New Reno Air chief pledges cuts to stem losses

Monday, Feb. 23, 1998 | 10:16 a.m.

Joseph O'Gorman expressed optimism about the carrier's future in a nationwide conference call to stockholders on Friday, a day after he replaced Robert Reding as its president and chief executive officer.

"Obviously, the emphasis has got to be on getting back to profitability," he said. "We look like we will have a profit for '98."

The change comes after Reno Air reported losing $12.3 million in 1997. Virtually all the loss came in the fourth quarter and followed two years of modest profits for the Reno-based airline that began in 1992. Reding had held the post since 1994.

O'Gorman, 54, who retired as an executive vice president at United Airlines in October, called the airline's costs per available seat mile (one seat flown one mile) of 8.8 cents for the fourth quarter and 8.4 cents for the year unacceptable.

The airline needs to be near the industry average of 7.3 cents to make money, he said.

Airline consultant Howard Putnam, past president of Southwest and Braniff International airlines, said change was necessary to stem the airline's losses.

"I think Reno Air has suffered from a lack of leadership from day one," he said. "The board of directors has tolerated mediocrity and they have attained that result year after year."

Reno Air needs to focus on its original vision of filling and dominating a low-fare niche in the West, Putnam said.

At the same time, the carrier needs to abandon a "shotgun approach" of entering and leaving markets and serving other markets seasonally, he said.

"(O'Gorman) will quickly create a sense of urgency they need," Putnam said. "(He's) very focused and disciplined, very decisive, and very open and direct."

Consultant Mike Boyd of Evergreen, Colo., said he sees less urgency in Reno Air's situation.

"A bad quarter doesn't make an airline," Boyd said. "This is not an airline up against a wall."