People Express, a newly created airline without a plane to its name, last week raised more money in one day than many existing airlines probably will earn during all of 1980.
The airline -- with plans for high-frequency, low-fare scheduled air service on the East Coast -- raised $25.5 million last week with a new issue of 3 million shares of stock at $8.50 each. The preliminary prospectus for 2 1/2 million shares attracted so much interest that the underwriters boosted it to 3 million.
The popularity of the new issue -- it was sold out the day it was offered -- is an indication of the possible profits that investors see from a new company with experienced management in the increasingly deregulated airline industry.
"I think people are looking for the new Southwest Airlines and the new Federal Express; both made a ton of money for those who invested early," Donald C. Burr, chairman and chief executive officer of People Express, said in a telephone interview.
Created by five former officials of Texas International Airlines, People Express received a formal go-ahead from the Civil Aeronautics Board just three weeks ago in the form of a favorable fitness finding. The agency did its work in less than three months, a record.
As it looks now, People Express will be the best-financed, totally new startup under deregulation; the now-successful Midway Airlines, the first airline created under airline deregulation, got started with a mere $6 million. a
The new airline plans to begin its services from Newark International Airport, fanning out to destinations not more than 1,000 miles, or a two-hour flight, away. Although the CAB authorized People Express to serve 27 cities from the New York area, including Washington, officers of the new airline say they will start with routes from Newark to Buffalo, to Columbus, Ohio, and to Raleigh/Durham, N.C.
The airline's organizers say fares will be between 41 percent and 55 percent lower than existing coach fares, with no advance-purchase, minimum- or maximum-stay, or cancellation restrictions. The airline will offer a two-tier pricing system, with the fares at night and on weekends at the lowest level. The airline will fly one kind of jet airplane exclusively either Boeing 737s or McDonnell Douglas DC9s -- planes regarded in the industry as ideally suited for the routes People Express plans to serve.
Burr said the airline's officials will concentrate now on buying planes and hiring people and plans to begin operations next spring. "We're going to take our time and do it right," he said.
Burr, 39, the oldest of the eight-member management team now assembled, was with Texas International from 1973 until January, most recently serving as its president, chief operating officer and a director.