Evening star., 1948-12-13
Merger Plan Detailed
|By Pan Am, American
|0yerseas Air|ines
BY the Assoeiufsd Press

ican World Always and American
Overseas Airlines have agreed to
the biggest merger in American
commercial aviation.
Plans for consolidation of Ameri-
can Overseas routes to II countries
In Europe with Pan Americana s
transatlantic services were an
nounced by both companies last
night.
Routes and assets Of American
Overseas Airlines would 60 to Pan
American in exchange for Pan
American stock. After this stock
was distributed, American Overseas
Airlines would be dissolved.
The merger agreement Is subject
to approval by the stockholders of
both concerns and the Civil Aero
nautics Board.
Pan American World Airways is
the largest international air carrier,
and American Overseas Airlines Is
a subsidiary of American Airlines,
the Nations largest domestic carrier.
TWA Only U. s. Competitor.
The merger would leave only one
other United States-Flag line
operating transatlantic air service
Howard Hughes Trans World
Airline.
Mr.. Hughes, who was not i'm
mediately available for comment,
attacked Pan Americans policies
before a Congressional investigat-
ing committee a year ago. Mr..
Hughes, TWAS largest stockholder,
said Juan Trippe, president Of Pan
American, was attempting to Or
ganize an international air travel
company monopoly, and to force
TWA to merge with 1t.
Senator Brewster, Republican, of
Maine-who Mr.. Hughes had said
was backing Mr.. Trippe-said in a
statement here that the merger an
nounced last night lis in general
line with what I've always believed
is the inevitable pattern of over
seas air operations.
"It is the only practical way Of
meeting the highly subsidized
foreign competition with which we
are faced,' said Senator Brewster,
who had been in bitter exchange
with Mr.. Hughes at the time Of the
investigation.
Trippe Sees Economies.
Senator Brewster said the plans
are in line with recent announce
ments by the Civil Aeronautics
Board that serious consideration
should be given to mergers and
consultations of airlines. He said
each major foreign country has
one airline handling overseas air
transport.
The merger announcement did
not give the value of the property
involved.
c. r. Smith, American Overseas
Airlines president, said the merger
was planned because Of: SLOW re-
vival of trade between the United
States and Europe; the fact that
the foreseeable volume of business
does not justify the continuation of
three competing United States car
riers on the North Atlantic route;
the increased subsidy which be re-
quired to sustain free carriers; and
the difficulty of securing the addi-
tional capital which will be re-
Iquired for the future"
Mr.. Trippe said: LAS Q result Of
the merger, important operating
economies would be affected. The
financial position Of the carriers
would be strengthened, and the op-
+portunity Of preserving fair share
of future North Atlantic air trafic
under the American nag would be
greatly improved"
Still Seeks Routes in u. s.
A spokesman for Pan American,
which has asked the CAB for per-
mission to set up certain routes
within the United States, said the
planned merger docs not change
in any way our petition as far as
domestic routes are concerned"
Joseph J. O'Connell, jr, CAB
chairman, said in Washington that
the two lines had asked the board
for an informal opinion on the
merger plan, but that the board
could not give an opinion until the
project had been presented formally
The petition will be presented to
the CAB next week, Pan Amer.
lean spokesman said, and he esti-
mated the merger-if approved
would take six months to complete
Any decision by the board on inter-
national air routes Is subject to ap-
proval by President Truman.
The joint announcement said
that American Airlines, as a major
stockholder in American Overseas
Airlines, would receive q stock in
terest in Pan American, but would
take no part in its management.
The stock would be put in o vot-