Pan American World Airways and Carnival Air announced Friday they would merge in a deal that gives Carnival's billionaire owner Micky Arison a 42 per-cent stake in Pan Am.
Arison is kicking in $30 million for the controlling stake and will put Pan Am's famous blue-globe logo on Carnival Air's larger fleet.Pan Am also will issue $30 million in new stock to create a $60 million fund to repaint and refurbish Carnival Air's jets, buy a leased Miami headquarters and probably buy more jets to pursue route expansion.
Reports of merger talks Wednesday drove Pan Am's stock down 20 percent. The stock fell 871/2 cents, or another 8 percent, to close at $10.121/2 a share Friday on the American Stock Exchange. Car-ni-val Air is privately held.
Pan Am and Carnival Air first talked two years ago, and a $100 million merger came and went last summer, but the consequences of the ValuJet crash finally decided the deal as Carnival Air passengers and profits disappeared.
The two low-overhead carriers based in South Florida competed on routes primarily linking the Northeast and Florida, but the Pan Am name was more marketable. Combined revenues would be about $400 million a year.
Pan Am chairman Chuck Cobb and president Marty Shugrue, a Pan Am veteran who supervised Eastern Airlines' bankruptcy, remain in place.