Rex in voluntary administration, ending all 737 services

[Harrison_133]

Share price down to 57 cents today...

 

[HS-TQE]

Some more popcorn in the REX leadership drama between current CEO Howell and former (defacto) CEO LKH in the moments coming up to the "leadership" spill.

Gonna be a costly pay out if much of the board gets the 'flick' now.

Edit: Current share price is now 0.56c at the time of post.

https://www.listcorp.com/asx/rex/regional-express-holdings-limited/news/variation-to-ceo-s-employment-agreement-3059751.html

 

[UP4014]

John Sharp surely wouldn't have taken over as chairman if he didn't have the numbers to survive a challenge.

Ex pollie, megalomania come to mind. Get in sort the details later, or even better get someone else to sort the details.

 

[UP4014]

They might be too busy battling each other for control of the board to consider the finer details like marketing and profit

With apologies to Yes Minister.

Before you stab someone in the back you need to get behind them.

 

[moa999]

Basically delivering effective control to the private equity firm PAG as Rex is forced to continue to drawdown on the convertible notes.

Can't imagine LKH has the money to buy them out, so the minute they convert LKH is heavily diluted.

 

[HS-TQE]

Breaking: News Corp (Australian) through Paywall is now reporting that REX has appointed Deloitte to look at their books.

Going by the history of Bonza and Kordamentha, I can only see this as "history repeating". I'd tipping some sort of "denial" from REX and/or LKH shortly sometime in the next 48 hours.

 

[33kft]

Here's hoping Deloitte can help walk them back from the vanity project and back to their raison d'etre

 

[UP4014]

Let’s hope John Sharp understands the proverb you reap what you sow.

 

[RSVKanga]

If Rex is in a position where it needs to axe all 737 services, so be it. As some people on this forum say; let the market decide.

Because what was the point of flying metropolitan jet services while retaining the brand “Regional Express” and that childish logo, not to mention the unnecessary “Our heart is in the country” wording on aircraft that fly only metropolitan routes? Apart from having zero sense of resonance with a potential customer base, their continued persistence with the 1990s branding/corporate culture and the reputation of John Sharp hasn’t helped them either. So I don’t think anything of value will be lost if we let it crumble.

I think this issue also extends beyond their 737 services from a 2024 perspective. Most of their regional routes depend on various state and federal subsidies, and the average age of their Saab fleet is now 30 years old. Some of their aircraft are 35 years old, with no active orders for replacements. Not to mention that half of the Saab fleet is parked. Is Rex’s “raison d'etre” as sustainable as it was pre-Covid, especially with QF flying to many previous Rex-heartland destinations? Link Airways and FlyPelican (both Virgin partners) are also competitors that have been much better managed and run than Rex, have a modern brand identity and are on a positive trajectory.

 

[N860CR]

That escalated quickly… I suspect the fat lady is warming up. The 737 operation is worthless. The brand is worthless. They’ve run the Saab operation into the ground so far that it’s likely not recoverable (nor financially appealing to an investor). It’s always been a bottom feeder operation run by foreign narcissists so, to be honest, it doesn’t really deserve to be saved.

The Australian aviation industry will be better with Rex as a distant memory.

 

[MooTime]

"what was the point of flying metropolitan jet services while retaining the brand “Regional Express”

And whats the point of Qantas flying anywhere claiming national carrier when they are ~40% foreign owned and couldn't bring Aussies home during COVID.

<redacted>

 

[jrfsp]

The Rex ops keeps QF and VA honest on the jet routes and without doubt fares would rise if they were to go - have they done a terrible job of marketing etc of course, but as consumers I wouldn’t be celebrating a return to the cosy duopoly.

Regional flying has always been marginal especially to small markets hence government support for some markets - however those flights are a lifeline for those communities.

 

[RSVKanga]

I expect Rex to be begging the federal government for support in the coming days. Why should they bother to save it?

1. Rex is not majority Australian-owned

2. We are currently in normal economic conditions. This is no GFC or COVID. Rex’s potential collapse will be purely due to their actions as a company. Unlike international aviation, Australian domestic aviation is a free market, and market forces are clearly against Rex, and they should respect that.

3. For the “lifeline” regional routes, the government can just strike deals with QF, Link and FlyPelican so they start flights to Rex-monopoly regional destinations. Not to mention that Alliance Airlines have a lot of potential as well.

The government should let it crumble.

 

[henrus]

Why should they bother to save it?

They might do something because of the regional routes.

 

[RSVKanga]

They might do something because of the regional routes.

See the posts above. We have four other airlines capable of flying to those regional destinations, and the government can just strike deals with them.

Rex regional of 2019 is not the Rex regional of 2024. There are now only 3 Rex monopoly destinations in NSW, for example. Parkes, Narrandera and Moruya. I’m sure that QF, Link, Alliance or Pelican will be happy to fly those routes if given the appropriate government support.

 

[RSVKanga]

I've just had a look at the Rex map. There are only a few Rex monopoly destinations in Australia, excluding the Qld government subsidised network. So any talk that a potential Rex collapse will leave regional Australia "disconnected from the world" is overblown.

Rex-monopoly destinations in 2024:

Parkes
Moruya
Narrandera
Ceduna
Coober Pedy
Carnarvon
Monkey Mia
Albany
Esperance
QLD connection network

I think these destinations could easily be served by other airlines if the appropriate government support is given. It could be that Qantas starts flights to Albany and Esperance, Alliance takes over the QLD network, Coober Pedy, Ceduna, Monkey Mia and Carnarvon, Link Airways takes over Narrandera and Parkes, and Pelican starts flights to Moruya.

 

[yachty]

There's probably two likely scenarios if Rex is truly having issues.

1. If (and a big if) they go into administration it would be used to release the 737 leases and get back to their airwork and regional ops. Saab-only Rex didn't exactly print cash but it was a little moneyspinner for a long time. A buyer would probably need to think about fleet replacement though. There are a lot of Dash 8s on the second hand market, and with the government easing up on the regional security screening requirements it could time to upgauge what they can.
2. An overseas operator picks them up, Pionair and Skytrans having both been bought out recently in that manner. Rex also has a lot less liabilities for anyone in the market for an Australian jet AOC so anyone who took a look at Bonza could be a candidate.

It's very unlikely Rex will totally cease to exist, and likewise that the government would intervene.

 

[MooTime]

I've just had a look at the Rex map. There are only a few Rex monopoly destinations in Australia, excluding the Qld government subsidised network. So any talk that a potential Rex collapse will leave regional Australia "disconnected from the world" is overblown.

Rex-monopoly destinations in 2024:

Parkes
Moruya
Narrandera
Ceduna
Coober Pedy
Carnarvon
Monkey Mia
Albany
Esperance
QLD connection network

I think these destinations could easily be served by other airlines if the appropriate government support is given. It could be that Qantas starts flights to Albany and Esperance, Alliance takes over the QLD network, Coober Pedy, Ceduna, Monkey Mia and Carnarvon, Link Airways takes over Narrandera and Parkes, and Pelican starts flights to Moruya.

View attachment 399170

Leave Qantas to Project Sunset.

Leave Rexy to regional.

 

[MEL_Traveller]

See the posts above. We have four other airlines capable of flying to those regional destinations, and the government can just strike deals with them.

Rex regional of 2019 is not the Rex regional of 2024. There are now only 3 Rex monopoly destinations in NSW, for example. Parkes, Narrandera and Moruya. I’m sure that QF, Link, Alliance or Pelican will be happy to fly those routes if given the appropriate government support.

But… the whole benefit of having four operators is competition, and competition for pricing of subsidised regional services.

The tax payer benefits from this.

 

[Harrison_133]

They seem to be having reliability issues with the Saab operation at the moment, particularly out of Melbourne.

Today, only one Saab flight from Melbourne is on-time (to KNS). MEL-BWT/WGA have +1 hour delays, while MEL-DPO/MIM/MQL all have 4+ hour delays.

Yesterday was a similar story, with most Saab flights from Melbourne delayed by a couple of hours, including cancellations and 5+ hour delays on MEL-MGB/WGA.

Looking at the FlightRadar history, these Saab reliability issues out of Melbourne have been happening for at least the last week or so.