Pan American World Airways, Inc :: Economy Economics Economical Papers Research

Pan American World Airways, Inc Pan American World Airways, Inc ("Pan Am") is a New York corporation organized in 1927 which is engaged in commercial air transportation which it pioneered between the United States and most areas of the world. Pan Am Corporation ("the Corporation"), a Delaware corporation, is and since September 14, 1984 has been the parent of Pan Am, it's principal subsidiary. For the past few years Pan Am's financial condition has been very poor. The company reported a consolidated net loss for 1986 of $469.3 million. The 1988 net loss included a gain of $89.1 million resulting from the sale of Pan Am's Airbus A320 aircraft and delivery positions. This gain was partially offsetted by a reserve of $25.7 million related to the loss on sale of Pan Am's subsidiary, which is responsible for the marketing of excess inventory, and 18 million of year-end adjustments. Pan Am's passenger traffic was strong in 1988. An increase of 12.2 percent on capacity of 11.2 percent. This was due to the result of strengthening of various European currencies against the U.S. dollar, fare increases in the market, enhanced management systems and procedures, as well as programs to reduce the dependence on wholesale ticket distributions throughout the Atlantic, Latin America, Domestic, and systemwide. Eventhough revenue was strong in 1988, labor and other costs increased at a higher rate as a consequence of efforts to improve service and effectiveness of the operation. Labor costs were higher in 1988 due to the result of an increase in the number of employees during the year. Also the addition of increased fuel prices, commissions, purchased services, aircraft rentals, and a $24.0 million foreign exchange loss had a negative impact on the corporation. 1987 expenses were effected by increases in expenses for fuel, commissions, maintenance materials and other operating costs which exceeded expectations. Labor cost reductions were not achieved in 1987. Other losses which occurred was the settlement of an $18 million provision for the proposed settlement of an age discrimination suit, and as well as $42.0 million for increased allowances for inventory obsolescence, uncollected receivables and costs associated with the WorldPass frequent flyer program. COMPANY BACKGROUND Pan Am lead by it's founder Juan Trippe, virtually single- handedly opened up the world to commercial flight. Teeming with adventure, international intrigue, and financial manipulations, this sky-struck young man with immense ambition and vision took a seaplane carrying mail 90 miles from Key West to Havana and expanded the operation into the vast world-wide