People Express May Form Holding Firm

People Express Airlines adjourned its annual meeting Wednesday so that stockholders may consider a reorganization plan designed to forestall takeover bids.

Although there is no pending bid for the discount carrier, the plan to create a holding company was developed because of recent events in the airline industry, including a hostile takeover attempt aimed at Trans World Airlines, Chairman Donald C. Burr said.

“We now know that we’re operating in a difficult world--so we’ve taken steps to shore up our defenses so a raider would have a difficult time,” he said.

Burr also said that, if the plan is approved by stockholders when the meeting resumes Aug. 28, the no-frills airline’s board of directors will institute its first quarterly cash dividend of 5 cents per share.

And he said that a review of losses over two quarters has led the carrier to change its policy of “wide-open growth” that created a 41-city network in four years to one with more cost-cutting elements designed to maintain the record earnings of the last quarter.

The reorganization plan, being reviewed by the Securities and Exchange Commission, would make the airline an operating subsidiary of a new holding company. Each share of common stock will be converted into one share of common stock plus one-tenth of a share of class B common stock of the holding company.

Each share of class B stock will have 30 votes on all shareholder matters, compared to one for each common share. The class B stock will not be freely transferable but can be converted into common stock of the holding company on a share-for-share basis.

The plan provides for staggered terms for the directors of the new holding company. Also, People Express preferred stock will be converted into preferred stock of the holding company on a share-for-share basis.

People Express employees now own about one-third, or 7 million shares, of People Express stock.

After two quarters of losses, the company last week reported second-quarter earnings of $13 million, up 200% from $3 million for the same quarter last year. The best-ever quarter was attributed to economy moves.

In last year’s fourth quarter, the airline lost $9 million; it reported an $18.8-million loss for the first quarter of 1985.