Rex in voluntary administration, ending all 737 services

[RooFlyer]

Lets talk some more about subsidies given to regional airlines, Rex, if you like. Are they deserved?

A subsidy to those living remotely to help them gain access to services that are freely available in cities and probably also a general subsidy for the 'disadvantage' of living remotely. Is that deserved? If they don't like it, can't they move to the cities? Sure, why not?

So, lets think more broadly. Rural communities get subsidies in many ways, not just air services (and relatively few rural communities get subsidised air services). For instance, Tasmania benefits from the Freight Equalisation Scheme - sea freight receives a federal subsidy to 'compensate' for lack of road access to markets. Same principle? Tough - Tasmanians should move to the big cities and stop sponging on the taxpayer. (I won't mention our GST cut )

Most will know what's coming next. Depopulate or make living in the rural areas so difficult and costly and you close down most of the rural industries. Yeah, food. Stuff the mining folk who get tax breaks. Its the mining industry, not the basket weavers of Balmain or coffee shop baristas of Brunswick pay the tax which drives this country.

I won't belabour it further. Many, many groups - not just rural/remote, by the way, get subsidies to compensate for disadvantage. Tell me that the rural areas don't deserve a subsidy for air services and then tell me no disadvantaged group should be 'subsidised'. See if that works. And think of the consequences for rural communities and everyone else who receives a state or federal handout.

Subsidies given to Rex, or other airlines is a truly trivial amount within our society and I think those begrudging it need to open their eyes and minds a bit and move beyond the 'Holden Vs Ford' thing.

 

[RSVKanga]

Lets talk some more about subsidies given to regional airlines, Rex, if you like. Are they deserved?

A subsidy to those living remotely to help them gain access to services that are freely available in cities and probably also a general subsidy for the 'disadvantage' of living remotely. Is that deserved? If they don't like it, can't they move to the cities? Sure, why not?

So, lets think more broadly. Rural communities get subsidies in many ways, not just air services (and relatively few rural communities get subsidised air services). For instance, Tasmania benefits from the Freight Equalisation Scheme - sea freight receives a federal subsidy to 'compensate' for lack of road access to markets. Same principle? Tough - Tasmanians should move to the big cities and stop sponging on the taxpayer. (I won't mention our GST cut )

Most will know what's coming next. Depopulate or make living in the rural areas so difficult and costly and you close down most of the rural industries. Yeah, food. Stuff the mining folk who get tax breaks. Its the mining industry, not the basket weavers of Balmain or coffee shop baristas of Brunswick pay the tax which drives this country.

I won't belabour it further. Many, many groups - not just rural/remote, by the way, get subsidies to compensate for disadvantage. Tell me that the rural areas don't deserve a subsidy for air services and then tell me no disadvantaged group should be 'subsidised'. See if that works. And think of the consequences for rural communities and everyone else who receives a state or federal handout.

Subsidies given to Rex, or other airlines is a truly trivial amount within our society and I think those begrudging it need to open their eyes and minds a bit and move beyond the 'Holden Vs Ford' thing.

You’re completely misunderstanding the point. Of course subsidies are essential and of course regional and remote communities need air services to the cities.


The only issue is who the subsidies are going to when there are much better potential recipients. Rex is a foreign-owned dinosaur with a history of political links and corruption, price gouging, misuse of taxpayer funds and bullying of local governments across the country - all since inception but particularly in the past four years. Not to mention the lack of an FF program and geriatric Saab aircraft with declining safety standards.

So instead of subsidising a rotten dinosaur, the government should instead subsidise the many profitable Australian-owned regional airlines to fly those Rex monopoly routes instead. Australian-owned will mean profits can stay right here rather than be snatched by Singaporean billionaires and Hong Kong holding firms. It will be a long overdue fresh start for regional Australia.

 

[RSVKanga]

So instead of subsidising a rotten dinosaur, the government should instead subsidise the many profitable Australian-owned regional airlines to fly those Rex monopoly routes instead. Australian-owned will mean profits can stay right here rather than be snatched by Singaporean billionaires and Hong Kong holding firms. It will be a long overdue fresh start for regional Australia

…and it seems like some of those alternative airlines are indeed more than happy to talk to the government and replace Rex on monopoly routes

Rex’s regional rivals eye an opportunity to expand into key routes

But others in the industry are urging the federal government to step in and provide funding to ensure towns aren’t left without services and staff are paid.

www.afr.com

Some of the country’s smallest carriers see the collapse of their larger rival, Regional Express, as an opportunity, pushing for federal and state governments not to bail out the collapsed airline better known as Rex and instead hand over lucrative routes.

Nexus Airlines, which flies a limited number of routes around Western Australia and has bid against Rex for some government-protected and subsidised services, said it would happily take over the operations of some of those flights

“It’s very important that there’s a solution here, but equally, it’s got to be a market-driven solution,” said Nexus’ founder, Michael McConachy on Wednesday.

 

[RooFlyer]

So instead of subsidising a rotten dinosaur, the government should instead subsidise the many profitable Australian-owned regional airlines to fly those Rex monopoly routes instead.

Fine. As long as they don't have a criminal record. Do you happen to know of any?

 

[RooFlyer]

You’re completely misunderstanding the point. Of course subsidies are essential and of course regional and remote communities need air services to the cities.

You realise there are opinions on the issue of subsidies other than your posted here, don't you? Although they do get a bit crowded out by your lengthy and predicable diatribes and cut-and-pastes, which always come across as really defensive.

 

[QF WP]

Thread is being temporarily closed for Moderation discussion

 

[Harrison_133]

The first creditors meeting took place today.

The Australian are reporting (behind paywall) that Rex owed $500m to 4800 creditors at the time of entering administration.

It is also revealed that prior to administration, Rex had approached a firm to market and sell some of the Saab 340s that are not in operation.

Buildings, land and a simulator owned by Rex are currently being considered for sale by the administrators.

The administrators singled out pilot and parts shortages as contributing to the collapse, as well as "competition" and "Rex's difficulty in securing the frequency of flights it needed."

Source: https://www.theaustralian.com.au/bu...ws-story/fb63a5fc91f42243722feb1d55c79f88?amp

 

[RooFlyer]

Number of creditors doesn't include passengers and many are employees, according to The Oz.

 

[HS-TQE]

I wonder how much the are the REX SAABs that are not in service/cannibalised for spare parts. Surely it'll be scrap change each at most?

 

[tmdl]

Is there a realistic way forward out of this for Rex?

 

[RooFlyer]

I wonder how much the are the REX SAABs that are not in service/cannibalised for spare parts. Surely it'll be scrap change each at most?

Some figures give in the Oz on-line (paywalled)

During the 90-minute [creditors] meeting it emerged that prior to administration, Rex had asked a firm to market and sell some of the Saab 340s that were not in operation.

Mr Freeman [E&Y partner] was unable to put a dollar figure on the value of the regional fleet, of which 23 of the 57 are parked, but said that was being assessed.

Buildings and land owned by Rex and a simulator were also being assessed as the administrators looked to “realise and recover value from them”.

Also

Asked why Rex fell into such financial distress, Mr Freeman said investigations were continuing.  “The initial or preliminary view is the pilot shortage really impacted the business and created a position of sub-optimal fleet utilisation, as did problems with the supply chain, parts and turbine props, which also impacted fleet utilisation and the efficiency of the business,” he said.

 

[henrus]

Non paywalled ABC version:

Rex Airlines owes money to 4,800 creditors, administrators tell first creditors' meeting

Administrators for beleaguered regional airline Rex say the company is half a billion dollars in debt.

www.abc.net.au

In short this is worse than I would have thought. Very amusing the airline blames this on pilots and parts shortages. It also notes the first meeting of the board when a report with issues was discussed occurred on 20 May meaning this had been brewing for months.

 

[RSVKanga]

What is the date of the second creditors’ meeting?

 

[TheInsider]

Now, who's going to be interested in buying their regional ops? QR or SQ! ? Maybe they can also join Star Alliance.
But seriously, who would even want it? No real assets either.

 

[henrus]

What is the date of the second creditors’ meeting?

I don’t think one is set yet as the abc said one expected to be held by the end of this month.

 

[oz_mark]

Is there a realistic way forward out of this for Rex?

Well, administration has a way of magicking away debt.

 

[Mwenenzi]

I wonder how much the are the REX SAABs that are not in service/cannibalised for spare parts. Surely it'll be scrap change each at most?

If they have engines ~ props can be value depending on the hours_history_documentation. Same for avionics.
Otherwise look at the scrap price of aluminium. Costs money to scrap_move_sell parts
Saab 340 made 459 off from 1983 to 1999. So newest is ~25 years old. Saab 340 - Wikipedia
Many current operators are 2nd-3rd-4th tier. List of Saab 340 operators - Wikipedia
Engines ~20,000 made of various types. But not many turbo prop. General Electric T700 - Wikipedia
Cannot see any real value, after costs.

 

[MooTime]

Finally some genuine newsworthy posts worthy of reading.

Can we assume if VA never went into VA then Rexy wouldn't of ventured into capital city jets and would still be operating at some sorta profit?

If so the gamble of VA not bouncing back has been an extremely costly one.

Yet I suspect the board & management have not come out of this anywhere near as bad as the employees who lost last pay + leave entitlements along with many regional customers with their plans stuffed.

Look forward to any positives that eventuate. They sure did for VA2.0

 

[RSVKanga]

But seriously, who would even want it?

Administrators keep saying that there are a large number of buyers interested.

Though it’s safe to say that liquidation is quickly firming up as the most sensible option that will be in the best interests of regional communities.

 

[MooTime]

Administrators keep saying that there are a large number of buyers interested.

Though it’s safe to say that liquidation is quickly firming up as the most sensible option that will be in the best interests of regional communities.

Spoken like true blue city dweller.

Wrap up regional routes, those needing flights can just walk I guess.