NEWS ANALYSIS : Delta Favored as Winner in Pan Am Bids

NEW YORK —  An offer by financier Carl C. Icahn to purchase Pan Am Corp. for $310 million might result in a bidding war for the bankrupt carrier’s remaining treasures.

But analysts predict that a competing bid by Delta Air Lines, which wants Pan Am’s Northeastern shuttle and some trans-Atlantic routes, will ultimately prevail.

“Unless TWA makes a remarkably higher offer, then I think Pan Am will try to close the deal with Delta as soon as possible,” said Timothy Pettee, an airline analyst with Alliance Capital Group. “Time is of the essence. Pan Am needs the money to keep on operating.”

Pan Am confirmed Monday that it had received a proposal “subject to various conditions” from Ichan’s Trans World Airlines to purchase the Pan Am shuttle and its transatlantic routes. TWA in turn would sell the shuttle and some of the European routes to American Airlines for about $250 million.

TWA also said it and outside investors, who were not identified, also planned to inject $140 million into a reorganized Pan Am that would fly primarily to Latin America from the United States.

“We feel we have a realistic proposal,” said Mark Buckstein, TWA’s general counsel. “It is well thought out and well financed. I am hopeful that the creditors and the bankruptcy court will agree, but I will not speculate.”

New York-based Pan Am, which sold off its prized Pacific routes and other operations in recent years to raise cash, said it would study the TWA proposal “together with other proposal already under consideration.”

Those other proposals under consideration include Delta’s $260-million offer for Pan Am’s Northeastern shuttle and some European routes. Delta also plans to invest in a reorganized Pan Am focused on Latin America.

Delta maintains that its $260 million is better for the Pan Am creditors than TWA’s offer. Delta officials point out that $30 million of Ichan’s offer represents the value of the Pan Am tickets TWA would honor.

“We do not think that we are far apart,” said William Berry, spokesman for Delta.

Delta has also vowed to retain 6,000 Pan Am employees, while TWA’s deal would keep only 4,500.

Although TWA’s offer is larger than Delta’s, the bankruptcy judge who is overseeing Pan Am’s reorganization is not bound to accept the higher offer. Instead, bankruptcy judges often give more weight to the recommendations of the creditor’s committee, said Prof. Richard D’Aveni of the Amos Tuck Business School at Dartmouth College.

Pan Am’s largest creditor--Airbus Industrie, the European aircraft manufacturer--will play a major role in deciding the outcome of the duel between TWA and Delta, say industry observers. Pan Am owes $400 million to Airbus and a leasing company for 21 A-310 jets.

Analysts believe that Airbus would lean toward Delta as a way to build a relationship with a potential customer.