SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: August 26, 1998
RENO AIR, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-20360 88-0259913
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
220 Edison Way 89502
Reno, Nevada 89502 (Zip Code)
(Address of Principal Executive
Offices)
(702) 954-5000
(Registrant's telephone number, including area code)
ITEM 5. Other Events
On August 26, 1998, Reno Air, Inc. ("Reno Air") issued a news release
announcing that its board of directors has authorized management to initiate a
stock repurchase program. The news release also stated that Reno Air entered
into an agreement in principle to sell a surplus aircraft and that Reno Air
expects significantly improved results for the third quarter of 1998 and for the
fiscal year ending December 31, 1998. The news release further discusses certain
other recent management initiatives, including the pursuit of synergistic
strategic alliances with domestic and international air carriers. The news
release is attached hereto as Exhibit 99.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99 Reno Air news release dated August 26, 1998 announcing that
its board of directors had authorized management to initiate
a stock repurchase program. The news release also stated
that Reno Air entered into an agreement in principle to sell
a surplus aircraft and that Reno Air expects significantly
improved results for the third quarter of 1998 and for the
fiscal year ending December 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RENO AIR, INC.
By: /s/ Steven A. Rossum
-----------------------------------
Steven A. Rossum
Senior Vice President, General Counsel
and Corporate Secretary
RENO AIR TO INITIATE STOCK REPURCHASE PROGRAM AND SELL SURPLUS AIRCRAFT; CARRIER
EXPECTS SIGNIFICANTLY IMPROVED THIRD QUARTER RESULTS
AND FULL YEAR 1998 EARNINGS
RENO, Nevada, August 26, 1998- Reno Air, Inc. [NASDAQ: RENO; PSE: RNO] today
announced that the company's board of directors has authorized management to
repurchase up to two million shares of its outstanding stock. The airline also
announced that it has agreed in principle to sell a surplus aircraft that has
been operated by BWIA International Airways to Pegasus Aviation, Inc. of San
Francisco. The stock repurchase plan and aircraft disposition are part of
management's action plan to return the airline to profitability and enhance
shareholder value.
Reno Air further announced that it expects record earnings for the third quarter
and reiterates that it expects to be profitable for the full-year 1998,
notwithstanding significant losses in the first quarter and restructuring
charges of $.7 million in the second quarter. The carrier suffered a $8.6
million loss in the first quarter of 1998 after posting a $12.3 million loss in
fiscal year 1997.
"The Pegasus transaction is a 'win-win' for both parties," said Joseph R.
O'Gorman, Chairman, President, and Chief Executive Officer of Reno Air. "It
generates cash flow to strengthen our competitive position and allows us to
concentrate on running the airline."
The company's action plan has streamlined operations, significantly reduced
costs, optimized scheduling and aircraft utilization, and improved the
operational and customer service performance of the airline. In May, June, and
July, the airline's on-time performance exceeded 86%. Reno Air's on-time
performance was superior during those periods to all of the major airlines,
based upon statistics reported to the Department of Transportation. In addition,
the customer service performance in reservations now exceeds industry
responsiveness standards.
Passenger traffic and yield have met or exceeded expectations for July. The
company reports that unit revenue appears to be on track for August and unit
costs continue on a downward trend.
"Based on the continued strong demand for travel in the domestic markets, the
significant improvement we have made in operational and customer service
performance and the current fuel-price environment, the outlook remains
favorable for Reno Air in 1998," said O'Gorman. "Obviously, the credit for our
enhanced financial and operational performance goes to the hard work and
dedication of our employees."
Earlier this year, the airline had announced that it had reduced its workforce
by more than 15%, sold two non-operating aircraft to Spirit Airlines of Detroit,
outsourced its revenue accounting systems and tour operator business, and
completely revamped its senior management team with seasoned airline executives.
In addition, the company continues to pursue synergistic strategic alliances
with domestic and international airlines. "With lower unit costs and the
enhancements we have made, we think we can bring significant value to a
strategic partner," commented O'Gorman.
Stock repurchases, including block repurchases, may be made in the open market
or private transactions, from time to time, depending on market conditions, and
may be discontinued at any time.
Pegasus Aviation and its affiliates are leading owners and operating lessors of
commercial jet aircraft with more than 144 aircraft on lease to more than 25 air
carriers worldwide.
<PAGE>
This news release contains forward-looking information. Actual results for the
third quarter and full year 1998 may differ materially from projected results
due to risks and uncertainties. Some factors that could significantly impact
expected operating results include airline pricing environment; industry
capacity decisions; jet fuel costs; success of the company's cost control
efforts; travel patterns; the economic environment of the airline industry, and
general economic conditions.
The web page address for Reno Air, Inc. is http://www.renoair.com
CONTACT: Reno Air Corporate Communications, Connie Huff - (702) 954-5097
Evening/Weekend - (888) 396-0817
