Continental to Absorb 2 Other Texas Air Units : People Express’ Name to Disappear on Feb. 1

Three airlines owned by the Texas Air holding company will be merged Feb. 1, with People Express and New York Air disappearing into an enlarged Continental Airlines, officials of the company announced Monday.

With the additions, Continental will have the third-largest fleet of aircraft of any U.S. carrier.

Frank Lorenzo, chairman of Continental and of Texas Air, both based in Houston, pledged to offer the traveler “the highest value at the lowest possible fare.”

To illustrate the point, he and the presidents of Continental, People Express and New York Air, stood behind a table constructed of $1, $5 and $100 bills totaling $5 million--the amount that Continental estimates it saves consumers each day. The figure was arrived at by multiplying the $50 a seat the airline estimates that it saves each passenger by the 100,000 travelers it expects to serve each day.

Erratic History Ends

Texas Air completed its acquisition of People Express in the final days of 1986, and the removal of the People Express name represents the end of the rebel airline’s erratic history.

While People Express revolutionized the industry by bringing low-fare, no-frills seats to travelers, it was eventually undone by larger, more sophisticated carriers. Through the first three quarters of last year, People Express showed a net loss of $245.4 million on $1.01 billion in revenue.

With the merger of People Express into Continental, People Express President Donald Burr completes a professional round trip. He left Texas Air to found People Express in 1981. He and New York Air President Doug Birdsall will continue at Continental or at Texas Air in undetermined capacities. New York Air was launched by Texas Air as a low-fare carrier in the Northeast in 1980.

Lorenzo said there are no plans to lay off employees of either of the absorbed airlines.

Analysts generally agreed that the merger is a good idea and cited Continental’s image and cost structure, as well as excess capacity throughout the industry, as reasons to believe that the airline will be able to keep fares relatively low. Continental operates with a non-union labor force.

Trading on Continental’s stock was light, and the price of the stock closed unchanged at $16.375 a share on the American Stock Exchange.

Tickets for flights on People Express and New York Air will be honored by Continental.