Pan Am clipper, Vol. 7, No. 3, March 1981

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William T. Seawell Chairman of the Board
DEAR FELLOW EMPLOYEE:
The Pan Am senior managers from all over the System met recently to plan our programs for 1981. Three major goals were established that involve you and your job at Pan Am:
1.	A goal of $4.25 billion in revenues.
2.	Extensive service improvements in virtually every area of our service activity to regain Pan Am standards of excellence.
3.	An employee communications plan that will permit each of you to know the status of the company, our programs and projects and our plans for the future.
1980 was the worst year in the history of the economics of the airline industry — rising OPEC fuel prices; uneconomic fares, often coupled with ambitious new capacity; and the worst deterioration of traffic in the industry’s history. In addition, we at Pan Am had the cost-generating complexities of integrating the old Pan Am and National into the new Pan Am. We had anticipated a difficult year, as had most other airlines, and we certainly got it!
But we didn’t expect the serious fall-off in Pan Am standards in passenger handling, on-time performance and telephone reservations we experienced, especially late in the year.
As I told the senior managers, Pan Am simply cannot tolerate shoddy performance. You are seasoned professionals, skilled in your jobs and aware of the high traditions of service this company has always maintained. I realize that many of you have been keenly aware of deficiencies in our service and are eager to help see to it that our performance improves.
I have directed the investment of a significant amount of money to improve substantially the patterns of service and support functions which have somehow been allowed to slacken. Like you, I want an airline to be proud of, and we are going to be such an airline again.
Obviously, if we perform poorly for the customer, he has a number of other airlines to select from. The only way we can compete is to perform at our own highest standards. Vital passenger areas, such as prompt response by telephone reservationists, efficient gate processing, on-time performance and speedy baggage handling must become the best in the business at Pan Am.
Service is still the best form of salesmanship for this company. And without increased sales we cannot purchase the new generation of fuel-efficient aircraft required for future success.
In the real world of airline finance, Pan Am earnings are essential to every employee. There can be no job stability without profit. Even apparently minor increases in business mean millions in extra dollars to the company. For instance, one extra passenger carried on each flight equals more than $18 million in operating profit. A 1 percent increase in passenger traffic means $34.5 million in black ink. Anything you can do to help, helps all of us at Pan Am.
At the Executive Management Conference we also instituted a practical system of employee communications to advise each of you of the major activities of the company. You will be reading and hearing and seeing more and more of what Pan Am is doing and what it is planning to do. I, personally, will visit as many bases as I can to talk with you.
The goal of the program is a two-way exchange of information that will permit all of us to do our jobs better. The people of Pan Am are every bit as important to this company as its airplanes. Our product is what you make it. In 1981 we are going to operate with pride and professionalism, so that we can meet and beat the competition in the
1980 profit shown due Pan Am Building sale
Pan Am reported 1980 net income of $80.3 million, including a gain of $294.4 million on the sale of stock of a wholly owned subsidiary, Grand Central Building, Inc., owner of the Pan Am Building.
The 1980 results include the operations of the former National Airlines, acquired by Pan Am a year ago, and compare with 1979 net income of $76.1 million for Pan Am alone, or $5.5 million when Pan Am and National 1979 results are combined on a pro forma basis. Chairman Seawell said, in commenting on the results, “Obviously, we were able to report earnings in 1980 because of the sale of
Grand Central Building, Inc. 1 he improvement in our airline operations that we had hoped for late in the year did not materialize, primarily due to the same problems faced by the trunk airlines in general — the poor economic climate and resulting traffic decline, and continued pressure from high fuel and personnel costs. Unfortunately, we have not been able to adequately offset these factors with higher fares, particularly in international markets.’’
Operating revenues in 1980 increased to a record $3.6 billion, up 12.1 percent over the combined Pan Am-National operations in
The China Clipper soars again
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A ribbon-cutting send-off is provided for the inauguration of Pan Am’s China service by Captain Thomas M. Thomas, who was in command of the first leg of the New York-Tokyo-Beijing (Peking) flight, and by 10-year-old Angela Ng who was one of the 40 Chinese children from New York’s PS. 130 elementary school who came out to the Woridport to see off passengers on the Jan. 28 flight.
It’s been a long time since the ceremonial Chinese lion danced for Pan Am.
But one danced on the Pan Am ramp last month in San Francisco and Chinese children cheered in New York as Pan Am’s long-awaited resumption of air service to mainland China received a traditional send-off.
The Jan. 28 resumption of regularly scheduled Pan Am flights to the People’s Republic of China is significant in many ways:
—It represents a bold marketing venture for Pan Am in which the PRC looms as a major new travel and tourism frontier.
—It serves to strengthen international friendship between the peoples of the U.S. and the PRC.
—It once again demonstrates the great technology of the U.S. air transport system in which a high-performance jetliner, the Boeing 747SP, brings the United States a mere 19 hours away from Beijing
1979, while operating expenses were up 17.3 percept to $3.7 billion.
Fuel Costs
Despite lower fuel consumption in 1980, fuel and oil expense increased to $1.2 billion, 49 percent over the fuel and oil expense of the combined carrier in 1979, and accounted for 32 percent of Pan Am’s total operating expense. Personnel expense, at $1.3 billion, was up 8 percent over 1979 and accounted for 35 percent of total operating expense. The company said that during the year it lowered personnel levels some 10.8 percent to 32,259.
Results in 1980 were adversely continued on page 8
(Peking), the capital of the PRC.
—It rekindles memories of an important Pan Am tradition. . .the famous Martin M-130 “China Clipper” flying boat. . .the ultimate in over-ocean travel in the late 1930s.
The men and women who inaugurated service with the original China Clipper in 1935 would have been proud of the jet-age version that pulled away from the World-port in New York to begin the U.S. air service to Beijing.
Flight 15, a 747SP with “China Clipper” in both English and Chinese characters inscribed on its nose, was given a flag-waving send-off by 40 Chinese children from New York’s P.S. 130 elementary school.
Captain Thomas M. Thomas, a senior 747 pilot based in New York, was in command of the first leg of the flight from JFK to Tokyo, and Captain Christopher H. Wharton, continued on page 7
It was a bit of a squeeze, but Pan Am’s International Flight Academy in Miami recently opened its doors to receive the DC10 simulator which was previously operated at the National Airlines’ Flight Training Center. Security vehicles cleared the way for the 20,000 pound simulator on its one-mile trip to its new home, where it will bring the total numer of simulators at the facility to six. Installation and testing of the DC10 equipment will take two months, with training scheduled to begin in late April.
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