Delta Air Lines plans to make an offer in a New York bankruptcy court today for some of Pan American World Airways assets--most likely its valuable Los Angeles-London route--in a move that hurt could Pan Am's survival chances.
A Delta spokeswoman said Wednesday that the Atlanta-based airline would file a petition with the court for "certain Pan Am assets that we are interested in."
Industry sources said Delta would seek to purchase for $50 million the long-coveted Los Angeles-London route. Asked specifically about that route, the Delta spokeswoman said: "We have been interested in that route, and I am certain that our interest has not gone away."
Delta, which flies to London from Atlanta and Cincinnati, wants the route to bolster the West Coast hub that it is developing in Los Angeles. Delta is also expected to ask the court for time to review Pan Am's other routes for a possible bid.
News of Delta's interest in Pan Am came as travel agents reported that the traveling public--hardened by the bankruptcies of Continental and Eastern airlines--continued to buy Pan Am tickets, despite the carrier's Chapter 11 bankruptcy filing Tuesday. No bankruptcy-related flight interruptions were reported.
The Los Angeles-London route is part of a five-city package of routes to London that Pan Am has agreed to sell to United Airlines for a desperately needed $290 million. Pan Am plans to ask U.S. Bankruptcy Judge Cornelius Blackshear to approve the sale to United today.
Delta's request could delay the sale and throw Pan Am's financing plans in doubt. United Airlines and Bankers Trust Co. have agreed to lend Pan Am $150 million, guaranteed by the proceeds of the London route sale. It is doubtful that United will put up the money if the judge fails to approve the deal.
A source familiar with Pan Am's situation said that any delay in obtaining the financing could be fatal to Pan Am.
Pan Am is expected to argue in court that the United deal is important to its future, not only because it will obtain short-term financing but also because United has agreed to form a marketing arrangement with Pan Am that is expected to strengthen Pan Am's remaining operations in Europe and Latin America.
Pan Am is also expected to point out that United has offered to back Pan Am's tickets if the sale goes through, so that Pan Am customers won't be stranded if the carrier fails.
Besides Delta, other possible bidders for Pan Am's assets might surface. It is known that Northwest Airlines is interested in Pan Am's Northeast shuttle. Other groups, including the shuttle's pilots and an Iowa investment group, are also interested in the shuttle.