PAN AM: Pioneer Airline Takes a Downward Spiral : For Pan Am, the Going Wasn’t So Great : Airlines: Longtime workers say the once-mighty institution was whittled away.

They were small changes that failed to draw much attention, but they were telling to former Pan Am flight attendant Lura Kuhlman.

Little niceties--ranging from lettuce under the hors d’oeuvres to playing cards and books for children--began to disappear as the carrier’s financial problems worsened, said Kuhlman, who retired from Pan Am in 1987 after 30 years.

“It was all being eaten away around the edges,” she said.

The last large remaining portions of Pan American World Airways, which began flying mail between Cuba and Florida in 1927 and went on to initiate many “firsts” in U.S. aviation history, were gobbled up by Delta Air Lines on Monday.

With the blessing of a New York bankruptcy judge, Delta will buy up Pan Am’s remaining transatlantic flights and its Northeast shuttle. Pan Am will survive, but only as a scaled-down carrier flying from its birthplace in Florida to South America under the control of Delta and other investors.

Pan Am is one of many U.S. carriers that have fallen victim to increased competition since the government deregulated the industry more than a decade ago.

But Pan Am’s fall from grace has been particularly long and hard. At is height, Pan Am was more than just a passenger carrier. For many Americans, the name Pan Am spoke of exotic and far away destinations, while foreigners looked upon Pan Am as a symbol of American commercial might and culture.

Sad as it might be, the dramatic decline of the carrier that pioneered international air travel has cleared the way for a stronger American presence in what is expected to be a fierce global competition.

This was proven out half a dozen years ago when Pan Am sold its Pacific routes to United Airlines. United boosted the number of passengers on those routes to 3 million annually, from the 750,000 who traveled each year under Pan Am ownership, said M. F. Labbee, a captain who has flown with Pan Am for 27 years.

“The growth was sitting there waiting to be capitalized on,” Labbee said. “But Pan Am never took advantage of it.”

Observers predict that the U.S. share of the transatlantic market will increase with Delta’s entry. In addition, United and American Airlines--which recently bought the London routes of Pan Am and Trans World Airlines respectively--will also offer improved service and become tougher competitors than their predecessors. As a result, analysts say, pricing and profits on the routes will improve.

But the global competition for airline passengers is of no interest to Pan Am loyalists such as Karl-Eric Johanson, a New York surgeon who flew the carrier when it made the first transatlantic jet flight in 1958. It’s the memories that are on his mind.

“Pan Am represented the United States all over the world,” Johanson said. “When you got in trouble in Rome, you went to the Pan Am office. There was always someone who could help you.”

Pan Am also built a reputation as the airline for heads of state and went to great lengths to please its high-powered clientele.

Retired Capt. George Jefferson Price recalled one day in 1943 when the airline’s flying boat base in Dinner Key, Fla. was closed to all visitors in preparation for the arrival of a Pan Am flight with a “Mr. X.” on board. The mystery passenger turned out to be President Franklin D. Roosevelt on his way to an Allied summit in Casablanca.

The airline also established a deep bond with its employees--sometimes over several generations. Gary Gulbransen, a 53-year-old captain who lives in Santa Barbara, followed in his father’s footsteps as a pilot for Pan Am at his mother’s urging.

“I told my mother that I was going to try out for a flying job with Trans World Airlines,” Gulbransen said. “ ‘You will not,’ ordered my mother. ‘Your Pablum came from Pan Am and that’s where you’ll fly.’ ” And he did.

But the strong ties and loyalty that Pan Am had developed with its passengers and employees began to fray as the company faced increasing competition from domestic and international carriers.

“I used to fly Pan Am all the time to the Far East. Pan Am had quality service to Europe,” recalled Robert J. Rukeyser, a vice president of American Brands Inc. “But then it cut the amenities. Its service became lackadaisical. Its people developed an I-don’t-care attitude.’ I started flying other carriers.”

As international passengers drifted to the Lufthansas and the Swiss Airs, things got even worse for Pan Am. Bathrooms were not cleaned properly. Pan Am developed one of the industry’s worst on-time performance records. Slowly food service went from elegant to mediocre.

“The best way I can put it,” said Robert Anderson, a veteran pilot who flies A 310s, “I watched Pan Am go from the finest Champagne and china, silver and Hershey chocolates and bottles of cordials in first class to plastic dishes, stainless steel and miniature liquor bottles.”

Pan Am began losing its lock on worldwide aviation soon after the last shot of World War II was fired. At the end of the conflict, the airline had a monopoly on American overseas flights, was the lone carrier over the Pacific and dominated virtually all transatlantic business.

But very slowly other American carriers were allowed by Washington to initiate overseas routes. And the airlines of foreign nations, having recovered from the war, also began to move into the competition. At the same time, Washington, while whittling away Pan Am’s foreign business, would not allow it to start up a domestic route system.

As a result, Pan Am in 1970 was a worldwide carrier and yet landed at a little more than a dozen American cities.

Analysts say that Pan Am’s biggest mistake was the purchase of National Airlines at the start of 1980. Designed to give it badly needed domestic flights, the National acquisition gave Pan Am routes primarily along the East Coast.

But National lacked routes across the United States. As a result, the merger failed to provide enough passengers to feed into Pan Am’s overseas flights.

“Everything fell apart with the acquisition of National,” said Stanley Gewirtz, who served as a vice president of Pan Am at that time. “It subsequently forced Pan Am to raise operating cash by selling its headquarters building in mid-Manhattan and its chain of (Inter-Continental) hotels, both at lower prices than they were worth.”

The final blow was the explosion in 1988 of Pan Am 103 at Lockerbie, Scotland, in which 270 people lost their lives. It resulted in the cancellation of an estimated $250 million in reservations--half of its economy bookings--overnight.

Thus the bankruptcy court’s decision to allow Delta to take over most of Pan Am, which filed for bankruptcy in January, came as no shock to anyone. But it was painful nonetheless.

“It’s like a grandfather dying at the age of 90,” Capt. Price said. “You know he’s going to go but it comes as a blow when he finally kicks.”

History of an Aviation Pioneer A $1.3-billion deal approved Monday allows most of Pan Am’s assets to be sold to Delta Airlines. Pan Am will continue to exist as a much smaller airline serving Latin America. Important developments in the history of Pan Am Corp.: 1927: Founded by former naval aviator Juan T. Trippe, 28.

1928: Opens routes to Caribbean islands, Mexico, Central and South America.

1935: Launches first scheduled transpacific service, pioneering regular air travel from the West Coast to Hawaii, Manila and Hong Kong.

1939: Inaugurates first scheduled transatlantic service between New York and Lisbon, Marseille, and Southhampton, England.

1947: Inaugurates first round-the-world service.

1950: Changes formal name to Pan American World Airways.

1980: Merges with National Airlines, the first big airline combination since deregulation in 1978.

1981: Negotiates wage cuts and freezes from unions and starts selling assets, including New York headquarters to combat recession.

1982: Loses more than $480 million for the year, despite cost cutting by Chairman C. Edward Acker.

1985: Mechanics end crippling strike; Pan Am sells key Pacific routes to United Airlines for $750 million, enabling it to post its last annual profit: $52 million.

1986: Starts Northeast shuttle service between Boston, New York and Washington, but lossescontinue amid fierce competition.

1988: Acker replaced by Thomas G. Plaskett, a veteran airline executive; labor tensions increase; overseas business burt by terrorist bombing of Pan Am Flight 103 over Lockerbie, Scotland.

1990: Sells German service to Lufthansa, key London routes to United; losses mount as Persian Gulf hikes jet fuel prices.

1991: Seeks federal bankruptcy court protection.

Earnings Erosion

(in Millions)

1985: $52 ‘86: -463 ‘87: -265 ‘88: -73 ‘89: -337 ‘90: -663