Rex in voluntary administration, ending all 737 services

[Saab34]

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

This won’t be a Bonza as such, is profitable or near parts of the Rex group which will most certainly be sold off.

 

[Rabs97]

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.

Management’s fault. Rex jet’s success was predicated on VA failing. They said so in investor briefings. Their refusal to back down from the 737 operation is just them not wanting to lose face and admit they made a bad decision. The other factor I think is the fact Sharp’s allies in the Coalition were voted out of power. They provided the cash injection to start up the jet operation, and perhaps they assumed a friendly government would help prop up the jet operation in the future.

Now the current government may rescue the regional arm and the charter arm (mining companies won’t like FIFO contracts being disrupted) but the future of the 737 capital city operation doesn’t look bright.

 

[HS-TQE]

How does that work with leases? Ie if they decided to pull back to 5/6 Jets. Wouldn’t you need to pay out the lease?

Don't see a drastically reduced Jet operation at REX assuming they do file voluntary administration. If it does survive it'll either be most jets survive (with the exception of the x2 20 year old non-bsi 737s), or they're closing the 737 operation entirely.

 

[MooTime]

Management’s fault. Rex jet’s success was predicated on VA failing. They said so in investor briefings. Their refusal to back down from the 737 operation is just them not wanting to lose face and admit

As it was in their investor briefings their plan was based on VA failing and basically disappearing then the investors put their investment cash into something that was far from set in stone.

The day VA went 2.0 was the day the briefing based investment was on tender hooks.

 

[Mattg]

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.

True on the first point, but they’re not getting $379 for most of those seats. A majority (well over half) of J seats are being filled by free or cheap upgrades.

 

[SCM]

Rex's heart is no longer in the country?

Rex lobs bid for Australia’s Antarctic operations after profit downgrade

The Antarctic program will require one large intercontinental passenger jet, four intercontinental turboprop aircraft and four twin-engine helicopters.

www.smh.com.au

Some of Antarctica is still part of Australia!

 

[antycbr]

Don't see a drastically reduced Jet operation at REX assuming they do file voluntary administration. If it does survive it'll either be most jets survive (with the exception of the x2 20 year old non-bsi 737s), or they're closing the 737 operation entirely.

I think the latter is on the cards. ZL was largely profitable for two decades after being formed from the ashes of AN, before any forays into 737s.

They really should partner with VA rather than going up against them. With VA withdrawing their ATRs they complement each other. But now VA is working closely with Link Airways instead.

 

[Saab34]

Obviously huge upside for VA financials and its float if the Rex 737s go, the Saab’s they wouldn’t really care much about them being here or not which won’t have much impact either way on VAs market share.

We have essentially gone back to 2006 on the market share front before Tiger arrived. Just the three left now, assuming the 737s go. Will hit pricing but I don’t think Rex has had that much impact anyway, certainly on J pricing however they have, but Y they have been flying very light at times, a flight that has only been moving 50/60 people won’t have that much of an impact if it’s taken away.

 

[drron]

The problem is many of those regional centres can't profitably run with larger aircraft than the Saabs. Putting Dash 8s on a lot of the routes would mean poor loads and reduced frequency.
Having 4 airlines competing on those routes is absolute nonsense. It wouldn't help the taxpayer at all. there is simply not the demand for more than 1 airline on a lot of the routes. fares would go up not down.
I worked for 17 years working at regional and rural hospitals. The people living there deserve an air service. Of our exports the overwhelming majority come from regional and rural areas.
I have travelled on many of Rex's Saabs to the smaller centres.

 

[antycbr]

Obviously huge upside for VA financials and its float if the Rex 737s go, the Saab’s they wouldn’t really care much about them being here or not which won’t have much impact either way on VAs market share.

We have essentially gone back to 2006 on the market share front before Tiger arrived. Just the three left now, assuming the 737s go. Will hit pricing but I don’t think Rex has had that much impact anyway, certainly on J pricing however they have, but Y they have been flying very light at times, a flight that has only been moving 50/60 people won’t have that much of an impact if it’s taken away.

The loss of capacity will help both VA and QF weather the bigger issue which is the macroeconomic climate with interest rates and cost of living crises. I’ve seen a softening in loads on VA recently - the CoL crisis has to show up eventually.

 

[antycbr]

The problem is many of those regional centres can't profitably run with larger aircraft than the Saabs. Putting Dash 8s on a lot of the routes would mean poor loads and reduced frequency.
Having 4 airlines competing on those routes is absolute nonsense. It wouldn't help the taxpayer at all. there is simply not the demand for more than 1 airline on a lot of the routes. fares would go up not down.
I worked for 17 years working at regional and rural hospitals. The people living there deserve an air service. Of our exports the overwhelming majority come from regional and rural areas.
I have travelled on many of Rex's Saabs to the smaller centres.

Some centres may end up losing service - places like Narrandera aren’t too far from another point such as Griffith. The states already subsidise the true remote services such as the Queensland milk runs.

Qantas may have to change tack on the retirement of the Q300s.

 

[HS-TQE]

I think the latter is on the cards. ZL was largely profitable for two decades after being formed from the ashes of AN, before any forays into 737s.

They really should partner with VA rather than going up against them. With VA withdrawing their ATRs they complement each other. But now VA is working closely with Link Airways instead.

VA/VFF partners with both Link Airways and FlyPelican on regional NSW services, making the need for REX very much redundant for VA.

 

[antycbr]

VA/VFF partners with both Link Airways and FlyPelican on regional NSW services, making the need for REX very much redundant for VA.

Not so much unless you live in Wollongong, Newcastle or really like Inverell. ZL would add places like Broken Hill, Griffith, Dubbo, Tamworth, Albury and Wagga ex Sydney. Both Link and FlyPelican are very limited in Sydney, which also has slot issues.

Two of those destinations (ABX and TMW) VA served with the ATR.

 

[Saab34]

Bain won’t want to get distracted. They will gain more in margin from Rex simply leaving Jet ops vs spending cash beefing up regional connectivity.

 

[antycbr]

Bain won’t want to get distracted. They will gain more in margin from Rex simply leaving Jet ops vs spending cash beefing up regional connectivity.

I agree I am more thinking from the ZL side than VA.

 

[HS-TQE]

Bain won’t want to get distracted. They will gain more in margin from Rex simply leaving Jet ops vs spending cash beefing up regional connectivity.

Agreed. Which is why any speculation of VA "buying" REX is highly likely to be "fake news" IMO.

 

[henrus]

Oh well the AFR article this afternoon is amusing. I didn’t realise there was a claim Rex stole Saab parts from a wrecking yard during Covid yet to go to court on 9 August.

Additionally there is the comment that the exVA 737s Rex originally got for $180k per month has normalised to market rates.

It almost seems like voluntary administration would be good to solve the mess.

 

[UP4014]

How does that work with leases? Ie if they decided to pull back to 5/6 Jets. Wouldn’t you need to pay out the lease?

There would be a cost for sure, but the lease company might take a deal now rather than push and risk getting nothing later.

 

[Saab34]

Oh well the AFR article this is amusing. I didn’t realise there was a claim Rex stole Saab parts from a wrecking yard during Covid yet to go to court on 9 August.

I will side with the wrecking yard on that one.

 

[antycbr]

I will side with the wrecking yard on that one.

Rex will claim that the parts fell off one of their aircraft that happened to be flying in the vicinity. Like a propeller or something.