Reno Air has become the latest of the US low fares airlines to undergo a management shake-up, appointing a new chief executive to help steer the struggling carrier back to profits.
The Reno board says that it decided that the carrier "would benefit from a change in leadership", especially in the light of "more aggressive competition" from the US airline majors.
Robert Reding, chief executive since 1994, will now be replaced by Joseph O'Gorman, a retired executive vice-president at United Airlines.
Reno chairman Lee Hydeman will also hand over executive responsibilities to O'Gorman, but remains as head of the supervisory board, while the airline's chief financial officer has already left.
The changes come as Reno posted a net loss of $11.6 million for 1997, against a modest profit a year ago. Reno had managed to keep at the breakeven point until the fourth quarter, when losses mushroomed.
Although yields grew, the damage came from a slump in load factors and an 11% rise in seat costs, blamed on rising maintenance charges, a switch to the Sabre reservation system and growing personnel costs as labour markets tighten. Load factors also sank in the fourth quarter, bringing the yearly average down two points to 66.5%. The company, however, says that its cash position has "substantially improved" following the private stock placement in October.
Elsewhere in the troubled low-cost sector, Vanguard has set a goal of turning a profit this year if it is to survive. The carrier has yet to reveal the extent of its losses for 1997, but says that the final quarter showed an upturn in yields and costs, with further improvements promised this year.
Vanguard's new management team has set about a rethink of the no frills formula, introducing standard refundable tickets and wooing the business traveller. In a similar move, Frontier has already unveiled plans to introduce business class seating throughout its fleet.
Other independents less reliant on the no frills concept, such as the business carrier Midwest Express, have continued to profit from the US airline boom, while established charter operator America Trans Air, which has made a foray into the low cost market, also swung back into the black last year after heavy pruning of its scheduled operation.
Meanwhile, Pan Am has held talks with financier Carl Ichan, among others, in its attempts to re-emerge from Chapter 11 bankruptcy protection and keep the airline flying. Ichan stepped in to take control of TWA in the middle of the 1980s.
Source: Flight International
