Rex in voluntary administration, ending all 737 services

[simmomelb]

Fairly sure there are penalties for ending leases earlier than planned. It may depend on how long those leases were signed d for.

There will (likely) be penalties, but is it financially viable to fly half-empty aircraft (in some cases) until the end of the lease or transfer a lease? Something Deloitte will need to establish.

 

[eastwest101]

Used for parts, just as QF cannibalised end of life aircraft including their 747 and 380 for parts.
ZL has probably the world's largest inventory of SAAB340 parts.

Back in 2013 ZL purchased from another large US Saab340 operator their entire spare parts inventory. The press release mentioned that their inventory would assure another 15 years operation from 2013. That would be 2028.
Can't fly any aircraft without available spare parts and no doubt they have been keeping an eye out for airframes and parts over the years.


Dont forget NZ, Canada. They will get them wherever they can.

Yes exactly - Rex always had a plan to maximize the life of its Saab 340 fleet by buying lots of aircraft/parts and having spare frames to cannibalize for parts, just like any operator of an aircraft that has been out of production for a while. There is nothing new or unique in that situation and its especially relevant as a direct 1 for 1 replacement does not even exist yet, not even on the drawing boards. This plan preceded COVID-19 and the launch of the B738 jet operations.

Its a smart practice and allowed Alliance to source and operate their Fokker F100 fleet until prices of used E190s dropped to acceptable levels for their capital profile.

 

[Saab34]

I think condensing the frequencies is going to be the first step here. Back to 4/5 aircraft, pull back the frequencies, push the aircraft harder. Markets like OOL can probably go, after all, it’s only 2 flights per day.

They are just too heavy on MEL-SYD, SYD-BNE. They seem to be the worst two performing, especially off peak. Probably half the frequency can go. Something needs to be done with a ‘lite’ fare also. Business Class just hasn’t worked. They should really have 186 seats.

30 odd Saab’s and 4/5 737s?

 

[Quickstatus]

direct 1 for 1 replacement does not even exist yet

The closest is the ATR42 and at least some former Saab340 operators have transitioned to this.
Their other problem is keeping their pilots from being poached.

They should really have 186 seats

Would that not reduce their per seat yield even more? Maybe there is a sweet spot somewhere.

 

[Saab34]

Would that not reduce their per seat yield even more? Maybe there is a sweet spot somewhere.

I feel like they need to play more the high volume/lower pricing game. Average a 50-60% LF on the current yield strategy isn’t working.

I don’t think they actually need to do that much to push revenue. A ‘Lite’ fare that competes closer (not on par, but closer) with Jetstar is a must, especially when you look how short all these block times are on the network. That drives significant revenue and passenger growth in itself. BOB and really try to drive ancillary is also something that needs to be considered. I think they just need to walk away from the whole J idea.

Rex pricing strategy needs to be between JQ and VA.

 

[MEL_Traveller]

I feel like they need to play more the high volume/lower pricing game. Average a 50-60% LF on the current yield strategy isn’t working.

I don’t think they actually need to do that much to push revenue. A ‘Lite’ fare that competes closer (not on par, but closer) with Jetstar is a must, especially when you look how short all these block times are on the network. That drives significant revenue and passenger growth in itself. BOB and really try to drive ancillary is also something that needs to be considered. I think they just need to walk away from the whole J idea.

Rex pricing strategy needs to be between JQ and VA.

business class is fine if you can’t fill your planes anyway! they get $379 for at least one seat that they would otherwise have got $109 for, or even nothing for.

I don’t think their business was competitively priced however given the lack of FF program. Rather than upping their fares, they should have kept them at $299 and marketed it as PEY.

 

[simmomelb]

Some news outlets are reporting Rex is going into voluntary administration later this week.
Not sure how true that is :/
I guess we will know within 24 hours unless they ask for an extension on their ASX trading halt.

 

[henrus]

Some news outlets are reporting Rex is going into voluntary administration later this week.
Not sure how true that is :/

Regardless of how true it is, as it starts spreading travellers will be unlikely to book new flights on the airline just in case things go under.

 

[marki]

Seems the rumour mill is suggesting Deloittes have been asked to help re-structure the business. Same people who did the Virgin turnaround.

SeatBackForward Cheer up

 

[Saab34]

News is spreading pretty quick, seems like Sky has been doing interviews over it, in this new age of digital news, doesn’t take long for the word to get around.

Confidence will be all but lost now. Incredibly damaging to any future bookings, seems like it’s as good as done.

 

[MooTime]

Whatever price REX put on many flights and certainly J cabin, VA always matched so dropping their price wouldn't necessarily benefit bottom line.

 

[pauly7]

Interesting comments from the government…

I wonder given their regional operations whether help will come - if required. I doubt the jet service would be supported, but regional ops potentially yes….

 

[Saab34]

Interesting comments from the government…

I wonder given their regional operations whether help will come - if required. I doubt the jet service would be supported, but regional ops potentially yes….

Assuming it would be business as usual while administrators are appointed.

I can see the Saab/NJE/Pelair/Contracts ops being bundled together and sold without the debt.

The Academy and 737s no chance.

I’m still no fan of taxpayer cash being used to fund what is nothing but management incompetence that led them here.

 

[simmomelb]

Assuming it would be business as usual while administrators are appointed.

I can see the Saab/NJE/Pelair/Contracts ops being bundled together and sold without the debt.

The Academy and 737s no chance.

I’m still no fan of taxpayer cash being used to fund what is nothing but management incompetence that led them here.

Yeah, I don't see any Government backing any airline moving forward (post COVID lockdowns). It's a sensitive issue.

They'll either need to reduce in size, considerably or it's all over.

 

[brokenagain]

Their other problem is keeping their pilots from being poached.

Not ‘poached’ (that’s simply the line John Sharp likes to push), it’s simply market forces at play. Treat staff as terribly as Rex do, they are naturally going to move on. In fact, shortage of pilots and engineers are a large reason that Rex are in the position they are in now. Rex management have finally reaped what they’ve sowed for a very long time.

Post automatically merged: Jul 29, 2024

Their other problem is keeping their pilots from being poached.

Not ‘poached’ (that’s simply the line John Sharp likes to push), it’s simply market forces at play. Treat staff as terribly as Rex do, they are naturally going to move on. In fact, shortage of pilots and engineers are a large reason that Rex are in the position they are in now. Rex management have finally reaped what they’ve sown for a very long time.

 

[Saab34]

The Australian is reporting it was EY reviewing the books not Deloitte.

I assume EY conducting the review, and Deloitte will be the administrators.

 

[henrus]

The Australian is reporting it was EY reviewing the books not Deloitte.

So it's either that or the media are unable to tell the big 4 apart. Sky News this arvo were reporting saying it's EY but then the Australian over the weekend said Deloitte.

One things for sure, with VA/QF/JQ flights being so full, if you do have a ZL booking on a mainline route in the next couple of weeks it might be worthwhile thinking of a backup.

 

[Rabs97]

Not ‘poached’ (that’s simply the line John Sharp likes to push), it’s simply market forces at play. Treat staff as terribly as Rex do, they are naturally going to move on. In fact, shortage of pilots and engineers are a large reason that Rex are in the position they are in now. Rex management have finally reaped what they’ve sowed for a very long time.

Employees are not slaves. If they wish to seek employment elsewhere then that’s their right. Disgusting any business executive thinks otherwise.

Truth is pilots will get paid at least double flying a jet vs flying a Saab. Why would they stay? A regional airline is always going to be a stepping stone in a pilot’s career to bigger and better things, and no crying about “poaching” will ever change that.

 

[MooTime]

What a disaster if rexy collapses.
Of course life will go on, but 2 airlines Gonski in 2024 & just ticked over half way.

Doesn't say a lot for certain management know it alls.
Or is it just a tough landscape here in Aus to be successful. Airline wise.

 

[Saab34]

So it's either that or the media are unable to tell the big 4 apart. Sky News this arvo were reporting saying it's EY but then the Australian over the weekend said Deloitte.

Same reporter talking to Sky, I think she has been informed with some more details this arvo.

EY reviewing makes sense, and Deloitte being the administrators has possible leaked out a bit early hence the halt, assuming the announcement was about to hit this week regardless.