Pan American Airways, Incorporated (PAA) was founded in response to the growing influence of the German-owned Colombian air carrier SCADTA in Central America. United States Army Air Corps officers formed Pan American after learning that SCADTA had hired a Delaware-based company to secure air mail contracts from the US government. This move was made out of concern for a potential German aerial threat to the Panama Canal.
Competing for the contract, Juan Trippe formed the Aviation Corporation of the Americas (ACA) on June 2, 1927, with $250,000 in startup capital and the backing of influential financiers. The company secured landing rights for Havana by acquiring American International Airways. Another contender, Atlantic, Gulf, and Caribbean Airways, was established by investment banker Richard Hoyt on October 11, 1927.
The US mail delivery contract to Cuba was awarded to Pan American Airways by the Postal Service. However, Pan American lacked aircraft and landing rights in Cuba. Just before the deadline, the three companies formed a partnership. ACA chartered a plane from a Dominican carrier, allowing Pan Am to operate the first flight to Havana on October 19, 1927. The companies formally merged on June 23, 1928, with Trippe becoming the operational head of Pan American Airways.
The US government approved the original Pan Am's mail delivery contract with little objection, out of fears that SCADTA would have no competition in bidding for routes between Latin America and the United States. The government further helped Pan Am by insulating it from its US competitors, seeing the airline as the "chosen instrument" for US-based international air routes. The airline expanded internationally, benefiting from a virtual monopoly on foreign routes.
In the late 1920s and early 1930s, Trippe and his colleagues at Pan Am worked on expanding the airline's reach in Central and South America. They acquired struggling airlines in the region and secured a majority of the government's airmail contracts. Trippe, along with Charles Lindbergh, visited several Latin American countries to negotiate landing rights. Pan Am began offering flights along the west coast of South America to Peru and established a seaplane route along the east coast to Buenos Aires, Argentina, and Santiago, Chile through a forced merger with New York, Rio, and Buenos Aires Line. Additionally, Pan Am formed partnerships, including with the Grace Shipping Company to create Pan American-Grace Airways (Panagra), and acquired stakes in other airlines like Mexicana de Aviación to expand its network in South America.
In 1929, Pan Am's parent company, the Aviation Corporation of the Americas, became a highly sought-after stock on the New York Curb Exchange, and there was a lot of speculation about its new route awards. In April of that year, Trippe and his colleagues made a deal with the United Aircraft and Transport Corporation (UATC) to have Pan Am operate south of the Mexico – United States border, while UATC obtained a significant ownership stake (UATC was the parent company of what are now Boeing, Pratt & Whitney, and United Airlines). In 1931, the Aviation Corporation of the Americas changed its name to Pan American Airways Corporation.
Pan Am initially operated its South American routes using the Consolidated Commodore and Sikorsky S-38 flying boats. In 1931, the larger S-40, capable of carrying more passengers than the S-38, joined Pan Am's fleet. These planes, known as the American Clipper, Southern Clipper, and Caribbean Clipper, were the first of 28 Clippers that came to represent Pan Am between 1931 and 1946. During this period, Pan Am offered Clipper services to Latin America from the International Pan American Airport at Dinner Key in Miami, Florida.
In 1937, Pan Am sought collaboration with Britain and France to establish a seaplane service between the United States and Europe. Pan Am struck a deal with both countries to provide service from Norfolk, Virginia, to Europe via Bermuda and the Azores using the S-42s. A joint service from Port Washington, New York, to Bermuda commenced in June 1937. Pan Am utilized Sikorskys, while Imperial Airways deployed the C-class flying boat RMA Cavalier.
On July 5, 1937, survey flights across the North Atlantic began. The Pan Am Clipper III, a Sikorsky S-42, landed at Botwood in the Bay of Exploits in Newfoundland from Port Washington via Shediac, New Brunswick. The next day, the Pan Am Clipper III left Botwood for Foynes in County Limerick, Ireland. On the same day, a Short Empire C-Class flying boat, the Caledonia, left Foynes for Botwood and landed on July 6, 1937, reaching Montreal on July 8 and New York on July 9.
Trippe decided to start a service from San Francisco to Honolulu, and then onwards to Hong Kong and Auckland following the established steamship routes. After negotiating traffic rights in 1934 to land at Pearl Harbor, Midway Island, Wake Island, Guam, and Manila, Pan Am shipped $500,000 worth of aeronautical equipment and construction crews westward in March 1935. They used the S.S. North Haven, a 15,000-ton merchant ship chartered to provision each island that the clippers would stop at on their 4- to 5-day flight. Pan Am ran its first survey flight to Honolulu in April 1935 with a Sikorsky S-42 flying boat. Construction crews, including Bill Mullahey who would later oversee Pan Am's Pacific operations, cleared coral from lagoons, constructed hotels, and installed the radio navigation equipment necessary for the clippers to island hop from Pearl City Seaplane Base, Hawaii, to Asia.
The airline won the contract for a San Francisco–Canton mail route later that year and operated its first commercial flight carrying mail and express in a Martin M-130 from Alameda to Manila amid media fanfare on November 22, 1935. The five-leg, 8,000-mile flight arrived in Manila on November 29 and returned to San Francisco on December 6, cutting the time between the two cities by the fastest scheduled steamship by over two weeks. Both the United States and the Philippine Islands issued special stamps for the two flights. The first passenger flight left Alameda on October 21, 1936. The fare from San Francisco to Manila or Hong Kong in 1937 was US$950 one way and US$1,710 round trip.
On August 6, 1937, Juan Trippe accepted United States aviation's highest annual prize, the Collier Trophy, on behalf of PAA from President Franklin D. Roosevelt for the company's "establishment of the transpacific airline and the successful execution of extended overwater navigation and the regular operations thereof."
Pan Am also used the Boeing 314 flying boats for the Pacific route. In China, passengers could connect to domestic flights on the Pan Am-operated China National Aviation Corporation (CNAC) network, which was co-owned by the Chinese government. In 1941, Pan Am flew to Singapore for the first time, starting a semi-monthly service that reduced San Francisco to Singapore travel times from 25 days to six days.
In early 1939, Pan Am received six large, long-range Boeing 314 flying boats. On March 30, 1939, the Yankee Clipper, piloted by Harold E. Gray, completed the first trans-Atlantic passenger flight. The first leg of the flight, from Baltimore to Horta, took 17 hours and 32 minutes, covering 2,400 miles. The second leg from Horta to Pan Am's newly built airport in Lisbon took 7 hours and 7 minutes, covering 1,200 miles. The Boeing 314 also facilitated the start of scheduled weekly contract Foreign Air Mail (F.A.M. 18) service and later passenger flights from New York (Port Washington, L.I.) to both France and Britain.
The Southern route to France was inaugurated for airmail on May 20, 1939, by the Yankee Clipper piloted by Arthur E. LaPorte flying via Horta, Azores, and Lisbon, Portugal to Marseilles. Passenger service over the route was added on June 28, 1939, by the Dixie Clipper piloted by R.O.D. Sullivan. The Eastbound trip departed every Wednesday at Noon and arrived at Marseilles on Friday at 3 pm GCT with return service leaving Marseilles on Sunday at 8 am and arriving at Port Washington on Tuesday at 7 am.
The Northern transatlantic route to Britain was established for Air Mail service on June 24, 1939, by the Yankee Clipper piloted by Harold Gray. The route included stops at Shediac (New Brunswick), Botwood (Newfoundland), and Foynes (Ireland) before reaching Southampton. Passenger service was introduced on the Northern route on July 8, 1939, also by the Yankee Clipper. Eastbound flights departed on Saturdays at 7:30 am and arrived in Southampton on Sundays at 1 pm GCT. Westbound service left Southampton on Wednesdays at noon and arrived in Port Washington on Thursdays at 3 pm. When World War II broke out in Europe on September 1, 1939, Foynes became the new terminus until the service ceased for the winter on October 5. However, transatlantic service to Lisbon via the Azores continued into 1941. Throughout World War II, Pan Am covered over 90 million miles (140 million km) globally in support of military operations.
The "Clippers," named after the fast-sailing ships of the 19th century, were the only American passenger aircraft at the time capable of intercontinental travel. To compete with ocean liners, the airline offered first-class seats on these flights, and the flight crews adopted a more formal style. Instead of the casual airmail pilots in leather jackets and silk scarves, the crews of the "Clippers" wore naval-style uniforms and followed a set procession when boarding the aircraft. In 1940, both Pan Am and TWA received and began using the Boeing 307 Stratoliner, which was the first pressurized airliner to enter service. However, the Boeing 307's airline service was short-lived, as all of them were commandeered for military service when the United States entered World War II.
During World War II, most Clippers were used for military purposes. A Pan Am subsidiary established an air military-supply route from Brazil to West Africa. The flight continued to Sudan and Egypt, following an existing British civil air route. In January 1942, the Pacific Clipper completed the first circumnavigation of the globe by a commercial airliner. Another significant event took place in January 1943 when Franklin D. Roosevelt became the first US president to fly abroad on the Dixie Clipper. During this time, Gene Roddenberry, the creator of Star Trek, served as a Clipper pilot. He was on board the Clipper Eclipse when it crashed in Syria on June 19, 1947.
The growing importance of air transport in the post-war era meant that Pan Am would no longer enjoy the official patronage it had been afforded in pre-war days to prevent the emergence of any meaningful competition, both at home and abroad.
Pan Am continued to use its political influence to lobby for the protection of its position as America's primary international airline. However, it faced increasing competition. First, American Export Airlines started offering flights across the Atlantic to Europe, and then it faced competition from other airlines including TWA to Europe, Braniff to South America, United to Hawaii, Northwest Orient to East Asia, and five potential rivals to Mexico. This new competitive landscape was a result of the Civil Aeronautics Board (CAB) adopting a new post-war approach to promoting competition between major US carriers on both domestic and international scheduled routes, as opposed to pre-war US aviation policy.
American Overseas Airlines (AOA) was the first airline to start regular landplane flights across the Atlantic on October 24, 1945. In January 1946, Pan Am scheduled seven DC-4s a week to fly from LaGuardia Airport to London (Hurn Airport) and Lisbon. The flight time to Hurn was 17 hours and 40 minutes, including stops, or 20 hours and 45 minutes to Lisbon. Additionally, a Boeing 314 flying boat flew from LaGuardia to Lisbon once every two weeks, taking 29 hours and 30 minutes. However, flying boat flights ended shortly thereafter.
TWA's transatlantic challenge, the impending introduction of its faster, pressurized Lockheed Constellations, resulted in Pan Am ordering its own Constellation fleet at $750,000 (today's equivalent to $10 million) apiece. Pan Am began transatlantic Constellation flights on January 14, 1946, beating TWA by three weeks.
In January 1946, it took 71 hours and 15 minutes to fly from Miami to Buenos Aires in a Pan Am DC-3. However, the following summer, DC-4s completed the flight from Idlewild to Buenos Aires in 38 hours and 30 minutes. In January 1958, Pan Am's DC-7Bs managed the New York to Buenos Aires route in 25 hours and 20 minutes, while the National – Pan Am – Panagra DC-7B via Panama and Lima took 22 hours and 45 minutes. Convair 240s replaced DC-3s and other pre-war types on Pan Am's shorter flights in the Caribbean and South America. Additionally, Pan Am acquired a few Curtiss C-46s for a freight network that eventually extended to Buenos Aires.
In January 1946, Pan Am did not operate transpacific flights beyond Hawaii, but they soon resumed with DC-4s. By January 1958, the daily California to Tokyo flight was serviced by a Stratocruiser, taking 31 hours and 45 minutes from San Francisco or 32 hours and 15 minutes from Los Angeles. (A flight to Seattle and a connection to Northwest's DC-7C totalled 24 hours and 13 minutes from San Francisco, but Pan Am was not allowed to fly that route). The Stratocruisers' double-deck fuselage, with sleeping berths and a lower-deck lounge, helped them compete with their rivals. "Super Stratocruisers" with more fuel were introduced on Pan Am's transatlantic routes in November 1954, making nonstop eastward and one-stop westward schedules more reliable.
In June 1947, Pan Am initiated the first scheduled round-the-world airline flight. In September, the DC-4 departed from San Francisco at 22:00 on Thursdays as Flight 1. It made stops at Honolulu, Midway, Wake, Guam, Manila, and Bangkok, ultimately arriving in Calcutta on Monday at 12:45. There, it connected with Flight 2, a Constellation that had departed from New York at 23:30 on Fridays. The DC-4 then returned to San Francisco as Flight 2. The Constellation departed Calcutta at 13:30 on Tuesdays, stopping at Karachi, Istanbul, London, Shannon, and Gander before finally arriving at LaGuardia on Thursdays at 14:55. A few months later, PA 3 took over the Manila route, while PA 1 shifted to Tokyo and Shanghai.
Until 1960, all Pan Am round-the-world flights involved at least one change of plane, before the Boeing 707s took over. In 1962-63, PA 1 became a daily flight, with different en-route stops on different days of the week. In January 1963, it departed from San Francisco at 09:00 daily and was scheduled to arrive in New York 56 hours and 10 minutes later. San Francisco was replaced by Los Angeles in 1968, and by 1971, when Boeing 747s replaced 707s, all stops except Tehran and Karachi were served daily in each direction. Finally, in 1975-76, Pan Am completed the round-the-world trip from New York to New York.
In January 1950, Pan American Airways Corporation officially changed its name to Pan American World Airways, Inc. The airline had been referring to itself as Pan American World Airways since 1943. In September 1950, Pan Am completed the $17.45 million purchase of American Overseas Airlines from American Airlines. During that month, Pan Am ordered 45 Douglas DC-6Bs. The first plane, Clipper Liberty Bell, launched Pan Am's all-tourist class Rainbow service between New York and London on May 1, 1952, to complement the all-first President Stratocruiser service. Starting in June 1954, the DC-6Bs began replacing DC-4s on Pan Am's internal German routes.
Pan Am introduced the Douglas DC-7C "Seven Seas" on transatlantic routes in 1956. In January 1958, the DC-7C completed a nonstop flight from Idlewild to London in 10 hours and 45 minutes, allowing Pan Am to compete with TWA's Super Constellations and Starliners. In 1957, Pan Am began offering DC-7C flights directly from the West Coast of the United States to London and Paris, with a fuel stop in Canada or Greenland. However, the introduction of the faster Bristol Britannia turboprop by British Overseas Airways Corporation (BOAC) between New York and London on December 19, 1957, ended Pan Am's competitive advantage on that route.
In the advent of the "Jet Age" Pan Am considered purchasing the world's first jetliner, the British De Havilland Comet, but instead waited to become the Boeing 707 launch customer in 1955 with an order for 20. It also purchased 25 Douglas DC-8, which could seat six across. The 707 was originally to be 3.66 m wide with five-abreast seating but Boeing widened their design to match the DC-8. The combined order value was $269 million.
On October 26, 1958, Pan Am's inaugural jet flight was from New York Idlewild to Paris Le Bourget, with a stop in Gander for refuelling. The Boeing 707-121 Clipper America, carrying 111 passengers, marked this historic journey.
On January 15, 1970, First Lady Pat Nixon christened the Pan Am Boeing 747 Clipper "Young America" at Washington Dulles. Over the next few days, Pan Am flew 747s to major airports in the United States, where the public had the opportunity to tour the aircraft.
On the evening of January 21, 1970, Pan Am's inaugural 747 service was delayed for several hours due to engine failure on the scheduled Clipper Young America. The flight from New York John F. Kennedy to London Heathrow was substituted with Clipper Victor. It's worth noting that Clipper Victor was destroyed seven years later in the Tenerife air disaster when it collided with a KLM 747-200. While the aircraft was on the tarmac at Heathrow, two students from Aston University managed to board the plane undetected and distributed promotional materials to the passengers as part of a publicity stunt.
Pan Am was one of the first three airlines to sign options for the Aérospatiale-BAC Concorde. However, despite signing options, the airline, along with most others, did not purchase the supersonic jet, except BOAC and Air France. Pan Am was also the first US airline to sign for the Boeing 2707, the American supersonic transport (SST) project, reserving 15 delivery positions for these aircraft. Unfortunately, these aircraft never entered into service as Congress voted against additional funding in 1971.
In the late 1960s and early 1970s, Pan Am used the slogan "World's Most Experienced Airline." At its peak, the airline carried 6.7 million passengers in 1966, and by 1968, its 150 jets flew to 86 countries across 81,410 unduplicated miles, covering all continents except Antarctica. Pan Am was profitable during this time, with $1 billion in cash reserves (equivalent to over $7 billion today). The airline's most popular routes were between New York, Europe and South America, as well as between Miami and the Caribbean.
In 1964, Pan Am started operating a helicopter shuttle service between New York's John F. Kennedy, LaGuardia, and Newark airports and Lower Manhattan, which was run by New York Airways.
In addition to the DC-8, the Pan Am jet fleet included Boeing 707s and 747s. The fleet also later included Boeing 720Bs, 727s, 737s, and 747SPs (which could fly nonstop from New York to Tokyo), as well as Lockheed L-1011 Tristars, McDonnell-Douglas DC-10s, and Airbus A300s and A310s. Pan Am owned the InterContinental Hotel chain and had a financial interest in the Falcon Jet Corporation, which held marketing rights to the Dassault Falcon 20 business jet in North America. The airline was also involved in creating a missile-tracking range in the South Atlantic and operating a nuclear engine testing laboratory in Nevada. Furthermore, Pan Am participated in several notable humanitarian flights.
Between 1950 and 1990, Pan Am operated frequent short-haul flights between West Germany and West Berlin using Douglas DC-4s, DC-6Bs (from 1954), and Boeing 727s (from 1966). This was made possible by an agreement after World War II between the United States, the United Kingdom, France, and the Soviet Union. This agreement restricted air services to and from Berlin to airlines headquartered in these four countries, preventing Germany from having its own airlines.
Tensions during the Cold War led to the Soviet Union withdrawing from the quadripartite Allied Control Commission in 1948, which resulted in the division of Germany the following year. The Soviet Union limited the Western powers' access to Berlin, so air transport in West Berlin was restricted to the carriers of the remaining Allied Control Commission powers. Aircraft had to fly through three 20-mile-wide air corridors at a maximum altitude of 10,000 feet across hostile East German territory. During this time, the airline's operations in West Berlin made up more than half of the city's total commercial air traffic.
Pan Am had a significant number of passengers boarding its flights at Berlin Tempelhof compared to any other airport. The airline had a crew base in Berlin consisting mainly of German flight attendants and American pilots for its IGS (Internal German Service) flights. When Lufthansa acquired Pan Am's Berlin route authorities, it also took over the German National flight attendants. Pan Am also had local flight attendant bases in London for flights within Europe and to the US, as well as in Warsaw, Istanbul, Belgrade, Tel Aviv, Nairobi, Delhi, and Bombay for their respective flight routes.
Pan Am operated Rest and Recreation (R&R) flights during the Vietnam War. These flights transported American service personnel for Rest and Recreation leaves in Hong Kong, Tokyo, and other Asian cities.
Pan Am had invested heavily in a large fleet of Boeing 747s, anticipating a continued increase in air travel. However, the growth did not materialize as the introduction of numerous wide-body aircraft by Pan Am and its competitors coincided with an economic slowdown. Reduced air travel following the 1973 oil crisis exacerbated the issue of overcapacity. Pan Am, with its high overheads due to a large decentralized infrastructure, was particularly vulnerable. The airline also faced challenges from high fuel prices and the operation of many older, less fuel-efficient narrow-bodied aircraft, leading to increased operating costs. In addition, federal route awards to other airlines, such as the Transpacific Route Case, further reduced Pan Am's passenger numbers and profit margins.
On September 23, 1974, a group of Pan Am employees published an advertisement in The New York Times to register their disagreement over federal policies that they felt were harming the financial viability of their employer. The ad cited discrepancies in airport landing fees, such as Pan Am paying $4,200 to land a plane in Sydney, while the Australian carrier, Qantas, paid only $178 to land a jet in Los Angeles. The ad also contended that the United States Postal Service was paying foreign airlines five times as much to carry US mail in comparison to Pan Am. Finally, the ad questioned why the Export-Import Bank of the United States loaned money to Japan, France, and Saudi Arabia at 6% interest while Pan Am paid 12%.
In 1976, Pan Am had accumulated $364 million in losses over 10 years, equivalent to $1.6 billion today. The airline's debts approached $1 billion, which equals $4.4 billion in 2024. This financial situation threatened the airline with bankruptcy. William T. Seawell, who had replaced Najeeb Halaby as Pan Am president in 1972, implemented a turnaround strategy. This involved reducing the network by 25%, cutting the workforce by 30%, lowering wages, introducing strict cost-saving measures, restructuring debt, and shrinking the fleet. Thanks to these measures, along with the use of tax-loss credits, Pan Am avoided financial collapse and became profitable again in 1977.
In the late 1950s, early 1960s as well as mid-1970s, there were discussions about merging the airline with a domestic operator such as American Airlines, Eastern Air Lines, Trans World Airlines, or United Airlines. Rival Airlines convinced Congress that Pan Am would use its political influence to dominate US air routes. As a result, the Civil Aeronautics Board (CAB) repeatedly refused to allow the airline to expand its operations in the US or merge with another airline. Therefore, Pan Am remained a US carrier operating only international routes, except Hawaii and Alaska. The last time Pan Am was allowed to merge with another airline before the deregulation of the US airline industry was in 1950 when it acquired American Overseas Airlines from American Airlines. After deregulation in 1978, more US domestic airlines began competing with Pan Am on international routes.
President Seawell of Pan Am sought to expand the airline's domestic routes by acquiring National Airlines in 1979. The $437 million acquisition further strained Pan Am’s finances, as it led to a bidding war and increased labour costs. Despite a 62% increase in revenues, the merger resulted in a 157% rise in fuel costs and a 74% increase in "miscellaneous expenses" during a weak economic climate.
In 1980, as Pan Am's financial situation worsened, the company began selling off non-core assets. The first to go was its 50% stake in Falcon Jet Corporation in August. In November of the same year, the Pan Am Building was sold to the Metropolitan Life Insurance Company for $400 million (which is equivalent to $1.24 billion today. In September 1981, Pan Am sold off its InterContinental hotel chain. Before the completion of this transaction, C. Edward Acker, the founder and ex-president of Air Florida, as well as a former Braniff International executive, replaced Seawell. The combined sale value of the InterContinental chain and the Falcon Jet Corp. stake was $500 million.
Acker continued the asset disposal program he had inherited from his predecessor and made operational cutbacks. One notable change was that Pan Am stopped its round-the-world service on October 31, 1982, which included flights between Delhi, Bangkok, and Hong Kong due to the route's lack of profitability. To increase seating capacity for the 1983 spring/summer season, the airline purchased three passenger Boeing 747-200Bs from Flying Tigers. In exchange, Flying Tigers received four of Pan Am's 747-100 freighters.
In the summer of 1984, despite Pan Am's financial difficulties, Acker proceeded with an order for new Airbus models, both wide-body and narrow-bodied aircraft. Pan Am became the second American company to order Airbus aircraft, following Eastern Airlines. These advanced aircraft were intended to make the airline more competitive as they were economically and operationally superior to the 747s and 727s Pan Am operated at the time.
In 1985, new A-221s started replacing 727s on the Internal German Services (IGS), and A300s began flying in the Caribbean networks. Starting from early 1986, additional new longer-range A-222s replaced some of the 747s on the slimmed-down transatlantic network following ETOPS certification, which allowed transoceanic flying with twin-engined aircraft approved by the Federal Aviation Administration (FAA). The first A-222 ETOPS transatlantic route was New York-JFK to Hamburg, followed shortly after by Detroit to London.
For its short-haul US domestic and European feeder routes, and most of its IGS services, Pan Am decided not to take delivery of the A320s and sold its delivery positions to Braniff. Consequently, the majority of these routes continued to be flown with obsolete 727s until the airline's demise. In September 1984, Pan American World Airways established a holding company called Pan Am Corporation to assume ownership and control of the airline and the services division.
In April 1985, due to Pan Am's financial difficulties, Acker decided to sell the entire Pacific Division to United Airlines for $750 million. This division represented 25% of Pan Am's entire route system and included their main hub at Tokyo-Narita. The sale also helped Pan Am address fleet incompatibility issues stemming from their earlier acquisition of National Airlines. As part of the deal, United Airlines acquired Pan Am's Pratt & Whitney JT9D-powered 747SPs, Rolls-Royce-powered L-1011-500s, and General Electric CF6-powered DC-10s, as well as the Pacific routes. It's worth noting that this sale happened during a month-long strike by the Transport Workers Union of America.
In the early 1980s, Pan Am contracted several regional airlines (Air Atlanta, Colgan Air, Emerald Air, Empire Airlines, Presidential Airways, and Republic Airlines) to operate feeder flights under the Pan Am Express branding.
In 1987, Pan Am acquired Ransome Airlines for $65 million, which is equivalent to $154 million today. The acquisition was aimed at providing additional support for Pan Am's mainline services at its hubs in New York, Los Angeles and Miami in the United States, and Berlin in Germany. The renamed Pan Am Express primarily operated routes from New York and Berlin, with Miami services added in 1990. However, the regional Pan Am Express operation only provided a small increase in support for Pan Am's international route system, which was now focused on the Atlantic Division.
To establish a presence on the busy Washington–New York–Boston commuter air corridor, Pan Am acquired Ransome and also purchased New York Air's shuttle service between Boston, New York, and Washington, D.C. This move was intended to allow Pan Am to offer a high-frequency service for high-yield business travellers, competing directly with Eastern Air Lines Shuttle operation. Following the acquisition, the shuttle service was renamed Pan Am Shuttle and began operations from LaGuardia Airport's renovated Marine Air Terminal in October 1986. However, this did not resolve Pan Am's ongoing challenge of not having a strong domestic feeder network.
In 1987, Towers Financial Corporation, led by its CEO Steven Hoffenberg and his consultant Jeffrey Epstein, attempted to take over Pan Am in a corporate raid using Towers Financial as their raiding vessel. However, their bid was unsuccessful.
In January 1988, Thomas G. Plaskett, a former executive of American Airlines and Continental, took over as president following Acker. During this time, Pan Am implemented a program to renovate its aircraft and improve its on-time performance, leading to positive results. However, on December 21, 1988, Pan Am flight 103 was bombed above Lockerbie, Scotland, resulting in 270 fatalities. This event led to a $300 million lawsuit filed by over 100 families of the victims. In response, the airline subpoenaed records from six US government agencies, including the CIA, the Drug Enforcement Administration, and the State Department. Although the records indicated that the US government had knowledge of bombing warnings but failed to pass on the information to the airline, the families of the victims accused Pan Am of trying to shift the blame.
In June 1989, Plaskett presented Northwest Airlines with a $2.7 billion takeover bid. This bid was supported by Bankers Trust, Morgan Guaranty Trust, Citicorp, and Prudential-Bache. The proposed merger was Pan Am's final attempt to create a strong domestic network to provide sufficient feed for the two remaining mainline hubs at New York JFK and Miami. It was also intended to help the airline regain its status as a global airline by re-establishing a sizable transpacific presence. The merger was expected to result in annual savings of $240 million. However, billionaire financier Al Checchi outbid Pan Am by presenting Northwest's directors with a superior proposal.
The first Gulf War, caused by the Iraqi invasion of Kuwait on August 2, 1990, led to increased fuel prices and a significant drop in global economic activity. This resulted in a sharp decrease in air travel demand worldwide, leading to substantial financial losses for once-profitable airlines, including Pan Am. This was another major setback for Pan Am, which was still recovering from the 1988 Lockerbie disaster. To improve its financial situation, Pan Am sold most of its routes to London Heathrow, its most important international destination, to United Airlines. This left Pan Am with only two daily flights to London, serving Detroit and Miami from Gatwick. Pan Am also sold its IGS routes to Berlin to Lufthansa for $150 million (equivalent to $309.23 million in 2023), bringing the total value of asset sales to $1.2 billion (equivalent to $2.47 billion in 2023). In addition, the airline announced the elimination of 2,500 jobs (8.6% of its workforce) in September 1990.
Pan Am filed for bankruptcy protection on January 8, 1991. Delta Airlines bought the remaining profitable assets of Pan Am, which included its European routes (except one from Miami to Paris), Frankfurt mini hub, the Shuttle operation, 45 jets, and the Pan Am Worldport at John F. Kennedy Airport, for $416 million. Additionally, Delta injected $100 million, becoming a 45% owner of a reorganized but smaller Pan Am that would operate from a main hub in Miami, serving the Caribbean, Central and South America. The airline's creditors would hold the remaining 55%.
The Pan Am Shuttle service running from Boston to New York, LaGuardia to Washington National, was acquired by Delta in September 1991. Two months later, Delta took over all of Pan Am's transatlantic traffic rights, except the Miami to Paris and London routes. In November 1991, all members of Pan Am's frequent flyer program, WorldPass, had their accumulated miles transferred to Delta's frequent flyer program, SkyMiles.
In October 1991, Russell Ray, Jr., a former executive of Douglas Aircraft, was appointed as the new president and CEO of Pan Am. As a part of the restructuring, Pan Am moved its headquarters from the Pan Am Building in New York City to new offices in the Miami area to prepare for the airline's relaunch from both Miami and New York on November 1. The re-launched airline was set to operate around 60 aircraft, generate approximately $1.2 billion in annual revenues, and employ 7,500 individuals. However, after the relaunch, Pan Am continued to experience substantial losses. In October and November 1991, revenue fell short of expectations, with Delta claiming that Pan Am was losing $3 million a day. This caused a lack of confidence in the reorganized Pan Am among Delta, Wall Street, and the travelling public.
Pan Am's senior executives projected a shortfall of between $100 million and possibly $200 million, with the airline needing a $25 million instalment just to operate through the following week. On the evening of December 3, Pan Am's Creditors Committee informed US Bankruptcy Judge Cornelius Blackshear that they were close to convincing another airline (TWA) to invest $15 million to keep Pan Am running. However, a deal with TWA owner Carl Icahn could not be reached. Pan Am opened for business at 9:00 am, but within the hour, Ray was forced to withdraw Pan Am's reorganization plan and implement an immediate shutdown plan for the company.
On December 4, 1991, Pan Am ceased operations following a decision by Delta CEO Ron Allen and other senior executives not to proceed with the final $25 million payment Pan Am was scheduled to receive the weekend after Thanksgiving. As a result, some 7,500 Pan Am employees lost their jobs, with thousands of them having worked in the New York City area and preparing to move to the Miami area to work at Pan Am's new headquarters near Miami International Airport. Economists predicted that 9,000 jobs in the Miami area, including jobs at companies not connected to Pan Am that were dependent on the airline's presence, would be lost after it folded. The carrier's last scheduled operation was Pan Am flight 436, which departed from Bridgetown, Barbados, at 2 pm (EST) for Miami under the command of Captain Mark Pyle flying Clipper Goodwill, a Boeing 727-200.
On December 9, 1991, Delta was sued for over $2.5 billion by the Pan Am Creditors Committee. Following this, a significant number of former Pan Am employees also sued Delta. In December 1994, a federal judge ruled in favour of Delta, stating that it was not responsible for Pan Am's downfall. Pan Am was the third American major airline to shut down in 1991, after Eastern Air Lines and Midway Airlines.
After serving as Pan Am's CEO for only two months, Ray was replaced by Peter McHugh, who was tasked with overseeing the sale of Pan Am's remaining assets by Pan Am's Creditor's Committee. Pan Am's last remaining hub, at Miami International Airport, was divided between United Airlines and American Airlines in the following years. TWA's Carl Icahn purchased Pan Am Express at a court-ordered bankruptcy auction for $13 million and renamed it Trans World Express. The Pan Am brand was sold to Charles Cobb, CEO of Cobb Partners, Cobb, along with Hanna-Frost partners, invested in a new Pan American World Airways led by veteran airline executive Martin R. Shugrue, Jr., a former Pan Am executive with 20 years of experience at the original carrier.
