Soros to Help Fund New Low-Cost Airline

Financier George Soros is funding a new airline that plans to begin flying out of New York’s John F. Kennedy International Airport next year.

Soros Private Equity Partners, which is currently involved in a multibillion-dollar bid to acquire a chain of British pubs, will back the airline with Chase Capital Partners and a San Francisco-based venture capital fund called Weston Presidio.

A spokesman for the new airline said the backers will provide most of the $130 million in initial funding for the venture, making it the most heavily capitalized start-up airline in history.

“We’re not actually looking to steal market share from competitors. We are actually looking to build traffic in the Northeast,” said spokesman Gareth Edmondson-Jones.

The new airline, whose name is to be announced today at a news conference in New York, is angling for the skies at a time when a number of low-fare airline services have failed, including last month’s collapse of SunJet.

But some Wall Street analysts said the venture stands a chance of success because of the steep capital backing, a management team made up of industry veterans and the lack of low-fare competition at JFK. The airport’s previous low-fare airline, People Express, went under some 15 years ago.

The chief executive for the new airline will be David Neeleman, who built Morris Air before selling it to Southwest Airlines Co. in 1993.

The airline is scheduled to start flying in January 2000 and plans to build a fleet of as many as 82 Airbus A-320 jets valued at $4 billion.

Edmondson-Jones said fares will be 50% to 70% lower than existing fares. Services will include leather seats that are wider than standard coach seats, live in-flight satellite television viewing at each seat and cappuccino and espresso machines.

The airline is considering 44 routes, including flights to Washington; Rochester, Buffalo and Syracuse in New York; Charleston, S.C.; Chicago; Cincinnati, Ohio; Tampa and West Palm Beach in Florida; Dallas and Houston.

Neeleman also served as a consultant for WestJet Airlines Ltd., a Canadian low-fare airline whose stock rose as much as 30% on Tuesday during its initial public offering.

“He [Neeleman] is the only person who has started two airlines post-deregulation,” said Morgan Stanley Dean Witter analyst Kevin Murphy.