Bankruptcy
Pan Am was forced to declare bankruptcy on January 8, 1991. Delta Air Lines purchased the remaining profitable assets of Pan Am, including its remaining European routes and the Pan Am Worldport at JFK Airport, and injected $100 million as a 45% owner of a reorganized, but smaller Pan Am serving the Caribbean, Central and South America from a hub in Miami. The airline's creditors would hold the other 55%. During that time, Pan Am began to relocate its offices to Miami. The new airline would have operated approximately 60 aircraft and generated about $1.2 billion in annual revenues with 7,500 employees.[29] During this interim period, Pan Am continued to sustain heavy losses as Wall Street, the traveling public and even Delta became less confident in the reorganization plan. Revenue shortfalls materialized throughout October and November of 1991. The Boston-New York LaGuardia-Washington National shuttle service was taken over by Delta in September 1991.[30] Delta later obtained all of Pan Am's remaining transatlantic rights, except Miami to Paris and London, in November 1991. Plaskett was replaced by Russell Ray, Jr. as Pan Am's new chairman and CEO.
Pan Am ceased operations on December 4, 1991, when Delta's CEO Ron Allen and other senior executives reached a decision to cut off its scheduled final payment due to Pan Am of $25 million the weekend after Thanksgiving. This was at a time when Pan Am's senior executives outlined a projected shortfall of between $100 and possibly $200 million, with the airline requiring an $25 million installment just to fly through the following week. On the evening of December 3, Pan Am's Creditors Committee advised U.S. Bankruptcy Judge Cornelius Blackshear that it was close to convincing an airline (TWA) to invest $15 million to keep Pan Am operating. However, the following morning a deal with TWA owner Carl Icahn could not be struck. Pan Am opened for business at 9:00 AM and within the hour, Ray was forced to withdraw Pan Am's plan of reorganization and execute an immediate shut-down plan for Pan Am. Over 9,000 employees lost their jobs. As a result of this action, Delta was sued for more than $2.5 billion on December 9, 1991 by the Pan Am Creditors Committee.[31] Shortly thereafter, a large group of former Pan Am employees also sued Delta. Delta was able to combine and move the cases from New York to Atlanta, and the lawsuits were later dismissed.
The airline's last scheduled flight was Pan Am Flight 436 from Bridgetown, Barbados, to Miami. The plane was a Boeing 727-200 named Clipper Goodwill. After serving only two months as Pan Am's CEO, Ray was replaced by Peter McHugh to supervise the sale of Pan Am's remaining assets by Pan Am's Creditor's Committee. Pan Am's last remaining hub at Miami International Airport was split during the following years between United Airlines and American Airlines. TWA's Carl Icahn purchased Pan Am Express at a court ordered bankruptcy auction for $13 million and promptly renamed it "TWA Express." The Pan Am brand was sold to Charles Cobb, CEO of Cobb Partners and former United States Ambassador to the Republic of Iceland under President George H.W. Bush and Under Secretary of the US Department of Commerce under President Reagan. Cobb, along with Hanna-Frost partners invested in a new Pan American World Airways headed by veteran airline executive Martin R. Shugrue, Jr, a well regarded former Continental president and Vice Chairman of the original Pan Am.
