USA: United Airlines Takes Over Pan Am’s Pacific Routes

Three decades ago, an ailing Pan Am was looking for a solution to its financial woes. In order to raise cash to finance the acquisition of its Airbus A320s (order placed in 1984) and the A300s and A310s that were delivered, as well as still reeling from the failed merger with National, “The Chosen Instrument” as it was called opted to cut off its profitable left arm, selling its Pacific division to United Airlines on April 22, 1985.

The deal included all Pan Am routes and assets in the region (except Hawaii), 18 aircraft, which included Pan Am’s Boeing 747SPs and Lockheed L1011-500s, and 2,700 of its employees in the airline business, all for $750 million in cash (equivalent to almost $1,7 billion in today’s figures).

Though the routes were profitable for Pan Am, the airline felt that the upgrade cost to modern equipment would be prohibitive. On the other hand, United, which became the first airline to serve all 50 U.S. states in 1984, was in a favorable financial position and the deal , which came in effect on February 7, 1986, was the onset of its transformation as a global carrier. Prior to the purchase of the routes, United’s only transoceanic services were to Tokyo via Seattle which began in 1983. Since then it has continued to build the most comprehensive route network of any U.S. carrier, offering the most trans-Pacific service. For the United, these routes have been consistently profitable, even during the post 9/11 crisis years.

For Pan Am, it was the beginning of the end. After half a century of pioneering experience in the Pacific, the distinctive Clipper service was gone for good in Japan, Thailand, Philippines, Singapore, China, South Korea, Australia, and New Zealand, leaving an enormous gap in its once massive route network. In the following years, Pan Am would shed other company jewels like London Heathrow to United in 1990 and then most of its European network with the exception of Miami to Paris, in 1990-91. Marred with operational, financial and reputational setbacks, Pan Am was finally forced to declare bankruptcy on January 8, 1991 and ceased operation forever on December 4, 1991.