Rex enters trading halt ahead of announcement

[Quickstatus]

Should have stayed a Saab operator

 

[henrus]

Should have stayed a Saab operator

and would still currently have 1/3rd of fleet grounded plus a staff shortage with zero future plan for saab replacement (unless you count the joke idea to convert the saab's to electric aircraft).

 

[Quickstatus]

and would still currently have 1/3rd of fleet grounded plus a staff shortage with zero future plan for saab replacement

The 737 experiment failed. Its a quarter baked idea of using 737s in direct competition with the Big guy with none of the other ancillaries - no wonder the corporate travel budget did not shift.

Additionally, none of its 34 seater routes can be replaced by a 170 seater so bringing in 737s would not solve that problem. They need a small turboprop solution. A lot of its routes dont even fill 34 seats but they are profitable. Unfortunately there are no solutions for anything in the 34 seat. The ATR 42 seater is likely too big for some of its routes.

The question is what is Rex?. Is it a regional operator servicing regional towns or is it trying to be a player in the Jet space flying between major capital cities?. I really don't think it can be both.

 

[henrus]

The 737 experiment failed. Its a quarter baked idea of using 737s in direct competition with the Big guy with none of the other ancillaries - no wonder the corporate travel budget did not shift.

It doesn't help that they had no ability to even allow corporate contracts. Our policy is we have best flight of the day with Qantas for domestic/TT and approval seems to be needed for any other carrier including JQ or for places where QF doesn't take you.

Additionally, none of its 34 seater routes can be replaced by a 170 seater so bringing in 737s would not solve that problem. They need a small turboprop solution. Unfortunately there are no solutions for anything in the 34 seat. The ATR 42 seater is likely too big for some of its routes.

100% agree, the ATR42 is the only thing that also comes to mind as current production aircraft that meets the criteria. With the ATR42 holding an extra 14 seats (noting ATR42's in a 30" config have 48 seats) it does beg the question what does the difference in fuel burn look like? The ATR42-600 is a rather efficient aircraft and I wouldn't be surprised if the old saab's are burning as much as a ATR42-600 during cruise?

The question is what is Rex?. Is it a regional operator servicing regional towns or is it trying to be a player in the Jet space flying between major capital cities?. I really don't think it can be both.

Regional operator... They were awarded by Skytrax "Best Regional Airline Australia & Pacific" and it's widely known that Skytrax ratings are essentially purchased, so Rex them selves are calling them self a regional airline. In addition they literally have "out heart is in the country" painted on their aircraft including 737's but in reality they should paint "we're bleeding in the cities".

 

[Quickstatus]

Regional operator.

Then be a regional operator. Don't compete with the big boys.

I speculate that the Saabs were profitable because they were old and cheap.

 

[SCM]

If Rex merges with VA and it's unified, how could such a newly created business honestly justify continuing to fly regional, given the lack of profit?

It's more of a community service than anything, honestly the government should just buy and subsidise the cough out of Rex, leaving capital city trunk routes to Qantas and VA. I'm far from a socialist, but I have relatives in the country, and I recognise the immense value of having an airline soley concentrating on regional routes.

Rex is actually a very good airline that has historically done a really good job regionally, I as a taxpayer fully want to support that, because they have been starting to get sloppy as of late. Given we'll never have HSR in this country, this is the only reasonable alternative.

 

[muppet]

The old SAABs likely cost very little to run and with most of REX’s regional routes being monopolies (and REX charging like it) the management probably thought they were brilliant business operators. But in fact they just had a captive market.

Now their focus has been on flushing money down the toilet to compete with large Jet operations and they’ve let their cash-cow regional ops go unmanaged.

Problem is, customers on the triangle have choice and why would they chose REX.

Any airline not making money in the current market is going to be in for a rude shock once it returns to normal.

 

[drron]

So the next trading halt will be to announce the appointment of liquidators.

 

[Scarlett]

…wants to compete with JQF or VA…

JQF

 

[antycbr]

Another factor is the increase in QFLink flying to the regions - including some of the more profitable destinations such as Merimbula, Orange, Griffith and Broken Hill, plus expanding service into places like Mildura, Albury and Wagga.

 

[docjames]

Another factor is the increase in QFLink flying to the regions - including some of the more profitable destinations such as Merimbula, Orange, Griffith and Broken Hill, plus expanding service into places like Mildura, Albury and Wagga.

They poked QF into it with deploying the 737s on trunk routes.

That and heavy local tourism demand - how well that maintains with rising interest rates and inflation will be interesting to see…..

 

[robbo135]

Rex is good at making money on subsidised monopoly routes. The moment competition comes along, John Sharp is rolled out in front of the media to whinge and sling mud at the competition.

When the majority of airlines are making healthy profits in the current environment of reduced capacity, high demand and elevated airfares, Rex churning out a loss is pretty damning...

 

[servicerequired]

Another factor is the increase in QFLink flying to the regions - including some of the more profitable destinations such as Merimbula, Orange, Griffith and Broken Hill, plus expanding service into places like Mildura, Albury and Wagga.

QF redeployed their DHC 300s back to QF Link after shutting down their regional JQ NZ operations - not in retaliation to REX commencing 737 ops.

Most of the new QF Link destinations, with exception to Orange and Griffith, are only flown once across a handful of days each week ... not exactly like they're going in very hard against REX.

QF have not expanded services into MQL, ABX or WGA, their actual seats offered at each port would be at least equivalent, if not less post-COVID, even with the addition of SYD-MQL and BNE-ABX/WGA flights.

IF ANYTHING - I know in the case of my local market, MANY of the passengers on the QF Link service would not even consider flying REX - it is all about the ancillary services from QF (lounges, seamless domestic connections, international connections, corporate travel) - also the fact that the Dash is more like a Toyota Coaster than a Toyota Hiace - and of course, 'local celebrity' status, we all know who they are, and where they want to be seen - remember, they're the ones with the disposable income.

 

[HS-TQE]

I feel like the current management of Rex would probably rather run the existing airline into the ground than admit defeat and partner/merge with VA.

I'd say if it wasn't for Bonza being around as a alternative "NOT-VA" merger partner, I'd say REX would've still been burning money regardless.

 

[Bagpuss]

I'd say if it wasn't for Bonza being around as a alternative "NOT-VA" merger partner, I'd say REX would've still been burning money regardless.

I can't see VA merging with REX if anything it may take on the Jets and that's probably it.

The Saab's are going to be a cause of headache over the short, medium and long term which are going to need pilots, maintenance and then replacement.

If anything the government may step in to ensure selected routes are protected and likely provide some sort of guarantee not to loose money whilst ensure an operating entity doesn't just burn through $$$. I think there maybe an opportunity for the likes of Link maybe.

 

[dajop]

I I think there maybe an opportunity for the likes of Link maybe.

What’s the backbone of the current Link fleet?

 

[Bagpuss]

What’s the backbone of the current Link fleet?

Our Fleet | Link Airways

Our fleet, discover destination information, manage upcoming trips and more. Experience Link Airways’ renown service on every flight, book today!

www.linkairways.com

 

[HS-TQE]

I can't see VA merging with REX if anything it may take on the Jets and that's probably it.

I can't see REX being interested in paying money to take back the 'leases' to the 'Hanger Queens' that are the first x6 (ex-VA 1.0) 737s of REX's fleet.

There is a slim chance that VA may be interested in the ex-Jet or ex-Singapore/Silk 737s at REX, but that's a slim chance at best.

 

[henrus]

I can't see REX being interested in paying money to take back the 'leases' to the 'Hanger Queens' that are the first x6 (ex-VA 1.0) 737s of REX's fleet.

There is a slim chance that VA may be interested in the ex-Jet or ex-Singapore/Silk 737s at REX, but that's a slim chance at best.

Why would they... VA has brand new 737 MAX aircraft on order.

Meanwhile REX is just acquiring random 737's they can find around the region, heck even Bonza have more new aircraft on order then Rex!

 

[dajop]

Our Fleet | Link Airways

Our fleet, discover destination information, manage upcoming trips and more. Experience Link Airways’ renown service on every flight, book today!

www.linkairways.com

Yes my question was rhetorical. I don’t think Link are going to necessarily be immune from the challenges Rex face with their propeller fleet.