Please ensure Javascript is enabled for purposes of website accessibility

The End of a Golden Age and the Start of a Fast-Food Reign

By Alex Planes - Dec 4, 2012 at 11:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Learning from the market's past to understand its present.

On this day in economic and financial history...

A distinctly American aviation era drew to a close on Dec. 4, 1991, when Pan American Airways closed down. The venerable airline, in operation since 1927 and a popular cultural touchstone, had been laid low by the Iraq war fallout, its remaining profitable assets purchased by Delta Air Lines (DAL 1.02%). Under Delta's leadership, a crippled Pan Am limped from its January bankruptcy proceedings until its December closure, dependent on Delta's largesse to continue operating. When the money stopped, so did Pan Am.

Pan Am was originally a small carrier with routes principally located in the Caribbean and South America. As it grew throughout the 1930s, it established a number of vital international routes around the Atlantic and Pacific, using "flying boat" seaplanes built by Sikorsky and Boeing (BA -1.53%). It was a leader in American airline innovation, with many firsts to its name:

  • First permanent international and intercontinental air service.
  • First airline to use radio communications.
  • First to develop airport traffic control systems.
  • First airline to employ flight attendants and offer in-flight meals.
  • First to operate jet-engined passenger aircraft (the Boeing 707).
  • First to develop computerized flight reservation systems, built by IBM (IBM -2.48%).
  • First to use computerized onboard navigation and flight records.

Pan Am nearly fell victim to a familiar foe of the airline industry in 1973. The OPEC embargo brought the airline near bankruptcy, but drastic cost-cutting measures allowed it to plod along until it returned to profitability in 1977. The oil-price shock that followed the Iraq invasion proved Pan Am's undoing, and investors thereafter had clear warnings that airlines would be among the hardest-hit businesses in any oil-related economic downturn.

Pan Am survived the Great Depression, a world war, the Cold War, and even an oil embargo. From the time of its founding to the day it closed its doors, the Dow Jones Industrial Average (^DJI -0.42%) grew from 184 points to 2,911, a gain of nearly 1,500%. The only company with airline operations ever to join the index was United Aircraft and Transport Corporation, a Boeing-led, air-focused conglomerate that was forced to break up in 1934. Its airline component became United Airlines (UAL 1.45%), but this new company never became part of the Dow.

Can Boeing continue to thrive in an era of extreme airline difficulties, or will it be cut down by carrier cutbacks? The Fool's premium research service has the answer. Find out everything you need to know about Boeing's future: Click here to subscribe now.

Have it your way
The first Burger King (BKW.DL) restaurant opened in 1953 as Insta-Burger King. However, the first restaurant licensed to the men who would give Burger King its current name didn't open until Dec. 4, 1954. James McLamore and David R. Edgerton had been inspired by the original McDonald's (MCD -0.27%) and its speedy service, and the pair developed Burger King's signature "flame-broiled" cooking process soon after opening their first franchises. By 1959 their Insta-Burger King franchise was doing far better than the parent company, so the pair bought it out and rechristened it simply Burger King.

By 1967 Burger King had grown to 274 restaurants, and Pillsbury acquired the growing chain. From 1967 until 1988, Burger King was a part of Pillsbury, and then Pillsbury found itself acquired through hostile takeover by British-based Grand Metropolitan. Grand Metropolitan merged with Guinness to form Diageo (DEO -0.53%) in 1997. (Unfortunately for Guinness fans, beer remained off the menu at Burger King.) By this point, Burger King's solid second-place position in the burger wars had eroded, and Diageo showed little interest in flame-broiling. Burger King was sold to three private-equity firms in 2002 for $1.5 billion.

Frequently changing hands has not helped Burger King. The chain lost its second-place burger sales standing to Wendy's (WEN 3.31%) in 2011, a year after its original private-equity ownership sold its stake to another private-equity firm, 3G Capital.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,967.82 (-0.42%) $-129.44
The Boeing Company Stock Quote
The Boeing Company
BA
$137.70 (-1.53%) $-2.14
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$252.29 (-0.27%) $0.67
Restaurant Brands International Inc. Stock Quote
Restaurant Brands International Inc.
BKW.DL
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$29.82 (1.02%) $0.30
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$137.62 (-2.48%) $-3.50
Diageo plc Stock Quote
Diageo plc
DEO
$171.72 (-0.53%) $0.91
The Wendy's Company Stock Quote
The Wendy's Company
WEN
$20.00 (3.31%) $0.64
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$36.97 (1.45%) $0.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.