* Operating and Net Up 260%
* Cost Cutting, Yield Management Have Impact
RENO, Nev., Oct. 15 /PRNewswire/ -- Reno Air, Inc.
(Nasdaq: RENO; PSX: RNO) today announced record third quarter net income of
$12.5 million, or $0.78 per fully diluted common share, including a
$3.1 million gain on sale of aircraft.
Operating profit was $9.4 million, or $0.61 per fully diluted share, for
the same period. Both are record results for the airline.
"We are extremely pleased with this quarter's performance," said Chairman
and Chief Executive Officer Joseph R. O'Gorman. "Reno's third quarter
operating income -- almost three times greater than last year's -- by far
exceeds any quarter in the company's history. The initiatives to control
costs and improve the product are producing tangible results."
Results for the nine-month period ended September 30, 1998 produced
operating income of $4.1, million before restructuring costs of $2.2 million,
and net income of $4.9 million.
Unit cost decreased by 5.6% over the prior year's third quarter. "This is
most encouraging," said O'Gorman. "The operational improvement and cost
control initiatives, completely supported by our dedicated employees, are
taking effect and have resulted in a significant reduction in operating
expenses."
"On-time performance has also improved measurably, surpassing the best of
the major airlines for the quarter," continued O'Gorman. "We will continue
our efforts to reduce operating costs and improve our product." Last week the
airline announced consolidation of its reservations facilities, a move
anticipated to reduce operating cost in excess of $1.1 million annually.
Yield increased by 3.6% for the quarter, unit revenue was up 1.8%. "This
indicates that our strategy to improve customer service and reschedule the
airline to more profitable markets is showing progress," added O'Gorman.
"Yield performance has been very positive."
The improvement in reservation service levels has contributed to the
increase in unit revenue, and Reno Air also recently commenced service between
several strategically important business markets. These include John
Wayne/Orange County and Seattle, Colorado Springs and Los Angeles, and Burbank
and San Jose.
Management fully recognizes the seasonal nature of many of the markets
served by Reno Air, but nevertheless expects to report net income for the full
1998 fiscal year despite a large first quarter loss.
This news release contains forward looking statements. Actual results for
the full 1998 fiscal year may differ materially from projected results due to
risks and uncertainties. Some factors that could significantly impact
expected operating results include the airline pricing environment; industry
capacity decisions; jet fuel costs; success of the company's new routes and
cost control efforts; travel patterns; the economic environment of the airline
industry, and general economic conditions.
Reno Air currently serves 16 cities with 186 peak daily scheduled
departures. The carrier's state-of-the-art fleet of 27 MD-80 and MD-90 jets
has an average age of six years, one of the youngest all-jet fleets in the
industry. Reno Air offers advance seat assignments, American Airlines
AAdvantage Miles, a spacious first class cabin, "EZtrip" ticketless travel,
and full participation in all major computer reservation systems. See Reno
Air's website at http://www.renoair.com.
Reno Air, Inc.
Statements of Operations
For the Three-month and Nine-month Periods ended September 30, 1998 and 1997
(in thousands, except for share data and Key Operating Statistics)
Three-months ended Nine-months ended
September 30, September 30,
1998 1997 1998 1997
(unaudited)
Operating revenues
Passenger $95,808 99,583 $278,898 275,345
Other 5,250 5,599 14,769 16,942
Total operating revenues 101,058 105,182 293,667 292,287
Operating expenses
Salaries, wages
and benefits 16,269 17,943 51,400 50,128
Aircraft fuel and oil 13,465 17,603 41,717 51,986
Aircraft leases 17,308 18,023 52,194 52,139
Maintenance 8,382 9,094 29,856 24,600
Handling, landing
and airport fees 9,399 10,306 29,889 29,473
Advertising, marketing
and sales 7,009 6,900 20,565 21,974
Commissions 4,924 5,619 13,931 15,582
Facility leases 3,558 3,664 11,237 10,254
Insurance 585 1,497 3,446 4,719
Communications 1,035 1,358 4,066 4,098
Depreciation 1,589 2,610 5,428 7,312
Restructuring charges -- -- 2,212 --
Other 6,249 6,164 20,215 18,848
Total operating expenses 89,772 100,781 286,156 291,113
Operating income 11,286 4,401 7,511 1,174
Nonoperating income (expense)
Interest expense (1,425) (1,372) (4,401) (3,807)
Interest income 589 532 2,129 1,557
Gains from sales of
property & equipment 3,064 1,279 3,064 1,279
Other, net (249) (43) (975) (179)
Total nonoperating
income (expense) 1,979 396 (183) (1,150)
Income before income taxes 13,265 4,797 7,328 24
Income tax expense (benefit) -- -- -- --
Net income before
preferred stock dividends 13,265 4,797 7,328 24
Preferred stock dividends 807 -- 2,421 --
Net income applicable to
common shares $12,458 4,797 $4,907 24
Net income per common
share - Basic $1.15 0.46 $0.46 --
Net income per common share
& potential common
share - Diluted $0.78 0.39 $0.45 --
Weighted common shares
outstanding - Basic 10,800,630 10,529,476 10,676,166 10,450,480
Weighted common shares
& potential shares
outstanding - Diluted 17,929,940 13,765,123 10,863,863 10,779,612
Key Operating Statistics
Revenue passenger miles
(RPMs - thousands) 814,069 876,278 2,369,589 2,401,404
Available seat miles
(ASMs - thousands) 1,183,048 1,253,986 3,549,342 3,532,581
Load factor (percent) 68.81 69.88 66.76 67.98
Revenue passengers 1,403,906 1,518,293 4,081,898 4,196,111
Yield (cents) 11.77 11.36 11.77 11.47
Unit revenue per ASM (cents) 8.54 8.39 8.27 8.27
Unit cost per ASM (cents) 7.59 8.04 8.06 8.24
Breakeven load factor
after preferred stock
dividends (percent) 59.86 66.52 65.59 67.97
Departures 16,753 17,715 49,987 50,794
Block hours (revenue) 25,684 27,453 77,996 78,497
Average daily aircraft
utilization
(revenue block hours) 10.07 9.95 10.12 9.85
Average passenger journey
(miles) 580 577 581 572
Average aircraft stage length
(miles) 515 511 520 514
Weighted average number
of aircraft during period (A) 28 30 28 30
Average fuel cost per gallon
(cents - excluding
into-plane fees) 57.38 69.23 60.82 74.74
(A) aircraft in revenue service
SOURCE Reno Air
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CONTACT:
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evening-weekend, 888-396-0817
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