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 (NYSE:DAL). 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 (NYSE:BA). 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 (NYSE:IBM).
- 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 (DJINDICES:^DJI) 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 (NASDAQ:UAL), but this new company never became part of the Dow.
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Have it your way
The first Burger King (NYSE: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 (NYSE:MCD) 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 (NYSE:DEO) 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 (NASDAQ:WEN) in 2011, a year after its original private-equity ownership sold its stake to another private-equity firm, 3G Capital.