DALLAS -- American Airlines signed an agreement to acquire Reno Air
for $124 million in a bid to strengthen its West Coast presence.
American will integrate Reno's operations into its own if the
deal passes Justice Department scrutiny.
In a sense, American is buying its way back into the market. In
the early 1990s, it had attempted to build a San Jose hub, but it
withdrew from the market when it was faced with low-fare
competition from, among others, Reno Air. It virtually ceded its
hub to Reno Air and formed a frequent flyer partnership with the
smaller carrier in 1993 to maintain a West Coast presence.
With the acquisition of Reno Air, American will have increased
connection opportunities with Canadian Airlines, Qantas and Cathay
Pacific, three of its four oneworld partners.
Reno Air, meanwhile, has had its difficulties with scheduling
inefficiencies, on-time performance and costs. Its fortunes have
improved since a management change in February.
Under chief executive Joe O'Gorman, formerly of United, the
carrier has streamlined its operations, outsourced tour and other
functions, cut costs and begun to turn a profit.
The West Coast market is no picnic, however.
The dominant carrier has long been United, which bowed to the
low-fare tradition that is almost unique to California and set up
Shuttle by United, its lower-cost unit.
Shuttle by United has settled into a sort of peaceful
coexistence with another California powerhouse, Southwest, and with
Alaska Airlines, which must compete on fares while maintaining a
full-service product.