Carnival deal boosts Pan Am revival

The resurrection of Pan Am, the American airline that resumed trading again last September following its collapse four years ago, was taken a stage further yesterday through a deal to buy Carnival Air Lines.

Carnival Air, formed in 1988, operates a fleet of 27 jet aircraft that operate between South Florida, the Northeast, California and the Caribbean. The airline, which had revenues last year of about $270m (pounds 168m), is majority owned by Micky Arison, the chairman and chief executive of Carnival Corp, which operates Carnival Cruise Lines and is a big shareholder in Airoturs, the second largest tour operator in the UK. While the full financial details of the deal rae not being released, it was disclosed that Mr Arison will make a $30m capital investment which will result in him holding around 9.5 million Pan Am shares.

This is Pan Am's second attempt at buying Carnival Air. Last July it pulled out of a deal that involved paying around $100m for the airline. Pan Am said yesterday that it had arranged financing that, when combined with the additional investment from Mr Arison, will give it $60m of working capital. Pan Am has four A300's with two more to be delivered in the next two months.