Progress, No. 19, May 29, 1984

              Progress
May 29, 1984 Number 19
FEATURING 1983 IN REVIEW
ACKER REPORTS ON MANAGEMENT PROGRESS AT SHAREHOLDERS' MEETING
Survival - December, 1982: Think back: Almost every time you picked up a business publication or the business section of a newspaper in December 1982 you found an article questioning Pan Ann's survivability. The prognosis was pretty bad. Think back to that time and ask yourself what management did to improve Pan Am's condition. Ed Acker, Chairman, reported management's accomplishments during 1983 to attending shareholders and employees at Pan Am's 56th annual shareholders' meeting on May 8, 1984. Because of those accomplishments, Pan Am made a 1983 operating profit of $51.1 million in 1983, compared to a devastating operating loss of $315 million in 1982. Net loss was reduced to $51 million, compared to an '82 net loss of $485.3 million. For those of you who could not attend the annual meeting Progress recaps the Chairman's report.
1983 FINANCIAL FIGURES
In his opening remarks Acker stated that in 1983 Pan Am was able to show financial improvement because the company was able to make substantial strides in virtually every area of operations.
Revenues: During 1983, scheduled revenue passenger miles increased 6.1% over 1982. Load factor, or the percentage of scheduled service seats that we fill, was up 5.3 points to 62.4%, a four-year high. The stronger traffic translated into a 6.3% gain in passenger revenues over 1982 despite two problems: A strong U.S. dollar adversely affected overseas revenues... Economic problems affected our markets in Latin America.
Operating Expenses: Operating expenses dropped 7.2% from a year earlier. One key reason? Last year, the price of aviation fuel dropped by about 9£ a gallon and is now down to a system average of 91.3 cents. In an industry where every penny per gallon increase translates into about a $10 million annual expense for Pan Am, this is welcome news indeed. The second key factor is that in 1983, we were able to reduce the funds spent on airline salaries and benefits by approximately 10.5%.
FINANCIAL ACCOMPLISHMENTS
Public Offerings: Improved Acceptance in Financial Market
Our public offering of secured convertible trust notes early last year was so successful that the original filing for $100 million was increased to $150 million... A few months later, another offering, this time an unsecured offering of debentures and warrants, originally set for $50 million, was also well received and was increased to $100 million... This April, Pan Am completed a new public debt issue in the face amount of $130 million. This was the first time in Pan Am's history non-equity unsecured public debt was issued, and it reflects an increasing acceptance of Pan Am in the financial market place.
Improvements To The Balance Sheet
During the second half of 1983, Pan Am improved its balance sheet by reducing debt and increasing equity. We converted $86 million of debt to common stock... In addition, $45 million of other Pan Am issues were voluntarily converted. These two conversions result in an annualized interest