easier so they flew on those carriers and not on PA. PA basically lost pax and needed to downgrade aircraft and focus more domestically, had they done this in the early-mid 80's, they would be flying today. I also think that PA flt.103 acted as a huge weight on a sinking ship. Does anyone know of any good books on PanAm??
Give me a break, I created this username when I was a kid...
Ctbarnes From United States of America, joined Mar 2000, 3491 posts, RR: 52 Reply 9, posted (12 years 7 months 4 days 14 hours ago) and read 1689 times:
I agree with much of what has been said here. PanAm's biggest failure was its inability to change. After almost single-handly inventing commercial air travel, the company was wholly unsuited to compete. Trippe went as far as trying to convince the Federal Government to make Pan Am a regulated monopoly at one stage. Trippe was rebuffed. Because it lacked a domestic feeder network, pundits called it "an airline without a country," making it highly vulnerable when the industry was deregulated in 1978.
Pan Am was already hurting when deregulation was enacted, lumbering under the huge debt of it's 747 fleet, (which was flying half empty) coupled with poor management, and high fuel costs, some of the highest costs in the industry. In a panic, PanAm bought National Airlines to try and obtain the precious domestic routes it needed. The merger was a disaster. Service suffered badly, and costs continued to rise forcing the company to raise cash through the selling of assets.
I think greater management savvy in the 70's and early 80's could ultimately have saved PA in the long run. If they had slowly and deliberately started to build a domestic feeder network, funneling flights through cities such as JFK, SFO, MIA, HNL, they might have avoided having to buy National.
Plaskett actually seemed to start turning things around by being the first person to recognize Pan Am couldn't do business they way the always had. He made some sweeping changes to cut costs and make the company more customer friendly when PA 103 was blown up over Scotland. That was indeed the final nail in the coffin.
The real tragedy of Pan Am was that they were a dominent force in the Aviation industry that rested too long on its laurels, and could not recognize this until it was too late. I can't help but think that if someone had come along sooner and shook the company out of its complacency Pan Am might still be with us today.
The customer isn't a moron, she is your wife -David Ogilvy
VirginA340 From United States of America, joined Jul 2005, 15 posts, RR: 0 Reply 10, posted (12 years 7 months 4 days 12 hours ago) and read 1679 times:
My opinions on why PA went under
1. Buying too many 747-100s and 747-200s during the oil crises.
2. Purchase of National
3. Not enough domestic route networks which is why TWA surivied because one of the reasons was a strong enough domestic route network.
4. PA 103
5. PA's gross neglagence to those on PA 103 by not informing passengers about the possible threat.
6. Ed Acker and his airline rapists that did the airline in along with the departure of Juan T Trippe
7. FAA gave PA waivers to skip hand searches on luggage on flights in Europe Including PA 103.
8. If PA used real bomb sniffing dogs instead of regular dogs purchased cheap from a local kennel.
9 A New York court finding PA guilty of the gross neglagence of the passengers on flight 103 and ordered to pay the families more compensation.
PA was litterally asking for it when they had weakened security measures like the ones listed above.
PA and my best friend and his family would be here (they were all killed on PA 103 ) If PA had avoided these stupid mistakes that sent PA to it's grave; Then they would've been bigger than United.
N863DA From United States of America, joined Sep 2004, 48 posts, RR: 6 Reply 11, posted (12 years 7 months 4 days 12 hours ago) and read 1677 times:
I can recommend a FANTASTIC book about Pan Am - which is really a superb book.
Its' called 'Pan Am - An Aviation Legend' and it's by Barnaby Conrad III. I picked it up a couple of weeks ago at Barnes & Noble in Daytona. I saw it a few weeks before, saved up and prayed that it wouldn't be gone. Thank god, it wasn't - and I picked it up! A fantastic, highly detailed book with great scannable pictures too!
I also recommend the newly-updated http://www.panam.org - it's now a fantastic site with loads and loads of detailed information, fantastic images, and lots of related links, too.
Exusair From United States of America, joined Sep 2000, 684 posts, RR: 0 Reply 12, posted (12 years 7 months 4 days 10 hours ago) and read 1673 times:
A lot of people seem to blame DL as having a major part in the semise of Pan Am. A bidding war broke out between AA and DL for the transatlantic routes that Pan Am had rights to. Ron Allen HAD TO HAVE those routes. It consumed his thoughts and his actions were to outbid (and subsequently pay too much for) the transatlantic. AA's real ambition was the Carribean, the only asset that was making money for Pan Am. In fact, PA managers were stunned at the signover of route rights to DL, that DL didn't have any interest in the Carribean and the Americas. After extensive investments in facilities and equipment, as well as a robust economy in the mid 90's, did DL turn a profit in europe. PA lost hope for the future many years before it's demise. An investment in a modern, fuel efficient fleet was dashed when it sold delivery slots of the A-320 to Branniff 2. These planes subsequently went to HP. PA's alienation from Boeing didn't help either. 767-200er's were around in the 80's, and a 767 fleet as opposed to Airbus could have been a reality. Not to mention, Boeing as a lending source when times got tough. The mountainous debt burdon of PA and the recession and fuel prices of the 90's would surely have gotten to PA. Their days were numbered after the deregulation act of 1978.
N202PA From United States of America, joined Jun 2000, 1550 posts, RR: 4 Reply 14, posted (12 years 7 months 4 days 5 hours ago) and read 1648 times:
I think the common wisdom is that Airbus cut Pan Am a deal for medium-range aircraft at discount rates--which is something that they needed to fill in the gap between their 727s and 747s/L1011s in the early 80s.
To answer your other question, most PA employees ended up with Delta, which apparently had a very favorable policy towards employing former PA people, and United, when many pilots and others left with the sale of the Pacific route structure in 1985. My mother was determined to get out of the aviation business, but many of her friends ended up at Delta, including her best friend, who ended up moving to Dallas to work in DAL's reservation center.
N202PA From United States of America, joined Jun 2000, 1550 posts, RR: 4 Reply 15, posted (12 years 7 months 3 days 14 hours ago) and read 1635 times:
Now that the sources of PA's woes in the 1980s, and thus, the causes of their ultimate demise, I wonder if we can now refocus this topic back towards the original question--that is, given these problems, could Pan Am have been saved towards the end (1990/91)?
Given that I watched, as a child, the slow decline of Pan Am through the 80s, and the short, vain attempt to bring it back after the Atlantic route sale (actually known as Pan Am II by employees like my mother--not the Pan Am II that operated from 1996-1998, but the Miami-based airline in November-December, 1991), I am fascinated with the question of whether PA could have survived as a Caribbean/Latin America carrier. My opinion is that had PA succeeded in getting a smaller fleet comprised of types that better matched its needs in this area, as well as initiating codeshares with Delta, PA could have continued into the future, prospered, and escaped being bought out or bankrupted, just as CO did.
Take this scenario, for example, as one way this revival could have happened:
(*) PA dumps a lot of the 727s and leases 737-200s. The two-man flight deck means one fewer employee to pay per flight, and the reduced capacity (a decrease of about 40 seats) means that PA could have served more routes in the Carribbean. The smaller capacity would mean they could have served short routes like MIA-NAS, MIA-FPT, and MIA-MCO/TPA with increased frequency, carring more passengers. It also would mean that PA could fly existing thin routes in the Caribbean more efficiently (such as the flights from Miami to Providenciales, Grand Turk, Port au Prince, etc.), as well as new, thin routes such as flights to Antigua, St. Vincent,Martinique, and other Caribbean islands. Finally, the 737s could have allowed them to serve new and existing intra-U.S. routes to cities like Atlanta, Dallas, Houston, New Orleans, Washington, Cincinnati, Indianapolis, St. Louis, etc., which could have been used to efficiently feed the main operation in Miami.
(*) PA dumps all but 5-6 747s, which they use on the New York-Rio-Sao Paulo, New York-Buenos Aires-Santiago, Miami-Rio, Miami-Buenos Aires, and Miami-Paris routes.
(*) PA starts a codeshare alliance with Delta, making all of PA's flights Delta codeshare flights, and all Delta flights PA codeshares. PA cedes the Miami-Los Angeles-San Francisco route to Delta, which they serve with a 767-200. Delta flights from Atlanta, Dallas, and Cincinnati are re-timed to meet up with the Pan Am international flights. Pan Am acquires rights to fly from Atlanta to Cancun, Mexico City, Jamaica, Nassau, Freeport, and Caracas, which Delta feeds with its domestic operation. These PA ATL flights are timed to meet DL flighs from major destinations such as New York, Los Angeles, San Francisco, Dallas, Cincinnati, Salt Lake City and Chicago.
(*) Delta gives PA the second loan, as per the original agreement, of cash to keep the airline running while the reorganization went on.
In this way, PA would have been able to operate more efficiently, expand into new areas of service, gained a strongbox hold as the #1 American carrier to the Caribbean, and attracted the strong domestic network, through a partnership with Delta, that they needed so badly.
Obviously, this is just one scenario of how a revival could have happened, but in the absence of specific constraints (such as ironclad 747 and 727 leases), it seems like it might have worked. Any other ideas?
RayChuang From United States of America, joined Jun 2000, 7716 posts, RR: 5 Reply 16, posted (12 years 7 months 3 days 13 hours ago) and read 1626 times:
I think in the end, what finally doomed Pan Am (besides the extreme negative publicity of PA 103's loss) was the fact the airline was not ready to take on the deregulated environment of US-based airlines.
Pan Am's primary forte was international travel, which it did superbly back in the regulated days of the CAB when airlines like American, Continental, Delta and United didn't intrude on PA's route structure due to CAB regulations. But once the airlines were deregulated in 1978, the writing literally was on the wall: PA could no longer compete against AA, CO, DL and UA with their extensive domestic routes and feeder route structures. And PA's ill-advised merger with the original National Airlines turned into a major disaster for everyone involved.
Because of that, PA lost money like mad; they were forced to do things like selling their Pacific Division to UA and eventually their Atlantic Division to DL. Of course, both UA and DL quickly took advantage of these new acquisitions, providing feeder service from their domestic routes to fill up the seats on the ex-PA routes. Also, PA could not compete against AA, which had taken over Eastern Airlines' old routes to Latin America and used their domestic flight routings to fill up seats for flights to Latin America from AA's DFW and MIA hubs.
In the end, PA was an anchronism in terms of modern airlines, and it is not surprising that the airline finally failed in 1991.
As for why Gordon Bethune was able to revive CO was simple: the airline had a strong enough domestic route structure with hubs at IAH, CLE and EWR to build international operations. That is why CO was able to develop successful operations to Europe, South America and Japan from EWR and successful operations to Latin America from IAH.
Woody From United States of America, joined Oct 2000, 174 posts, RR: 0 Reply 17, posted (12 years 7 months 3 days 12 hours ago) and read 1616 times:
I got a book last Christmas about the downfall of Eastern (yes, this has something to do with Pan Am) and the author said that Eastern was trying to get Pan Am to buy them because Eastern had aircraft that were compatible to Pan Am's fleet, and Eastern had the domestic route structure to augment Pan Am's international routes. The author then said that if Pan Am had bought Eastern that Pan Am would still be flying.
I'm not sure if this would've worked, but it might have helped Pan Am stay around so that they could have merged with one of the big 3.
Jonnyboy From United Kingdom, joined Jul 2000, 220 posts, RR: 1 Reply 18, posted (12 years 7 months 3 days 11 hours ago) and read 1607 times:
talking of Eastern, where the reasons for their demise similar? I doubt it. They had a huge strike, I know, and huge EastCoast operations but not much internationally right? Wasn't the problem that they failed to focus on hubbing after 1978. Any thoughts...
DesertJets From United States of America, joined Feb 2000, 7677 posts, RR: 18 Reply 19, posted (12 years 7 months 3 days 10 hours ago) and read 1597 times:
1990/91 would be the worst time for any recovery in the airline biz. Here was the situation... The world is entering a really bad recession that would linger throughout the early 90s. The Gulf War causes oil shocks sending oil prices to over $40 a barrel (sounds like today, but no war). Even if Pan Am could have gotten a fleet that was more fuel efficient getting the cash to hold them up a little longer would be difficult. This was the reccession that pushed CO and TW into a second bankruptcy, HP went BK, Midway I went under. Braniff II, Eastern finally bit it... the list goes on. They could have saved it in the stronger times of the mid 80s, but after PA 103 and the events of the early 90's, nope.
Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
Ryanair From United Kingdom, joined Jul 1999, 654 posts, RR: 0 Reply 21, posted (12 years 7 months 2 days 20 hours ago) and read 1573 times:
I think up until around Feb. 1991 they could have just, just have been saved. Long term, probably they could have made it under the Delta model, but the I think it's debatable, taking into account the money necessary in the mean time to cover heavy losses, that it would have been a good investment for Delta. Delta gave Pan Am II cash which was supposed to tide them over for 6 months (I think from old press cuttings I have, which are packed away so I can't check) but this lasted less than three. Today, yes it would work, but ten years ago I doubt. Also, remember it was 1992, not 1991 that was the worst year for the industry, if Pan Am II was loosing so much cash in 1991, in 1992 things would not have improved. Certainly, with the money, the changes you give would work, but I doubt in the years that followed they would have bought enough time. They could have copied American in time, scheduling the planes so they flew into Miami from a US destination, then onto LatAm in a wave system.
If Pan Am had more agressively cut back in say 1988, dropping 747's etc they'd be in business today in some form I think. People forget though, up until nearly the very end the transatlantic network made money, in 1987 $300 million, latam was break even, but the domestic network lost $400 million. The arguement was the domestic network was necessary to fill the 747's. However, if they'd have more agressively put the A310's on longhaul, they could have shut much of the hemeraging domestic (ie. the loss of seats would cancel out the need for the domestic network), which would have stemed losses and allowed the sale of assets like the 747's and 727's, which were sold on a lease back basis to cover losses, to gain cash to reduce the debt. Cutting losses and lessening debt would have allowed room to move, making deals like Northwest possible, especially in the money for nothing environment of the late '80's.