NEW YORK — Pan Am Corp., parent of Pan American World Airways, said Tuesday that its third-quarter profit surged more than tenfold to $63.4 million from a depressed $5.5 million in the same period last year.
The company said its operating profit more than doubled to $90.3 million from $40.8 million a year earlier as operating revenue rose 19.5% to $1.062 billion, while operating expenses rose 14.6% to $972 million.
Pamela Hanlon, a spokeswoman for Pan Am, said passenger traffic was up 16% in the latest quarter, compared to a year ago when several instances of terrorism involving airliners in Europe persuaded many American travelers to spend the summer in the United States.
For the first nine months of the year, the parent company said its loss narrowed to $19.8 million from a loss of $265.3 million a year earlier.
The company has had operating losses of more than $1.4 billion this decade and has a negative net worth, due mainly to a debt of $600 million to its pension fund. It has sold or mortgaged many major assets, including its headquarters building in New York, the Intercontinental hotel chain and its entire Pacific network.
Pan Am stock was lower Tuesday despite the higher earnings, closing down 12.5 cents to $3.25 a share.
Meanwhile, Pan American's unions appeared to edge closer to announcing full support of financier Kirk Kerkorian in his attempt to gain control of the airline and restructure the parent firm.
Unions at Pan Am have been looking for an investor to help them take control of the ailing airline, which has racked up a series of steep losses.
"The individual unions for the most part have made the decision to go ahead," said a lawyer at the firm of Skadden Arps Slate Meagher and Flom, which is representing four of Pan American's five major unions. "It's up to Kerkorian to make a (formal) proposal to the (Pan Am) board," he said.
Fred Benninger, a long-time Kerkorian associate, said Tuesday that the financier did not make a proposal to the Pan Am board at its regular monthly meeting Tuesday but expects to do so soon, perhaps by next week. Benninger is chairman of MGM Grand Air, a luxury airline controlled by Kerkorian.
Benninger said he expects Pan Am management to react well to the proposals. "I think the reaction will be friendly," he said. "So far our talks with them have been friendly and cooperative."
He also said the Kerkorian group would proceed with a plan only if it is supported by Pan Am management. "We want a friendly deal," he said. A Pan Am spokeswoman declined to comment and other company officials were not available.
The Pan American labor group, the Joint Labor Coalition, is made up of the Independent Union of Flight Attendants, the Air Line Pilots Assn., the Flight Engineers International Assn. and the Teamsters. It does not include the Transport Workers Union, which represents ground staff.
The plan devised by Kerkorian and a group of associates reportedly calls for the airline to be spun off from the parent company. Pan American would then be majority owned by Kerkorian, with employees getting roughly a 20% stake, sources said. In return for previous wage and benefit cuts, union employees now own about 7% of the company.
Under the expected terms of a Kerkorian offer, the unions would be asked to make concessions greater than had been requested by current management. A Pan Am management offer was rejected by the union group, which said that it offered too little in stock in exchange.
Two union sources declined to cite specific numbers, but indicated that the value of the concessions demanded by Kerkorian would be greater than the $180 million worth that current management has demanded, perhaps by $20 million to $40 million a year.
The sources also declined to specify how much Kerkorian would invest. But news reports have said he was planning to put anywhere from $50 million to $150 million into the airline.
Kerkorian, who controls MGM/UA Communications Co., an entertainment concern, as well as MGM Grand Air, has lengthy airline experience and is considered a serious potential bidder, Wall Street analysts have said.
Officials of the Joint Labor Coalition did not return telephone calls.