Kerkorian to Launch Upscale Los Angeles-to-Newark Airline

Reclusive financier Kirk Kerkorian plans to return to the airline business, it was learned Wednesday.

In documents filed earlier this week with the Department of Transportation, a group financed by Kerkorian said it intends to begin an all-first-class carrier named MGM Grand Air. The airline, which will have a total of $20 million invested, plans to begin service with two airliners April 20, initially between Los Angeles and Newark, N.J.

Kerkorian, who began his career flying gamblers to Las Vegas in a surplus bomber after World War II, founded Transinternational Airlines in 1948 and operated it until 1968, when he sold it to Transamerica Corp. From 1969 to 1976, he was a director of Western Airlines and its major shareholder.

Over the years, Kerkorian has also had extensive holdings in casinos, hotels and movie companies. His estimated wealth is $600 million, placing him among the top 75 on Forbes magazine’s list of the 400 richest Americans. He is seldom seen in public and was last interviewed by reporters more than a decade ago.

MGM Grand Air, which will begin operations with two 727s that it has bought, will be a subsidiary of Tracinda Corp., the Las Vegas investment company owned by Kerkorian. Later, by Oct. 1, it plans to begin L-1011 service, extending its routes to London’s Gatwick airport from Newark, and also to put in a business class.

The airline told the Department of Transportation that it wants to provide an alternative to the “systematic degradation of service in the rush (since deregulation) to provide low-cost access to the greatest number of travelers.” Before beginning operations, new airlines must receive approval from the department and, separately, from the department’s Federal Aviation Administration.

The chief executive officer of MGM Grand Air will be F. Michael Rogers, a retired Air Force general, who was previously chief executive and president of Regent Air, a luxury carrier that ceased operations early this year. Regent, which charged higher rates than other carriers for flights between New York and Los Angeles, redesigned its 727s for 35 passengers instead of the usual 120.

Fred Benninger, president of Tracinda, will be a director of MGM Grand Air, as will Kerkorian. From 1980 to 1986, Benninger was chairman of the executive committee of MGM/UA Entertainment Co. and chairman of MGM Grand Hotels, both owned by Kerkorian. The hotel company was subsequently taken over by Bally Manufacturing Corp., but Kerkorian retained control of the MGM Grand name.

In a telephone interview Wednesday, Benninger, when asked about Kerkorian’s investment in the new airline, said: “He likes airlines. He understands the business. You always go back to what you like and understand.”

Benninger said the new airline’s fare structure and other marketing matters had not been decided yet.

Rogers said in a telephone interview that the president of the airline will be Timothy C. Collins, a founder and former executive of Jet America. Rogers said Regent had been “undercapitalized,” and that is why it had constant troubles.

MGM Grand Air, on the other hand, has the Kerkorian investment. “That almost ensures success, he said. “We made a feasibility study. Kirk responded to our figure and gave us a cushion.”