Pan Am struck a $1.39 billion deal with Delta Air Lines under which it will survive but no longer resemble the globe-circling airline that once was the unofficial U.S. flagship carrier.
Under the deal, Delta would get most of Pan Am's routes across the Atlantic and beyond; the Pan Am Shuttle, which serves New York, Boston and Washington; dozens of planes and spare parts; and a 45 percent stake in Pan Am.The agreement, approved by a federal bankruptcy judge on Monday, is one of the biggest transfers of airline assets in history. It came with only days left before Pan Am would have run out of cash and been forced to shut down.
The international route transfers still must be approved by the U.S. Transportation Department.
An orderly transition would mean no disruption for Pan Am passengers. About 4,000 Pan Am employees, however, would lose their jobs.
Pan Am plans to move its headquarters from New York to Miami and concentrate on the Latin American routes that gave it a humble beginning with a Florida-to-Cuba mail run in 1927.
Delta, in turn, would join the ranks of U.S. "mega-carriers" American Airlines and United Airlines, though the Pan Am purchase will not move it out of third place in size.
Pan Am filed for Chapter 11 bankruptcy protection in January, citing high fuel prices, the recession and fallout from the bombing of Flight 103 over Scotland.
The airline opened the door to what could have become a liquidation when it invited bids on all its assets in June.
Pan Am creditors agreed to the Delta package early Monday after Delta topped a $1.3 billion offer from United, American and Trans World Airlines. The deal was approved by U.S. Bankruptcy Judge Cornelius Blackshear.
Pan Am creditors will get 55 percent of the new Pan Am and recover $720 million, attorney Leon Marcus said.
Delta and the reorganized Pan Am expect to employ 13,500 Pan Am employees. Five-thousand employees were laid off last month.