FOR ESSAYS GURU ONLY

1. Introduction

i. Pan Am started in the year 1927 by providing passenger and mails services. It was one of the big airline companies that which collapsed due to financial pressure.

ii. Thesis: Pan Am was once a famous company with decades of experience, however; it collapsed due to financial crisis that were caused by high fuel prices, reduced number of customers, and terrorist attack.

2. Body

i. Causes of the Pan Am collapse

a. Rise of fuel prices

The fuel prices increased because of the Persian Gulf crisis. Within a period of five months, the cost of fuel in the company had increased by about 150 million dollars. This resulted into the depletion of the firm’s coffers (Dallos & Gellene, 2002). This contributed into the firm’s bankruptcy because the high costs of fuel prices had reduced the firm’s profitability.

b. Terrorist attacks

The company also collapsed because of the many terrorist attacks. One the company’s aircrafts was blown by terrorists in Lockerbie, Scotland. The attack heavily affected the cash flow of the company leading to low profitability.

c. Reduced number of customers

Due to the terrorist attacks, the reputation of the company in terms of security was negatively affected. As a result, it lost most of its customers which in turn reduced its profitability. Moreover, the company’s customers reduced because the high costs forced the company to reduce the pleasure and business travels (Mayo, Nohria, & Rennella, 2009).

ii. The rise of the Pan Am

The Pan Am rose because of its innovative strategies. Among the strategies included the introduction of the computerized reservation systems and the use of jumbo jets and jets (Dallos & Gellene, 1991).

3. Conclusion

The Pan AM roses because of its innovative strategies that were more effective compared to its rivals. However, it later collapsed because of the financial crisis that was caused by terrorist attacks and high fuel prices which negatively affected the company’s profitability.

References

Dallos, R. E., & Gellene, D. (1991, January 9). Pan Am, a 50-Year Leader in Aviation, Goes Bankrupt : Economy: Carrier cites fuel costs, downturn and Flight 103 bombing. It says travelers will not be affected. Retrieved from Los Angeles Times Web site:http://articles.latimes.com/1991-01-09/news/mn-7223_1_fuel-costs

Mayo, A. J., Nohria, N., & Rennella, M. (2009). Entrepreneurs, Managers, and Leaders: What the Airline Industry Can Teach Us About Leadership. New York: Palgrave Macmillan.

Dallos, R. & Gellene, D. (2002). Pan Am a 50 year leader in aviation goes bankrupt: economy: carriers cites fuel costs, down and flight 103 bombing. It says travelers will not be affected. Los Angeles Times. Retrieved from;

http://articles.latimes.com/1991-01-09/news/mn-7223_1_fuel-costs