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
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
1987 expenses were effected by increases in expenses for fuel,
commissions, maintenance materials and other operating costs which exceeded
expectations. Labor cost reductions w
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