OAKLAND — World Airways, which sparked a revolution in air travel in 1978 by introducing an unrestricted coast-to-coast fare of $99, said Wednesday it will suspend its loss-ridden scheduled passenger service on Sept. 15 to concentrate on its profitable charter and aircraft-maintenance operations.
About 1,500 of the airline's 2,600 employees will be terminated or furloughed, but 50,000 ticketed passengers holding reservations for travel starting Sept. 16 will be accommodated by Pan American World Airways, United Airlines and Presidential Airways.
The planned orderly shutdown of World's scheduled passenger operations comes in marked contrast to Frontier Airline's chaotic suspension of service last month a few days before it sought refuge from creditors under Chapter 11 of the federal bankruptcy code. Frontier's abrupt suspension left thousands stranded at airports.
Still, the termination of scheduled service by a pioneer low-fare carrier like World underscores the rigors of airline deregulation. Initially, World had hoped to avoid the competitive wrath of larger carriers by serving such secondary airports as Oakland, Newark, N.J., and Baltimore-Washington. But that strategy backfired when the majors matched or even undercut World's prices.
"We had no way of forecasting what would happen under deregulation," said Violet June Daly, vice chairman of World and the widow of the airline's maverick founder, Edward J. Daly.
In 1975, Daly won fame for defying government bureaucrats during the final days of the Vietnam War by flying refugees and orphans from that war-torn nation. As the city of Da Nang fell to the Communists, the former semi-professional boxer fought off with his fists and a pistol a mob of South Vietnamese soldiers who were trying to storm a World plane.
When the war wound down and World's military charter business dried up, Daly sought to capitalize on his notoriety by seeking permission to add low-cost scheduled service to World's existing charter operations. After years of battling regulators, he won that right in 1978--vowing with characteristic bluster to "bury" his much larger competitors and scorning them as "9-to-5 country club boys."
But within a year, World was dealt a near-crippling blow when the Federal Aviation Administration temporarily grounded DC-10 airliners, which made up a majority of World's fleet. And, as deregulation unfolded, World found that it lacked the capital and the small aircraft suited for effective hub-and-spoke operations.
World's routes connect the West Coast to Hawaii, the East and West coasts, and the East Coast to Europe. As it phases out scheduled passenger service, nine of its 14 airplanes will be returned to their lessors, leaving a fleet of five DC-10s for military charters, commercial charters and cargo operations.
"We think this is a niche in which we can succeed and even grow," said T. Coleman Andrews III, who was named president and chief executive Wednesday, succeeding Arthur H. Hutton, who became vice chairman. Andrews, the 32-year-old former chairman of a small charter carrier called Key Airlines, will oversee World's restructuring.
After seven years of losses, Andrews said he hopes that World will return to profitability in 1987 after absorbing substantial severance and other expenses this year. He noted that the company has $140 million in tax loss carry-forwards to shield future profits.
World performs maintenance for other airlines at a sprawling hangar in Oakland.
Analysts and travel agents said World's suspension of scheduled service may give some breathing room to the financially ailing discount airline People Express and may eventually result in higher air fares on the routes on which it competed.
"But, overall, I don't think it is a carrier that a lot of passengers will miss," said William Single, manager of Getz International Travel in San Francisco.
Word of the company's decision was relayed to scores of disappointed employees at Los Angeles International Airport on Wednesday afternoon by Marshall Patterson, vice president for the airline's Western region.
"It was an unpleasant job," Patterson said after the meeting. The airline has 230 employees in Los Angeles but it could not be learned Wednesday how many of them will be laid off.
Patterson said those whose jobs are being eliminated will receive from two to eight weeks of severance pay. He added that United Airlines has agreed to interview laid-off World employees for possible jobs with UAL.
For Pam Shields, 23, of Westchester, who was worked for World for five years as a ticket agent and who will lose her job, the announcement came as a shock.
"I feel sad and depressed," she said. "We've been through trouble for the last five years." But, she added, "We were the World."
Mary Lou Plaskin, a passenger service representative with the airline since May, will be laid off but said she hopes to find a job with another airline. She and her co-workers were "not surprised" by the company announcement, she said, "because we heard so many rumors."
But Andrea Harkless of Inglewood, a passenger service agent for five years, said she was surprised to learn that she and many other World employees are "going to be completely out of jobs."
She said she thought World had gone through the worst of its "bad times." She added, "I didn't think it could happen to us."
Contributing to this story was Times staff writer John Kendall in Los Angeles.