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 corporationorganized in 1927 which is engaged in commercial air transportation whichit pioneered between the United States and most areas of the world. Pan AmCorporation (the Corporation), a Delaware corporation, is and sinceSeptember 14, 1984 has been the parent of Pan Am, its principal subsidiary. For the past few years Pan Ams financial condition has been very poor.The follow reported a consolidated net loss for 1986 of $469.3 jillion.The 1988 net loss included a gull of $89.1 million resulting from the saleof Pan Ams Airbus A320 aircraft and delivery positions. This gain waspartially offsetted by a reserve of $25.7 million related to the loss onsale of Pan Ams subsidiary, which is responsible for the marketing ofexcess inventory, and 18 million of year-end adjustments. Pan Ams passenger traffic was strong in 1988. An increase of 12.2percent on capacity of 11.2 percent. This was due to the result ofstrengthening of various European currencies against the U.S. dollar, fareincreases in the market, enhanced management systems and procedures, as easily as programs to reduce the dependence on wholesale ticket distributionsthroughout the Atlantic, Latin America, Domestic, and systemwide. Eventhough revenue was strong in 1988, labor and other cost increasedat a higher rate as a consequence of efforts to improve serving andeffectiveness of the operation. Labor costs were higher in 1988 due to theresult of an increase in the number of employees during the year. Also theaddition of increased fuel prices, commissions, purchased services,aircraft rentals, and a $24.0 million foreign exchange loss had a negativeimpact on the corporation. 1987 expenses were effected by increases in expenses for fuel,commissions, maintenance materials and other operating costs which exceededexpectations. Labor cost reductions were not achieved in 1987. Other losseswhich occurred wa s the settlement of an $18 million provision for theproposed settlement of an age discrimination suit, and as well as $42.0million for increased allowances for inventory obsolescence, uncollectedreceivables and costs associated with the WorldPass frequent flyer program.COMPANY BACKGROUND Pan Am lead by its burst Juan Trippe, virtually single- handedlyopened up the world to commercial flight. Teeming with adventure,international intrigue, and financial manipulations, this sky-struck youngman with immense ambition and vision took a aviate carrying mail 90 milesfrom Key West to Havana and expanded the operation into the vast world-wide