Outlook For Pan Am Looks Grim
Analyst: "I Can't See Them Surviving This"
Belleville, Illinois (September 23, 2001) -- One airline has gone out of business and several others have laid off thousands of employees and reduced service in the wake of the terrorist attacks September 11, 2001.
With the airline industry reeling, could Pan American Airways -- the only airline serving MidAmerica St. Louis Airport -- be in trouble?
A St. Louis-based industry analyst says yes. Juli Niemann of R.T. Jones Capital Equities in St. Louis said the industry would have faced enough problems before the attacks in an economic downturn, but the attacks will hurt the industry even more. She said US Airways, America West and Continental Airlines all could go out of business.
"If those guys are going under, I can't see how Pan Am can make it," she said. "It's going to be very tough -- I just can't see them surviving through this."
A main reason Pan Am could be in trouble, according to Niemann, is that Pan Am is too dependent on leisure travelers for its business. She expects vacation travel to drop drastically in the wake of the attacks.
"Vacation travel is (now) a drive to Blockbuster and back," she said.
John Nadolny, a spokesman for Pan Am, said bookings on the carrier's flights are "lagging a bit, but not as badly as we might have thought."
Nadolny, who would not release specific information about airline ticket sales, said the airline is operating its full schedule and does not expect to lay off any employees. He said, without elaborating, that Pan Am is not in the same position as Midway Airlines, which folded after the terrorist attacks.
"I think their situation was different from ours," he said.
After the terrorist attacks, federal transportation officials required tougher security at America's airports, including elimination of curbside check-in, more intensive screening of passengers and their baggage, and restricting access to gate areas to ticketed passengers.
Airlines have financial responsibility for much of the airport security system, but Nadolny would not say how Pan Am's costs have been affected by the new security rules.
Steve Lott, business editor of Aviation Daily, an airline industry trade publication, said charter flights, which Pan Am operates at some of the airports it serves, could be crucial to the airline's future because leisure travelers won't stay off them as much as regularly scheduled flights.
But he said smaller airlines don't have as much money saved as large carriers and don't have lines of credit as large. Therefore, they face darker futures.
"The picture for smaller airlines is pretty grim," he said.
Pan Am, based in Portsmouth, N.H., offers a nonstop flight to either the Chicago or Orlando area every day but Tuesday from MidAmerica.
Should Pan Am cease to exist, Lott said the industry's troubles and the tendency of passengers to use more established airlines and airports will make it tough for MidAmerica to get a new tenant.
Total layoffs between the Boeing Co. and airlines such as American, Continental, US Airways and Northwest is about 100,000. Many major airlines have reduced schedules by as much as 20 percent. Trans World and American Airlines are no longer serving food on many domestic flights.
Niemann thinks more cost-cutting could be on the way.
"I'm looking for more -- this is just the first round," she said. "None of this bodes well."
But Nadolny said Pan Am is taking a wait-and-see approach.
"We will see what the coming weeks hold for us all," he said.
Information provided by the Belleville News-Democrat
David van den Berg Article © the Belleville News-Democrat
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