Pan Am: Why One Of The Most Iconic Airlines Went Bankrupt

There is, arguably, no more consequential name in world aviation than Pan American Airways, as it was originally known. The very notion of commercial flights today would be markedly different if it hadn't been for the iconic U.S. company. Debuting in 1927, Pan Am's origins barely hinted at the globe-spanning tour de force of passenger travel it would become: At the time, it was simply as a U.S.-to-Cuba mail carrier.

Its operations would expand to the passenger sphere in short order, however, as it conquered the globe. In October 1957, the U.S. Navy arranged a Strato Clipper flight to Antarctica, an historic global first, according to Everything Pan Am.

Pan Am's downfall, sadly, was all the more dramatic for its former great success. Between economic challenges and a devastating tragedy caused by a bomb on a Pan Am aircraft, the company was ultimately doomed to bankruptcy.

Pan Am owed some degree of its success to the fact that no other companies at the time could offer close to what its vast network could. A February 1982 update on the company's available planes revealed that it boasted 29 Boeing 747-121s, 12 Lockheed L1011-500s, 54 Boeing 747-100/200s, and many more. The latter aircraft could transport 400 passengers, proving that the airline truly led the way in the arena of carrying as many passengers as possible in (relative) comfort ... even if the 747 did use floppy disks.

This concept remains the cornerstone of air travel today, but an update was made in the wake of 1978's Airline Deregulation Act. This legislation opened the field for other airlines to gain a foothold, and so Pan Am's finances took a tremendous hit, according to Simple Flying. The effect was exacerbated by the reduction in passenger numbers that was a result of the rising inaccessibility, and so cost, of fuel. As in any industry, being forced to increase costs of goods and services can be fatal as it drives customers towards alternatives. When said alternatives were rising in prominence, as they were, it resulted in something of a perfect storm for Pan Am.

Early in the 1980s, measures to rectify the financial situation, involving making 5,000 members of staff redundant and ceasing services that were not profitable. "The Delhi Hong Kong sector has been unprofitable for a number of years largely because of competition and lack of traffic," the company stated to Flight Global. It seemed that Pan Am could not obtain more assets or release burdensome ones.

Then the tragic Lockerbie bombing of December 1988 proved to be a devastating blow to the company.

Pan Am's flight 103 was destroyed by a bomb during a flight to New York City. It exploded as the aircraft passed over the Scottish town of Lockerbie, and resulted in the deaths of everyone aboard the aircraft and some on the ground. A total of 270 people were killed.

Business Insider reported that Scottish Justice Minister Kenny MacAskill said of the incident, "Pan Am, you can say, took the hit metaphorically as well as literally for an industry where security standards had not got up to speed." Legally, the company was found responsible for allowing the tragedy to happen.

A few short years later, with its finances hit and its global reputation sorely lacking, the company had no choice but to file bankruptcy on January 8, 1991. It was the end of an iconic, troubled, and tragedy-stricken institution, one that became and remains a vital chapter in the story of flight. A lot of forgotten airlines have all but vanished from the skies, but Pan Am will surely never be forgotten.