People Express, the maverick low-cost, no-frills airline, said yesterday that it is for sale -- in whole or in part.

The nation's fifth-largest airline announced that it is exploring ways to improve its financial situation, including steps to increase revenue, reduce costs or to sell specific assets. The company said it has been consulting with its financial adviser, Morgan Stanley & Co., on possible courses of action.

"In addition, in light of the continuing consolidation in the airline industry, the company and Morgan Stanley are also exploring the possible sale of part, or under certain circumstances, even all of the company," the announcement said.

The company, the prototype in this country for the low-cost, minimalist air service that has resulted from deregulation, said it was making the announcement in response to rumors of financial problems and heavy trading in its stock. The stock closed at $5.50 yesterday when trading was halted pending the announcement. That was down 50 cents from the stock's closing price of $6 on Friday. Earlier in the month, the stock had been trading at $9.

People Express began with only three jets in 1981, providing service from its Newark hub to Buffalo, Columbus, Ohio, and Norfolk. It specialized in low-cost trips for passengers willing to carry their luggage, bring their own meals and live with relative uncertainty. People has led major domestic airlines in complaints filed with the Department of Transportation about overbooking and other problems.

The airline expanded rapidly but also began experiencing financial troubles. People Express lost $58 million in the first quarter of 1986 on revenue of $329.3 million, after it lost $20.1 million in 1985.

Last year, it expanded by buying three regional airlines: Britt Airways, a commuter line based in the Midwest; Provincetown Boston Airline, an East Coast Carrier; and Frontier Airlines, based in Denver. Analysts said yesterday that Frontier -- acquired only seven months ago -- is likely to be jettisoned.

Texas Air Corp., which lost out to People Express the first time Frontier was for sale, and UAL Corp., parent of United Airlines, may be interested in the regional carrier, according to David Sylvester, an industry analyst with Montgomery Securities.

Beyond that, "it's not clear to me that People Express has a franchise that other carriers are interested in," he said. Sylvester said that it is unusual for an airline to announce that it is up for grabs. "A lot of times carriers are sold before it's publicly announced," he said.

"To say, hey, we're putting the 'for sale' sign out smacks of real problems," he said.

In its announcement, the company said it has "sufficient resources to meet its current obligations." It said that recently announced reductions in fares to near last summer's levels generated "substantial increases in call volume and advance bookings."

"As a result, the company anticipates substantial positive cash flow for the balance of the summer," according to the company's press release.

The company has made other changes recently that have taken it in the direction of other major airlines. It dropped its policy of charging the same price for each seat and began offering cheaper seats for advanced bookings.

Last month, it took another step in the direction of traditional airlines operations, announcing that it would add first-class sections to most of its aircraft and would offer more of the services usually available through other airlines. In Newark, for instance, it has used a check-in counter.

People Express also has announced a version of a "frequent flyer" bonus program designed to attract business travelers.