So why, then, have both Pan Am and Trump put their shuttles on the block within a matter of weeks? To a large extent, the answer rests in the financial troubles affecting the airline giant and the real-estate tycoon. “They both need the cash,” says Helane Becker, a Shearson Lehman Hutton analyst. Yet what both sellers have found is that the shuttle services don’t hold quite the same attraction they once did. Traffic has fallen off this year and isn’t expected to grow much beyond the estimated 4 million passengers annually. While the $119 one-way peak fare is pricey, operating the shuttles is enormously expensive. Extra planes and crews are always on standby because passengers are guaranteed a seat on the hourly flights. The high fares may also be finally discouraging some passengers, Becker says.
Pan Am launched the shuttle in 1986 for $75 million, and it now represents the crown jewel in an empire that is running out of cash. A spokesman says the money from a shuttle sale will be needed to carry it through the winter months, when its mainstay transatlantic business typically drops off. Still, Pan Am says traffic is increasing on all its flights, and shuttle president Harris Herman says his service has been profitable since 1988.
Trump officials also contend their shuttle has turned profitable, and Trump has said that if he does sell, it will merely be to raise cash to buy other assets. Yet many analysts think that in buying the service from Eastern Air Lines for $366 million a year ago, Trump overpaid just as his empire was becoming overloaded with debt. Trump disputes that view, but shuttle president Bruce Nobles concedes the service hasn’t reached the 60 percent market share he expected. Estimates give Pan Am 63 percent and Trump the rest. To raise cash, Trump last week advertised 10 of his 20 planes for sale. Sources say he had previously explored selling his refurbished planes and leasing them back. The plush carpets and faux marble bathrooms apparently didn’t impress potential buyers. A source close to the Trump operation concludes, “I think he realized the airline business is a [lousy] business to be in.”
Still, the shuttle holds enough appeal to attract lookers. Marvin Davis, the West Coast investor, has hired advisers to check out the shuttles. American Airlines is reportedly looking at Pan AM’s shuttle, if not all of the airline. America West, which lost out to Trump last year, would like to buy one of the services. Add to the list USAir, Midway and Delta. Even Trump’s pilots have suggested an employee buyout, which he rejected. How much will the shuttles fetch? Probably in the $300 million ballpark, with Trump maybe getting a bit more than Pan Am because he owns all of his planes. Trump must realize that even the glitter of his name won’t draw the $500 million to $600 million he’s asking.
