Pan American-Grace Airways

In June 1928, Pan American Airways Corporation, originally known as Aviation Corporation of the Americas, was formed to obtain the necessary capital to enable its operating subsidiary, Pan American, to bid for various foreign airmail contracts to Latin America. These contracts were soon to be announced by the US Postmaster General pursuant to the Foreign Air Mail Act of 1928 and Pan American believed that it would be ultimately conducting operations under any contracts that might be awarded.

Pan American was correct and during May and July 1928, the new company had three foreign airmail contracts bestowed for service to Latin America. Specifically, Pan American was awarded the contract for Foreign Air Mail Route (FAM) No. 5 for service between Miami and Panama in the Canal Zone. Interestingly, Pan American had already strategically decided that if it received FAM 5 then it would ask for extension services beyond the Canal Zone to and along the western coast of South America. The New York-based airline had also promulgated operating rights into Colombia, Panama, Ecuador and Peru, and had also purchase sufficient aircraft to operate the route system.

Aviation Corporation of America's operating subsidiary, Pan American World Airways, operated only twelve aircraft with 100 employees, while AVCO's entire capitalization was only US$3,775,000, at the end of 1928. The developments of 1928 introduced the auspices for the formation of a new company formed under the laws of Delaware. Pan American entered into an agreement with W. R. Grace and Company to operate airline operations into Peru, which was outlined in two letters of intent dated August 31, 1928, and September 7, 1928. Under this agreement, both companies subscribed to US$25000 of new capital stock in the new Panagra company, which would jointly study the possibility of operating air carrier and mail services between the Canal Zone and Valparaiso, Chile. If AVCO were to determine that it would be beneficial to bid on a mail contract for this type of service then W. R. Grace's initial contribution would be treated as stock in the new company giving W. R. Grace the option to obtain an interest in the new venture not to exceed 50 percent of its capitalization.

Also, the agreement stated that Pan American would have full responsibility for the operation of the air carrier services, while W. R. Grace operations in cities along the proposed new route would act as agents for the new company, which was incorporated as Peruvian Airways Corporation. In September 1928, both companies contributed US$25,000 in capital to Peruvian Airways, forming a 50/50 partnership. On January 31, 1929, the US Postmaster General issued need for a contract for Foreign Air Mail Route No. 9, which would extend from Panama extending down the west coast of South America to Santiago, Chile, with an option for the Postmaster General to offer extension services from Santiago across the lower belt of the Andes Mountains to Buenos Aires, Argentina, and beyond to Montevideo, Uruguay.

On February 21, 1929, Pan American World Airways and W. R. Grace and Company, the parent company to Grace Shipping at that time, announced the formation of Pan American Grace Airways, Inc., to bid on the new airmail contract. The new company bid on the contract and both partners subscribed US$500,000 each to the capitalization of the new Pan American Grace company, which also included the original amounts subscribed to the original operating entity, Peruvian Airways Corporation.

First scheduled services

Pan American and W. R. Grace's new operating entity, Peruvian Airways Corporation, purchased its first aircraft on August 1, 1928. The new airliner, a Fairchild P-1 monoplane, featured a cabin for four passengers and was powered by a Wright Whirlwind engine with an output of 220 horsepower (164 kilowatts). Five weeks later on September 13, 1928, the new Fairchild P-1 inaugurated the first scheduled commercial flight along the West Coast of South America, with a nonstop flight from Lima, Peru, to Talara, Peru, carrying both passengers and mail.

The little Fairchild carried just a few letters and a full load of four passengers on the inaugural flight, which departed from a racetrack in Lima. Upon arrival in Talara, the legend-making airliner landed at an "airport" in Talara that was a soccer field. In spite of these drawbacks, Pan American Grace Airways first flight had been successfully completed without incident.

Reainting the Panagra fleet

All five DC-8 aircraft were initially left in the green and yellow Panagra color scheme but black Alexander Girard 'Braniff International' titles were added down both sides of the fuselage replacing the Pan American Grace titles. The Panagra feather logo on the tail was replaced with a large Alexander Girard black BI logo.

After May 1967, four of the DC-8s were painted in the 1967 Alexander Girard/Harper and George 'Solid' color scheme. One was painted in Dark Panagra Green, N1801 in Orange, one was painted in New Dark Blue, and one passenger and the cargo aircraft were painted in Orange. The DC-8-31 aircraft were quickly retired from the Braniff fleet as the new DC-8-62 Intercontinental Jets were delivered in August-December 1967. The Series 62 aircraft were never painted in a proposed Panagra Concept color scheme but were instead delivered in the updated 1967 Harper and George color palette for the Girard Solid Color Scheme. Harper and George used the Panagra DC-8 Concept color scheme green and yellow colors as inspiration for the Panagra Green and Panagra Yellow Solid colors.

New service that resulted from combining the two carriers featured the first through-flights from San Francisco and Los Angeles to Lima and La Paz and Lima and Santiago that eliminated the need for a change of planes at Panama City. New nonstop service was also inaugurated between Santiago, Chile, and Miami, Florida, for the first time.

Prior to the merger, many of Braniff's and Panagra's flights departed at the same time. They were rescheduled to be equally spaced to provide more fluid and convenient schedules for Braniff passengers. Five US Gateways would also be used for the first time and included New York, Miami, Houston, Los Angeles, and San Francisco, which would allow service to be provided to South America from each major section of the US Mainland.

Braniff acquired seven used aircraft and five new aircraft orders as a result of the merger. The Panagra fleet included two Douglas DC-7Bs, one Douglas DC-8-55F Jet Trader (freighter), which had been leased from Douglas in 1966, four Douglas DC-8-31s, and orders for five Douglas DC-8-62 Intercontinental Jets.

The Douglas DC-7Bs were quickly retired with only the four DC-8-31s and one Series 55F aircraft remaining in the Braniff system.

Accidents

February 3, 1931 - Fairchild FC-2 NC8023 - Operating a revenue flight from Buenos Aires, Argentina - The airliner crashed off the coast of Buenos Aires under unknown circumstances and the fate of the crew and passengers is unknown.

February 3, 1931 - Fairchild FC-2W2 NC8026 - Operating a revenue mail flight between Arauca, Colombia and Antofagasta, Chile - The Fairchild crashed into the sea at Piedra de las Montijitas, about 11 km north of Caleta Buena under unknown circumstances. There was a crew of two pilots, Captain C. Thompson and Copilot Luis Morales, and eight mail bags on board. There were no injuries and six of the eight mail bags were recovered along with the aircraft, which was then parked on a nearby pier. However, the aircraft was written off as a total loss.

February 7, 1931 - Sikorsky S-38B NC306N - The flight was operating as a revenue flight to Cristobal, Panama Canal Zone - The Sikorsky amphibian crashed on landing into Bay of Limon at Colon, Panama in the Canal Zone. There were no injuries.

April 1, 1931 - Ford Trimotor NC8418 - Operating a revenue flight to Ovalle, Chile - The aircraft crashed on landing at Ovalle Airport but the circumstances are unknown. All seven persons on board survived but the aircraft was a total loss.

July 16, 1932 - Ford Trimotor NC403H "San Jose" - Flying a revenue flight from Santiago, Chile, to Buenos Aires, Argentina, with an en-route stop at Mendoza, Argentina - The Ford was operating over the Andes Mountains east of Santiago when it encountered a heavy snowstorm and crashed into mountainous terrain near El Plomo. There were no survivors. Initially, the search did not find the accident site and was called off after a few days. However, twenty months later, the aircraft was found by ramblers.

March 11, 1933 - Fairchild FC-2W2 NC9723 - Flying a revenue flight at Mendoza, Argentina - The aircraft crashed under unknown circumstances. There were no casualties.