With financing complete, routes and aircraft in place and eight international codesharing partners signed up, the new Pan Am is hoping to be in service by September. But it will start without taking over Carnival Airlines first.
Martin Shugrue, Pan Am's president and chief executive, who will trade on a renowned name without mimicking its strategy, believes the market will support a transcontinental new entrant offering a full-service product at low fares.
Starting with three A300s, Pan Am will begin by offering direct services in the New York-Los Angeles and Miami-Los Angeles markets. 'There are no-name low-cost carriers in the market, but we think the combination of low cost with name-brand recognition will be very popular,' Shugrue says.
Pan Am will grow to a fleet of nine aircraft in its first three years and add services to Chicago, San Francisco and San Juan, among others. Its codesharing partners, including Iberia, LanChile, Viasa, Aer Lingus and Egyptair, will replace the old Pan Am's market niche: international flying. Its $40 million financing is all equity, according to Shugrue, and has met the US Department of Transportation's criteria for startup capital. Still, DOT had yet to approve Pan Am's application at presstime.
Pan Am's plan to buy Carnival Airlines collapsed after Carnival refused to accept a reduction on the original $100 million offer for the company. Sources indicate that Pan Am changed its offer after due diligence inquiries because it was unhappy about Carnival's credit lines and forward bookings.
Carnival, a privately owned carrier linked to the Carnival cruise line, may now renew its search for buyers.
Mead Jennings
Source: Airline Business
