Pan Am’s Fate Bad News for Plane-Leasing Firm

SAN DIEGO — The economic woes that on Wednesday forced Pan Am Corp. to ground its fleet won’t affect local travelers because the long-troubled airline hasn’t served San Diego’s Lindbergh Field in more than a year.

But the airline industry’s latest failure will generate more bad news for San Diego-based PS Group, which had leased two jet aircraft to the airline. And, the grounding of Pan Am means that former Pacific Southwest Airlines President Russell L. Ray Jr., who joined Pan Am as president in September, again will be looking for a job.

Pan Am’s failure was the latest in a string of jolts for PS Group, which has leased aircraft to three airlines--Pan Am, Continental and America West--that have been forced into bankruptcy court. PS Group had leased two 747-100 jets to Pan Am, which declared bankruptcy in January and since had struggled to generate enough cash to keep operating.

In each case, the bankrupt airlines are expected to return to PS Group aircraft that are no longer being used. When the aircraft are returned, PS Group will be forced--in the midst of a glut of older jet aircraft--to arrange new leases.

PS Group executives were unavailable for comment Wednesday. However, in documents filed earlier this year with the Securities and Exchange Commission, the company detailed Pan Am’s economic problems and the possibility of aircraft being returned to PS Group.

Pan Am’s demise marked the second time that Ray, 56, has lost a job as airline president when the airline he was working for ceased to exist. Ray earlier served as president of PSA, the now-defunct, San Diego-based airline that was acquired by USAir Group in 1988.

After PSA’s demise, Ray joined Douglas Aircraft in Long Beach as vice president and general manager of commercial marketing. He joined Pan Am two months ago with the understanding that he would have to make “a lot of tough and bitter decisions,” one airline industry analyst said at the time.

Ray, in a prepared statement released Wednesday, said he “maintained optimism” during his two-month tenure as Pan Am’s president that the airline would pull out of its financial tailspin. However, Ray acknowledged that, “without funding, we simply would not have the cash resources to provide the stability” that Pan Am needed.

“Today, we see the end of an airline whose name will be forever forged in American history,” Ray said.