Texas Air Buys People Express for $125 Million
NEW YORK — People Express, the no-frills airline that made its name by slashing fares, agreed today to be acquired by Texas Air Corp., one of the nation’s largest carriers, for about $125 million in securities.
The move, the latest in a string of mergers in the industry, followed rumors and speculation on Wall Street ever since People Express was forced to seek bankruptcy protection for its Frontier Airlines subsidiary last month.
Texas Air also said it agreed to acquire the assets of Frontier.
The deal marks the end of efforts by airline visionary Donald Burr, chairman of People Express, to expand his concept of a discount airline and remain independent.
Intense Competition
People Express’ expansion plans ran headlong into intense competition from major carriers in the last few years, resulting in mounting losses.
At a press conference today, Burr said the deal “will preserve People Express as a low-priced leader in the industry.”
Houston-based Texas Air said it will pay $4.75 a share to make People Express a wholly owned subsidiary.
Under the proposal, each share of People Express common stock will be exchanged for $2.25 of Texas Air common stock and $2.50 of Texas Air preferred stock.
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