Pan Am clipper, Vol. 15, No. 3, April 1989

              Shuttle Traffic Soars
In Wake Of Eastern Strike
Pan Am Shuttle traffic has soared to record levels because of the strike against Eastern Airlines which began on March 4, even though the competing Eastern Shuttle has managed to run a regular hourly schedule almost since the strike began.
“The situation at Eastern presented us with an enormous revenue opportunity if we could demonstrate to the traveling public that The Pan Am Shuttle could meet the demands of the marketplace, ” said Shuttle Chief Operating Officer Harris Herman. “We developed a plan that made optimum use of manpower and aircraft and had things ready to go before we knew for certain that Easterns pilots would support the walkout by the IAM.
“But the real challenge, ” said Herman, “was in our ability to convert the regular Eastern Shuttle customer into a regular Pan Am Shuttle customer. We knew their initial reaction would be generally positive—we’ve seen that all along when a regular Eastern customer tries us for the first time,” Herman said.
For the first full week in March, The Pan Am Shuttle and Pan Am’s Airline Planning Department had established a full contingency plan to operate extra sections during peak morning and evening hours and by adding Airbus A300 equipment to the LaGuardia-Boston market, if needed. Unfortunately, on March 6, the first business day after the strike began, a snowstorm and the failure of an ILS at LaGuardia brought the three-city Shuttle market almost to a halt for several hours. Over the next two days, traffic increased steadily, although,weather played a major role in driving down bn-time dependability. On Thursday, traditionally the busiest traffic day in the shuttle markets, The Pan Am Shuttle carried 10,500 passengers, a record that would be surpassed within two weeks. In the meantime, the Eastern Shuttle had managed to operate a full shuttle schedule of its own, but, in most cases, flights were carrying only a handful of passengers.
In an effort to stimulate its shuttle traffic, Eastern announced a special $12 one-way weekend fare (the original weekend fare when the Eastern Shuttle began operating in 1961) and lowered its weekday fare to $49, half of the normal $99 fare. Pan Am did not match the fare reduction, maintaining, as Eastern has since Pan Am entered the Shuttle market in 1986, that the shuttle market is not price-sensitive.
As anticipated, Eastern Shuttle flights were full over the weekend as what turned out to be a mainly student crowd flocked to Eastern Shuttle flights to take advantage of the $12 fare. Eastern offered no back-up service, however, and by the continued on page 6
Presidential Welcome In Seoul
THE PAN AM WHITE HOUSE PRESS B747 CHARTER AIRCRAFT provided a perfect backdrop for the arrival of President George Bush in Seoul during his recent Asia trip. Pan Am flew the White House Press Corps from Washington to Tokyo, Beijing and Seoul.
Photo courtesy Wally McNamee, Newsweek
tmiVAIVI
CLIPPER
VOL 15 NO 3
APRIL 1989
10
20
30
40
THE AGING
AIRCRAFT
ISSUE:
Straight Talk From Captain Bob Gould
The subject of aging aircraft has generated considerable public concern in recent months. In late March, CLIPPER sat down with Captain Bob Gould, Senior Vice President-Operations, to address some of the most often asked questions about the aging aircraft issue as they apply to Pan Am.
CLIPPER:
Why has the issue of aging aircraft become a topic in the news lately?
GOULD:
There is little doubt that this period of public concern for aging aircraft began on April 28, 1988, the day an Aloha Airlines B737 lost a portion of the upper fuselage at 24,000 feet. The aircraft was able
to return and nerhans for the first time provide graphic evidence of the conseciuences of catastrophic structural failure. The incident has so shocked both the media and the public that they have been
suspecting age as the cause for all incidents which have taken place since then. Media coverage of most incidents now includes the age of the aircraft as a routine part of the news article.
CLIPPER:
At what age does an aircraft become a safety concern?
GOULD:
This is a very good question with no single numerical answer. There is a loose, general design formula used by manufacturers to develop an economic design objective which states that the design will provide
“95% probability that 95% of structure will not fail within AW hours and/or AWcycles.” continued on page 3
RETIRED PAN AMER RAY HART and his wife, Helen, served as unofficial meeters and greeters at the Marine Air Terminal during peak hours. For the Harts, it was a special homecoming. The two met when they worked at the ticket counter at the historic terminal in 1947. They were married in 1950. Helen worked for Pan Am for 13 years. Ray retired after a 40 year career.
1988 Financial Results Aided By Shuttle And Express
Pan Am Corporation’s 1988 net loss of $72.7 million showed a considerable improvement over Pan Am’s net loss of $265.3 million in 1987.
Chairman Tom Plaskett said that while the company can never be satisfied with financial results that show a loss, the company believes the improvement is indicative of the kind of progress that has been made in 1988 toward the stabilization and improvement of Pan Am’s operations.
Plaskett pointed out that the company’s cash position at year-end was $288 million, up from $234 million at year-end 1987. And, he said, the company will realize additional liquidity from the proceeds of the sale of World Services. “We remain optimistic that for all of 1989, we will again show improved financial results over last year,” Plaskett said. “But for the first quarter of 1989, we will show a loss greater than the first quarter of 1988.”
Plaskett said the first quarter results will be negatively impacted by higher expenses related to some of the long overdue service improvements that have been required, as well as lower revenue resulting principally from a
traffic shortfall in the Atlantic division.
“As we move into succeeding quarter of 1989, we believe that the comparisons with last year should improve,” he said.
The Corporation’s operating loss in 1988 was $63.5 million, compared with $124.5 million in 1987, while revenues were up 16.8 percent, from $3,055 billion to $3,569 billion.
The results included an $89.1 million gain on the sale of orders and option positions on Airbus A320 aircraft, offset in part by $44 million of reserves and adjustments.
While the Corporation does not break out revenues or profits of Pan Am Express and Pan Am Shuttle, the company noted that the revenues of both Express and Shuttle together increased 46.7 percent, from $143 million to $210 million. Operating results for the two improved from a loss of $11.2 million in 1987 to a profit of $20.6 million in 1988. “With the continuing strong performance of Express, as well as the recent boom in traffic in the Shuttle markets as a result of the Eastern strike, future results of the two subsidiaries should show good contributions to the Corporation’s net results, ” Plaskett said.