Pan Am clipper, Vol. 2, No. 4, July 1976

              Volume 2 Number 4
May results reflect big book profit
Pan Am moved into the black in May with a whopping $76.1 million net income—a book profit from income tax credits and the debenture exchange that significantly strengthens the company but has little impact on current cash.
Chairman Seawell was quick to point out that without the extraordinary income, the airline itself continued to operate in the red.
Although Pan Am operations have shown an improvement over year-earlier figures, it is still uncertain whether they can move into the black for 1976, and depends in large part on performance during the summer	months—June
through September.
The reason for the May profit is the debenture exchange in which Pan Am is swapping two new issues for two old ones—an action which considerably reduces longterm debt and at the same time spreads out repayment of the new debt over a longer period of time.
The May net income figure includes extraordinary income of
The debenture exchange of-^\ fer, its purpose and effect on Pan Am’s financial picture, are explained in depth by David K. Redpath, senior director-investor relations in the Finance and Development Department. See page 6.
$49.9 million, primarily from the debenture exchange, and a federal income tax credit of $32.5 million. Before the extraordinary income and the tax credit, Pan Am had a net loss in May of $3 million compared with a deficit of $10.8 million in May last year, when it did not have any extraordinary income items or income tax credits.
For the first five months of this year, the airline’s net income was $14.4 million. Without the extraordinary credits and tax benefit recorded in May, the company’s net loss for the first five months was $35.5 million, compared with a $51.1 million deficit in the year-earlier period.
The $49.9 million extraordinary income includes a pretax gain on the debenture exchange totaling $82.4 million and a $7 million tax-loss carry-forward, less $39.5 million charged for income taxes related to the debenture swap gain.
The $82.4 million gain recorded in May is the reduction in debt achieved through the debentures tendered during the month. The exchange offer ended June 22 for one of the issues, and the other was continued until July 2. Thus, additional extraordinary credits will be recorded from the exchange in June and July results.
The $32.5 million income tax credit reported in the May results comes from a “reasonable probability” that Pan Am will be in the black for all 1976 as a result of the debenture exchange. The tax credit Continued on page 6
Congress
hears
employees
By Pamela Hanlon
James Parker, JFK painter, readies aircraft for Flight 1776, the special Bicentennial version of Flight 100 on July 4. Flight attendants from 18 airlines take part in the flight to London.
Part Am salutes Bicentennial
1776 is coming... Flight 1776 that is, the appropriately numbered special July 4th version of Pan Am’s daily Flight 100 from Kennedy Airport to London and Brussels.
On that day, as a salute to America’s 200th birthday, Pan Am invited the U.S. domestic carriers to participate in the flight, by each sending a uniformed flight attendant and various cabin service supplies aboard Flight 1776 (cocktail napkins, matchbooks and playing cards). Eighteen carriers were to join with Pan Am in this aviation first: Air California,. Air New England, Aloha, American, Continental, Delta, Eastern, Frontier, Hawaiian, Hughes Air West, National, North Central,
Ozark, Piedmont, Southern, Texas International, United and Western.
Catering Services prepared a special meal for the flight featuring all-American fare, including free apple cider to economy passengers. The cabin service items supplied by the participating carriers were to be used interchangeably with Pan Am supplies. The cabin attendants were aboard to talk to the passengers and promote travel to their section of America.
While in London, the domestic airlines’ cabin attendants were to take a sightseeing tour hosted by members of the London flight service base and meet with key travel industry officials in the United Kingdom to invite Britishers to “Visit U.S.A.”
WASHINGTON—Berlin-based pilot James Hotchkiss, in testimony before the House Aviation Subcommittee, has criticized the U.S. Government for not carrying out the Fair Competitive Practices Act of 1974 and urged Congress to investigate the Civil Aeronautics Board’s implementation of the legislation.
Hotchkiss, along with Nancy Hafner, reservations agent-New York, and John O’Neill, mechanic-New York, appeared before the Aviation Subcommittee of the U.S. Public Works and Transportation Committee June 23 on behalf of fellow employees. The Subcommittee is hearing comments on the Administration’s proposed Aviation Act of 1975.
Hotchkiss outlined for the Congressmen, who over the past weeks have been hearing testimony primarily from airline corporate officers including Chairman Sea-well, the ways in which Pan Am’s problems of recent years ha^e affected every employee of Pan Am—“Real people,” said Hotchkiss, “who are damaged by the poor or short-sighted decisions made in Congress and elsewhere in Government.”
The Pan Am employees were introduced by Florida Congressmen Claude Pepper and William Lehman who both voiced
Pan Am goes to court in MIA-LAX route case
\~NOTICE—\
On June 11, 1976, the Pan Am Political Action Committee was organized under the provisions of the Federal Election Campaign Act of1976, and the guidelines established by the Pan Am Board of Directors.
The following officers of the Committee were elected: Chairman, William J. Evans, senior director public affairs; Treasurer, James Hotchkiss, first officer; and Secretary, Nancy Hafner, reservations agent. Alternates for Evans are Rosemary Murray, directorfor legislative affairs; for Hotchkiss, First Officer Norman (Buzz) Wilson; and for Miss Hafner; John O’Neill, mechanic.
The Pan Am Political Action Committee is a voluntary, non-profit, unincorporated association, independent of any political party, candidate or organization. It is designed to provide financial support to selected candidates for federal offices.
The Political Action Committee will be sending out an appeal for financial contributions soon, with specific details on how funds should be forwarded. Any specific inquiries regarding the FAC should be forwarded to the Pan Am Political Action Committee, 1800 “K" Street, N.W., Suite 900, Washington, D. C. 20006.
Pan Am has shifted the battleground to the U.S. Court of Appeals in Washington in its effort to have the Civil Aeronautics Board ruling denying Pan Am its first domestic route—Miami-Los Angeles-—overruled.
Move to the Court follows final disposition of the route case by the CAB on June 16 when the Board turned down Pan Am’s bid to have the agency reconsider its March verdict denying the route to the company.
Stating that Pan Am “has presented nothing on reconsideration that would cause us to alter our conclusion,” CAB said that its original decision awarding the route to Western will go into effect on July 4.
Pan Am had also asked that the award to Western be delayed until the Court reviews the Board’s findings. CAB, however, dismissed the request stating that “Western should be entitled to the benefit of the Board’s presumptively correct order during the (court) review proceedings.”
At Clipper deadline Pan Am had filed a motion with the Court urging that it order CAB to hold up the Western award until the legal review is completed. Counting on an eventual Court ruling that CAB
erred from a legal standpoint in its decision, Pan Am is seeking to have the Court send the case back to the Board for new hearings. Thus, company contends that to allow Western to implement service over the route during the Court review, would prejudice Pan Am’s ability to obtain a fair hearing at a new CAB hearing.
Continued on page 7
strong support of Pan Am and its objectives.
When the Fair Competitive Practices Act of 1974, for which Pan Am employees worked so hard, was finally enacted, Hotchkiss noted, we felt assured “that Pan Am would now be returned to its proper place in international aviation and to profitability.
“One thing we didn’t count on,” he said, “was an Administration that didn’t know how to implement your legislation.”
Some 18 months later, “we sit here before you to tell you we feel
Continued on page 7
Berlin-based pilot James Hotchkiss and John O’Neill, JFK mechanic, testified on behalf of fellow employees before the House Aviation Subcommittee in Washington.