Still, in their secret hearts dwelled the old dreams. Imagine! Pan Am, once again a heavyweight global carrier. It seemed too good to be true.
And, of course, it was.
For all Tom Plaskett’s surprising boldness, Pan Am’s hand simply wasn’t strong enough. As romantically appealing as the Northwest-Pan Am marriage appeared, this was the decade of the winner-take-all corporate predator. Such a predator was Alfred Checchi, a well-heeled takeover artist who plunked down a bid the Northwest directors decided they couldn’t refuse. Al Checchi became the new owner of Northwest Airlines.
The disappointment settled like a pall of gloom over Pan Am. No one was blaming Plaskett for the failure, not even when it was divulged that he had spent some $23 million putting together the buyout package. Most of the grunts just shrugged and said, like a pilot in New York, “Hey, the little guy gave it a shot, didn’t he? Better to go down kicking than to just roll over and die.”
After the collapse of the Northwest initiative, there wasn’t much more brave talk about Pan Am’s “comeback.” Even Plaskett was laying it on the line: Pan Am had one shot at survival—it had to sell, merge, or amalgamate with somebody.
With that assessment, Mister Nice Guy was redefining his role at Pan Am. He was not going to be the airline’s savior. He was not a charismatic leader who would guide them back to glory. Tom Plaskett was just the bargaining agent.
Through it all, Plaskett was generally liked by the employees. He came around the crew rooms and employee lounges. He visited the cockpits on the shuttle to Washington. He listened to the employees’ anxieties about the future.
You are correct, folks, he let them know. We are in deep financial effluvium. But we’re in it together.
Oddly, that kind of siege mentality had a unifying effect among the rank and file. “Morale has never been higher,” reported a flight attendants’ union official. “It’s the camaraderie you see when you’re in the last lifeboat and you’re bailing.”
Another strange development was that Pan Am was becoming a first-class operation. Under Plaskett’s administration, Pan Am improved its schedule performance, cleaned up its aging airplanes, renovated the terminals. The airline spent $31 million alone on the run-down Kennedy complex. Pan Am’s abysmal on-time record, traditionally one of the worst in the industry, went from thirteenth to first place, flying over 80 percent of its flights on schedule. Broke or not, Pan Am was hauling more people across the Atlantic than any other airline, keeping its grip on 14 percent of the total market.
But the same old demon that plagued Pan Am wouldn’t go away. Here it was, setting industry standards for leaving on time, delighting its passengers, even sweeping the halls and cleaning up the johns—and it was still losing $2 million a day.
Why couldn’t Pan Am make money?
Well, actually. . . nobody could say. No one had ever delivered a simple, concise answer, any more than anyone had explained why Pan Am made money at one time. When Plaskett trotted out his cue cards and recited statistics about RPMs (revenue passenger miles) and load factors (percentage of seats filled) and yield (how much you were getting—or in Pan Am’s case, weren’t getting—from your product), it sounded like a lot of smoke from a number cruncher, which it was. The audience listened politely, scratched their heads, and wondered: What the hell does it mean?
The truth was that almost nobody was making money flying the North Atlantic. Historically, the Pacific had been Pan Am’s only real moneymaker, which was why, of course, United Airlines had bought it from Ed Acker in 1985. The Atlantic had become a cheap-fare market, with too many carriers flying too many seats for ridiculously low fares. The other major players on the Atlantic—United, American, TWA—fed their international flights from strong hub-and-spoke domestic systems—something Pan Am had never developed. The idea was that you could make money flying a passenger from New York to Europe it you also sold him a ticket to or from somewhere else in your system—Kansas City, Denver, Dallas.
Each time Pan Am was poised to build a true domestic system that fed its international web, it had, instead, done something egregiously inappropriate, like buying a regional airline (National, 1980), which it then proceeded to dismantle instead of expanding into a hub-and-spoke operation. Or building a nonfeeder “halo” operation (the Northeast Shuttle, 1987) that was disconnected from the rest of the airline.
Now it was too late. There was no money left to build anything. Even the shuttle was for sale.
Pan Am’s summer of 1989 came and went, mostly without passengers. Almost all advance bookings had been wiped out by the disaster at Lockerbie. But the traveling public’s fear of terrorism was softening. Even CNN had stopped flashing the image of the blue-and-white death capsule in the Scottish meadow. The summer of 1990 was coming, and lo!—advance bookings were beginning to come in. After every bad break imaginable—could it be? Would there finally be a season without calamity?
Of course not.
No such luck for the world’s most bedeviled airline. In August 1990, Saddam Hussein invaded Kuwait.
It was the crest of the travel season. Travelers had once again been lining up at the Pan Am ticket counters. Things had been looking, if not good, at least one hell of a lot better than at this time last year.
No more. A Middle East war was imminent. In the space of one televised glimpse of tanks rolling across the desert, fuel prices shot through the ceiling. Back was the specter of terrorism—the subliminal image of the death capsule in the meadow.
The crowds at the Pan Am ticket counters dispersed as if someone had discharged mustard gas. Would-be passengers put as much yardage between themselves and the Pan Am blue ball as their feet could take them.
It was the same scene all over again. From one cavernous end to the other of a 747 passenger cabin you could see scarcely a passenger. If anyone had to travel, he did it on an obscure, non-terrorist-tempting airline. Or he took a boat. Or he said to hell with it and stayed home to catch the war on CNN.
Instead of being a recovery year, 1990 was going down as the worst year in international airline history. Iraq refused to budge from its occupation of Kuwait, and the inevitability of war in the desert, with the possibility of losing Saudi Arabia’s oil too, sent fuel prices off the scale.
The year was shaping up so badly it looked as though Pan Am wouldn’t see the end of it. Something had to give. The airline couldn’t pay its bills. Some bills, in fact, had gone unpaid for months. Crunch time had come.
It was in this spirit that Tom Plaskett found himself in late summer sitting in a hotel conference room just outside Chicago’s O’Hare Airport. Across from him was Stephen Wolf, a youngish, fast-moving executive who had been a senior vice president for marketing at Pan Am from 1981 to 1982. He had taken an early departure and moved on to brighter venues. Now Wolf was running United Airlines.
The presence of the two chief executives symbolized the contrast between the airlines. In a room full of business-suited executives, you could feel the vitality of Steve Wolf. He was tall, mustached, confident. Wolf was one of a handful of airline executives who, business reporters liked to write, possessed vision. Wolf had a plan that extended into the next century. A pity, they said, that Pan Am hadn’t kept him.
All of which caused inevitable comparisons with Tom Plaskett, whose vision these days extended as far as next week’s session with the creditors. Such comparisons were unfair, of course, since Plaskett was no more the cause of Pan Am’s woes than Wolf was responsible for United’s great success. But still, the distinction was there. Wolf looked like a winner. Plaskett looked like just what he was: a harried little man trying to get the best deal he could for his losing airline.
What Wolf wanted from Plaskett was nothing less than Pan Am’s remaining crown jewel. The most prestigious route property still in Pan American’s possession was its service to London’s Heathrow Airport. United could not start up service to Heathrow on its own because of the inflexible quid pro quo that governed British-Ameri
can access to each other’s air terminals. British Airways had a specified number of slots and gates at Kennedy Airport, New York. In turn, Pan Am and TWA had similar slots and gates at Heathrow Airport, London. No other United States flag carriers had such rights. United’s only entry to Heathrow was by acquiring the privilege from another carrier. A carrier such as Pan Am.
Which was why Wolf was sitting in Chicago that day, smiling across the table at Tom Plaskett. Pan American had been serving London for fifty-two years. Pan Am, in fact, had been the first United States airline to fly to the United Kingdom, beginning its service with the majestic Boeing B-314 flying boats.
Another chapter of Pan Am history was about to end. In 1986, United Airlines had bought Pan Am’s entire Pacific route system, closing out a half century of Pan American history. Now it was time to close out another.
There were details to be worked out, and many more such meetings before an agreement was signed and an announcement made. But Wolf and Plaskett had a deal: for $400 million Pan Am would sell its service to London from New York, Washington, Los Angeles, Seattle, and San Francisco. United would take over seven London-to-Europe routes served by Pan Am. United would also gain Pan Am’s route from Washington to Paris, and it would acquire two 747-200 jumbos as well as spare parts and facilities in the United States and London.
Bob Gould was aghast. As a twenty-five-year pilot with Pan Am, he had a different view than Tom Plaskett had. He didn’t think that selling Pan Am’s most valuable asset was the way to save the airline. Each time Pan Am had received an infusion of cash in return for a valuable property like the Pacific operation or the Pan Am Building, the airline had used the proceeds to fund new losses. There was no growth, just shrinkage.
Gould could see no future for Pan Am after the London sale. He saw only a vacuum. The Imperial Airline that he had joined as a new hire back in the sixties was gone.
So Gould resigned. A few days later, the announcement appeared in the press that he had been hired as the new president of Eastern Airlines, which was in bankruptcy. The court-appointed trustee of Eastern Airlines happened to be Pan Am’s former vice-chairman and Bob Gould’s old management mentor, Marty Shugrue.
The report of the United sale was received in Skygod country like the news of an incoming Scud.
In the official employee news wire Plaskett asked the troops to accept the sale as “a giant leap forward in strengthening Pan Am.” It would be a new start for the Imperial Airline.
Giant leap. They had seen enough such leaps. Each one had left the airline with one of its parts missing. For years now they had watched Pan Am shed its assets, then squander the proceeds. The result was always the same—a smaller, weaker airline. And always with fewer employees.
A joke was making the rounds of the crew lounges. “Pan Am is like a coyote caught in a trap,” went the joke. “It’s chewed off three of its legs, and it’s still in the trap.”
The pilots’ union filed a suit in federal court to prevent the sale. The union charged that Pan Am was violating the labor contract by not negotiating the transfer of an appropriate number of pilots to United along with the routes and airplanes.
With the Pacific sale in 1986, United had absorbed into its seniority list 410 Pan American airmen, all of whom went on the United seniority list according to their original date of hire at Pan Am. For most, it was an instant promotion in seniority and cockpit position. It was a very good deal for the transferred Pan Am pilots.
Too damned good, in the view of the United pilots. They were not about to allow another gaggle of refugees from Pan Am onto the upper regions of their seniority list. United had gone through a nasty strike by the pilots, and then experienced a buyout initiative by the same pilots. Collectively, the United pilots had become a formidable voice in the United executive suites. They didn’t want any more Pan Am pilots on their seniority list. Just Pan Am routes and airplanes. Forget what had happened with the Pacific deal. That was history. These days United would acquire new pilots off the street, and they would start at the bottom of the list.
Which put an effective end to any illusions that ingenuous airmen still held about the international brotherhood of airline pilots. The protection of a union extended only as far as your own airline. In the case of mergers or acquisitions, it was every man for himself.
While the lawsuits and route applications and labor wrangling went on, Pan Am continued bleeding. The sale would take several months. It wasn’t a simple transfer of assets, since the authority to service Heathrow required the approval of both the United States Department of Transportation and the British government, which had little interest in allowing a competitor the size of United Airlines into the same arena with their home team, British Airways.
Pan Am wobbled closer than ever to Tango Uniform. Without an infusion of cash, the airline wouldn’t last long enough for the Heathrow sale to be consummated.
Something else had to go. Quickly. So Tom Plaskett reached up on the shelf and seized another Pan Am property.
For this one, history had already supplied a buyer.
In the autumn of 1989 the Berlin Wall tumbled. The following year, to the astonishment of the world, the reunification of Germany proceeded at the speed of a Blitzkrieg.
It was because of the partition of Germany that Pan Am’s Internal German Service had begun after World War II. For forty years the isolated city had been connected to the free world, via the three air corridors, by Pan American airplanes.
Now, unbelievably, Berlin was no longer isolated. There was no enemy. There was no more need for an Internal German Service. Anyone could fly into Berlin—even Lufthansa, Germany’s monolithic flag carrier, which for nearly half a century had been barred by the Cold War pacts from flying into Berlin.
So it seemed pointless, at first glance, for Pan Am to offer to sell its Internal German Service to Lufthansa. Pan Am’s exclusive Cold War license to fly the corridors across East Germany into isolated Berlin was an anachronism. There would soon be no Cold War, no East Germany, no corridors. Why would Lufthansa pay for something it could have for free?
But reunification was happening sooner than anyone had dreamed. Berlin was about to become once again a prominent European capital city, whether or not Lufthansa was ready. Lufthansa wasn’t prepared to step in and establish its own Berlin base. So for $150 million, the German airline purchased Pan American’s Internal German Service routes and facilities. The agreement included a lease arrangement by which, for several months, Pan Am airplanes and crews would continue to operate the service until Lufthansa could put together its own Berlin hub.
For old Pan Am Berlin hands, it amounted to the loss of their hometown.
The Last Flight—the final Pan Am trip into Berlin—was a hugely symbolic event, a handing back of the keys, so to speak.
Who would fly the Last Flight? The first word was that the system chief pilot, a pleasant fellow named Norm Davies, would come over from New York to command the ceremonial trip. But that went down badly with the old IGS hands. The Last Flight, they thought, ought to be flown by one of them—one of the old Berlin hands.
Davies already knew about the penchant of the IGS pilots for wildcat work ethics. They could slow down, sit in, sick out—whatever it took to make their point. Davies wasn’t dumb. With several generals, ambassadors, and his own CEO watching, it was not a time for a labor war with the grunts. So he conceded the point. One of the old hands would make the Last Flight.
Captain Hans Bernick could have been typecast for the role. Bernick looked like the actor Peter Graves. Urbane, multilingual, he fit perfectly into the Berlin operation. Bernick was a German who had been raised in China by missionary parents, orphaned in the revolution, smuggled into Hong Kong by mercenary pilots, then illegally landed in the United States, where he joined the U. S. Air Force. In the process, he learned to fly, became a citizen, and went to work for Pan American World Airways.
It was appropriate that someone like Bernick would fly the
last flight. What made it even more appropriate was that it happened to be his last flight, at least as a captain. Bernick was turning sixty, the mandatory retirement age.
The Last Flight would be a round trip, Berlin to Frankfurt and back. For the occasion Bernick did what every IGS captain dreamed about. He broke every rule he could.
One rule was that no unauthorized persons could ride in the cockpit. However, several pilots of a charter airline were trying to get to work in Frankfurt. Though the cabin was already filled, Bernick wasn’t leaving anybody behind. “Fine,” said Bernick. “Put your bags in the cockpit.”
“Where should we sit?”
“Where else? On your bags.”
For the return flight to Berlin, he broke the same rule. He put his wife, Mai, in the cockpit.
Approaching the Berlin terminal area, Bernick asked the air traffic controller, “How about a Rundflug?” He wanted to make a sightseeing tour around Berlin.
That was okay too. The controllers had gotten into the spirit of the occasion. “Berlin is yours, Clipper.” It was a good night for breaking rules.
At an altitude of two thousand feet, they flew down the city’s main artery, the Kurfurstendamm. Then they turned and flew back down it the other way. Bernick flew a circle around Alexanderplatz, formerly the heart of East Berlin. It was a rare autumn night, clear and cool. The lights of Berlin glittered like Ganymede up close. The passengers loved it.
The best part—for Bernick—was the landing back at Tegel Airport. It was a grease job.
Inside the terminal, in the lounge behind gate 13, a party of sorts was in progress. Everyone was there—chief pilots, the Lufthansa crowd, Pan Amers both ground and air. Chairman Plaskett was there. He uttered some predictable Plaskettudes about how bright Pan Am’s future was. Old Berlin hands, past and present, had come from all over the globe. Most were feeling feisty and morose and a little mean.
Skygods: The Fall of Pan Am Page 30
