Trans World Airlines Inc. and American Airlines teamed up yesterday to threaten Delta Air Lines Inc.'s bid for many of bankrupt Pan Am Corp.'s key assets, offering to buy the whole airline for $450 million.
The offer represented the start of a bidding war for the remaining jewels of Pan Am, said industry analysts, who gave Delta the winning edge.
"It certainly created a maelstrom," said Leon Marcus, the representative for Pan Am's unsecured creditors, who are looking to get as much cash as possible for the carrier's assets. "It's what we wanted."
Delta reacted to the bid by standing pat and calling its own $260 million offer a better one.
Delta executives said that if Pam Am accepted a separate United Airlines offer of $190 million for its South American and Caribbean operations, the total price with Delta's bid works out to the same $450 million TWA and American would pay for virtually the same assets.
"We think we have a deal that will be in the best interest of Pan Am's creditors," said Neil Monroe, a Delta spokesman. Pan American World Airways has accepted Delta's offer, but the ultimate decision will be made by a federal bankruptcy court.
Delta also has offered to invest $60 million in Pan Am to enable it to continue its Latin American operations.
Despite three straight losing quarters, Delta says that it has the cash to finance the purchase of Pan Am's European, African and Asian routes, plus the Northeastern shuttle.
TWA said that it and AMR Corp.'s American would pay Pan Am $310 million for the same assets Delta offered to buy two weeks ago for $260 million.
Those are Pan Am's European, Asian and African routes, including its Frankfurt hub in Germany, the Pan Am Shuttle in the Northeast corridor, and leases on 21 planes.
TWA, perhaps with unnamed "outside investors," would also inject $140 million in equity into New York-based Pan Am, the statement said.
The $310 million would be mostly cash and some ticket guarantees. American would put up the lion's share of the cash at $250 million.
In exchange, it would get Pan Am's routes to Italy, Spain and Portugal, without taking on any of Pan Am's abundant liabilities, such as pension obligations. It would also get the shuttle that connects New York with Boston and Washington.