Pan American World Airways: 1927-1991

This is not a story about planes. It's about romance. The death knell for Pan American World Airways was imminent last week. Pan Am agreed to sell its major European routes, its East Coast shuttle and 45 planes to Delta Airlines, America's third largest carrier, for $260 million. The latest sale leaves it with a few domestic routes and its profitable Latin American lines, which United Airlines was negotiating to buy over the weekend for perhaps as much as $300 million. The carrier had been under bankruptcy protection since January, and its obituaries have been written for well over a decade. "It's pretty clear that a year from now, Pan Am will only be a legal entity," says Thomas Longman, an analyst for Bear, Stearns. "It will no longer be an operating airline."

It may be hard for today's all-too-frequent fliers to remember that once, air travel was an adventure; that airlines once had a soul. Pan Am certainly did. It ushered in cross-Pacific air travel in the mid-'30s with its China Clipper and commercial-jet travel with its Boeing 707--the first jet was christened in grand manner by First Lady Mamie Eisenhower. The carrier came to stand for a questing American spirit--and sound business sense. The entrepreneur who built Pan Am, Juan Trippe, was perfect for the role: part swashbuckler, part tyrant, he made the airline his toy and his obsession. Trippe saw the competitive advantages in going global, often negotiating personally with foreign officials for landing rights. His consultant on new routes was aviator Charles A. Lindbergh. The airline was also a point of civic pride in New York, where the unabashedly ugly headquarters building had almost the star status of Chrysler's nearby skyscraper.

Through it all, the company--and an eager press--built on air travel's aura of glamour and luxury. For long flights in the 1940s, passengers could reserve sleeping berths; New York-to-London passengers were served breakfast in bed. A 1940 Saturday Evening Post article marveled at Annabella Power, wife of movie idol Tyrone, who made three transatlantic crossings in less than two weeks. Trippe had cannily named his sea-route planes "clippers," evoking the tall seagoing vessels of the past. But he was also pushing the future with aggressive aircraft orders; he was often first in line to snap up new planes like Boeing's gorgeous Stratocruiser, or the massive 747 jumbo jet. And while Pan Am never explicitly got the "chosen instrument" status on government business that Trippe coveted, his airline served Washington often; during World War II, Clippers quietly--and profitably--shuttled important passengers, mail and war materials throughout the Pacific, their shiny hulls painted gray to avoid detection. Later, in Vietnam, the airline flew soldiers on furlough "freedom flights" to distant Asian vacation spots virtually free of charge.

Trippe's solo management style eventually caught up with his company. When he stepped down as chairman in 1968, he had groomed no strong successor. The airline began its long descent. Competition had grown as domestic carriers crowded Pan Am's routes, and many foreign airlines used their government subsidies to undercut Pan Am's prices and at least match its service. Airline-industry deregulation in 1978 removed the last protection old-line carriers like Pan Am had enjoyed. Without a strong domestic-route system to support it, Pan Am's losses mounted. The company spun off assets for cash, from the headquarters building to the Inter-Continental hotels, as well as its pioneering Pacific and London routes. Yet around the world, Pan Am's planes were still a symbol of America's global reach--a point tragically driven home by the terrorist bombing of Flight 103 over Lockerbie, Scotland, in 1988.

Pan Am hasn't been the only airline in pain, of course. Through the 1980s, airlines became pretty much like other businesses, except perhaps more poorly run. Green-eye-shade boys and corporate raiders turned CEOs flew by their bottom lines--and profits still plummeted. The past two years have seen Eastern and Braniff grounded, and such airlines as Continental and America West seek bankruptcy protection. The gulf war's chill on travel and the recession's squeeze has been especially cruel to the major carriers, which lost $2 billion in the three months before Pan Am filed for Chapter 11. Industry analysts will tell you that there is a bright side to the airline consolidation. Delta, the conservatively run Atlanta-based carrier, is likely to be a good home for the transferred routes. Pan Am's workers won't be so lucky; Delta has pledged to hire 6,000 of them, leaving some 16,000 to add to the unemployment rolls. More has been lost than memories.

So long, Pan Am. You were a victim of so many things. The history books will probably say the chief cause of your demise was deregulation. Your managers, raised in Juan Trippe's government-protected fiefdom, never learned how to scrap in a feistier world. Moses had to wander through the desert for 40 years--no doubt to weed out those Israelites who couldn't adjust to the deregulated environment of the Promised Land. You didn't get that much time.