MGM Air Will Drop Schedule

MGM Grand Air, which caters to wealthy travelers with private first-class compartments and stand-up bars, on Thursday said it will scrap its money-losing scheduled flight service in favor of air charters.

Founded by reclusive financier Kirk Kerkorian five years ago, MGM Grand Air’s gilded Los Angeles-to-New York service fell victim to the recession and intense airline industry competition, said President Charles Demoney. The airline will cease its two daily round trips--the only scheduled service offered--on Dec. 31 and lay off nearly half of its 325 workers.

“The ongoing recession hasn’t helped us or any other airline,� Demoney said. “It became obvious over time . . . that we had a drag on our profitability.�

Las Vegas-based MGM Grand, the airline’s holding company, said it will post a $1.5-million pretax charge related to the shutdown of scheduled service as well as the addition of a Boeing 757 jet, which will be used for charters.

MGM Grand Air took off originally as an all first-class airline for affluent travelers such as business executives and celebrities. A one-way seat fetched more than $1,000.

But the airline has lost money for most of its existence and, in 1990, added a coach service to bolster its first-class business.

MGM Grand Air also could not effectively compete with major airlines--such as American and United--that offered more daily flights as well as more lucrative frequent flier programs.