Pan Am Creditors to Receive Approximately $30 Million in Proceeds from Settlement of Flight 103 Lawsuit Against Libya

20 August 2006

Pan Am World Airways, the pioneer U.S. flag carrier, announced today that a final distribution will be made by the end of the year to Pan Am's administrative creditors, including more than 15,000 former employees. Pan Am said that the additional distribution of approximately $30 million will be made possible by proceeds from a law suit settlement with the Government of Libya stemming from the destruction of the airline's Flight 103 over Lockerbie, Scotland on December 21, 1988.

Pan Am originally filed for bankruptcy relief on January 8, 1991. The airline ceased operations on December 4, 1991. Among the reasons leading to Pan Am's demise was a severe decline in international air traffic in the aftermath of the Libyans' terrorist bombing of Flight 103.

After the bombing of its aircraft, Pan Am sought to recover damages from the Libyan Government, Libya's national airline and two Libyan agents. The civil action was stayed while Scottish authorities pursued criminal charges against the two individuals.

In 2004, the conviction of one of the individual defendants by a Scottish Court sitting in The Hague became final. Following that conviction, the civil suit was able to proceed. The pressure of that action, coupled with Libya's shift in geo-economic strategies, enabled Pan Am to negotiate a settlement with the Libyan authorities. That settlement provided the funds for this final distribution.

The distribution will be made to all eligible administrative creditors, including former employees, pursuant to procedures approved by the Bankruptcy Court in New York on July 6, 2006. Distribution checks are expected to be mailed beginning in December 2006.

Pursuant to the approved distribution procedures, Pan Am has mailed a notice of the distribution to all holders of outstanding Allowed Administrative Claims at their last known addresses.

Persons who believe they hold an Allowed Administrative Claim but who do not receive a mailed notice or who receive a mailed notice as a result of it being forwarded to them at an address different from that to which it was addressed must contact Wells Fargo Bank, N.A., Pan Am's distribution agent, as soon as possible, and in any event no later than November 1, 2006, in order to update their contact information. Pursuant to the court-approved procedures for the final distribution, Administrative Creditors who cannot be located may forfeit their right to participate in the final distribution.

Creditors with questions about individual claims or the final distribution, or who wish to update their contact information, should call Wells Fargo's toll-free service and information line (877-813-3539) between the hours of 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, Monday through Friday, send an email to panamliquidationtrust@trumbullgroup.com or write to Pan Am Liquidation Trust c/o Wells Fargo Bank, N.A., P.O. Box 2370, Minneapolis, MN 55402-0370.

The final distribution is being made pursuant to an order of the Bankruptcy Court dated February 15, 1996 which, among other things, established the Pan Am Liquidation Trust, transferred substantially all of the remaining assets of Pan Am to the Liquidation Trust, and authorized the distribution to each holder of an Allowed Administrative Claim of an amount equal to its pro rata share of the anticipated net recovery from the litigation pertaining to the loss of Pan Am Flight 103.

Previous distributions to Administrative Creditors have totaled approximately 23% of their respective claims. It is anticipated that the final distribution will equal not less 5% of the remaining outstanding Administrative Claims. Any unclaimed or otherwise undistributed funds will be turned over to the Pan Am Retirees' Supplemental Medical Plan.

CONTACT:

Media Inquiries Only:

Michael Freitag or Roanne Kulakoff

Kekst and Company

(212) 521-4800

Creditor Inquiries:

(877) 813-3539

Source: prnewswire

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