Rex to fly between Australian capital cities

[Bagpuss]

Is this the best Rex can do? Seems to be in all major papers today. Not sure if it is the BEST way of spending advertising $$, just bagging a competitor?

It's also misleading.
Rex is actually stating they will provide a credit OR a refund if the cancellation is due to covid.
Qantas and Virgin are essentially offering a credit without fees for a period of time regardless of reason.

The question I have, when Rex provide a refund are they also refunding any credit card surcharges as well, as some operators wont refund it, although they should. (Though I do believe the cosumer needs to understand to sell services and then refund does cost them money in terms of staffing etc.)

 

[Mattg]

Rex's MEL-CBR launch has been pushed back to 18 June (was 10 June) due to the lockdown in Melbourne.

Seems fair enough.

 

[luke100]

I’ve noticed that the SYD-OOL 8:30am flight and OOL-SYD 10:30am has been cancelled for Tuesday (8/06) and Wednesday (9/06). I wonder if this is because of low numbers. Does Rex do this often?

 

[henrus]

Does Rex do this often?

Yep, earlier this year they canceled flights before the MEL-SYD route even launched.

Rex isn't alone, all of the airlines do it but I guess the impacts are more noticeable given far less alternatives.

 

[ANstar]

I do wonder what Rex's strategy is. Lately I seem to think they want to make as much noise as possible focussing on QF as a distraction.... When their real target is VA.
ie.. upset Bain enough to think they will affect a potential Virgin IPO ($3.5bn at risk) that it forces Bain to buy them out to enable a successful IPO. ($200m cost).
A bit left field but certainly possible.

 

[henrus]

I do wonder what Rex's strategy is. Lately I seem to think they want to make as much noise as possible focussing on QF as a distraction.... When their real target is VA.

It's quite obvious why they're doing it. Rex is still a regional carrier, most of their flights are still regional services, VA doesn't really have a single regional service.

If QF really wanted to they could launch onto many of the Rex routes overnight and theoretically destroy them. QF has launched onto several Rex routes over the past 12 months and this is clearly upsetting Rex hence why ZL has been very vocal about QF recently.

If I were Rex I'd be worried, whilst the QF Dash-8 fleet is quite busy right now, the reintroduction of larger aircraft is a concern, a B787/A330 frees up B737's which can free up B717's which can free up Dash 8's.

 

[dajop]

I do wonder what Rex's strategy is. Lately I seem to think they want to make as much noise as possible focussing on QF as a distraction.... When their real target is VA.
ie.. upset Bain enough to think they will affect a potential Virgin IPO ($3.5bn at risk) that it forces Bain to buy them out to enable a successful IPO. ($200m cost).
A bit left field but certainly possible.

I do wonder if not Rex’s strategy, then PAG’s strategy (who provided the capital for the Jet expansion). It would be logical teaming (VA And Rex) to carve out some space against QF/JQ.

 

[jakeseven7]

I do wonder if not Rex’s strategy, then PAG’s strategy (who provided the capital for the Jet expansion). It would be logical teaming (VA And Rex) to carve out some space against QF/JQ.

It’s pretty clear their jet ops operate in Bain/VA2’s space, I wonder if it is a strategy to force Bain to the marriage alter at some point. Which wouldn’t be such a bad idea.

 

[Must...Fly!]

It’s pretty clear their jet ops operate in Bain/VA2’s space, I wonder if it is a strategy to force Bain to the marriage alter at some point. Which wouldn’t be such a bad idea.

IIRC Rex were the ones who spat the dummy when they had a partnership of sorts with VA (interline baggage for example)

 

[eastwest101]

It's quite obvious why they're doing it. Rex is still a regional carrier, most of their flights are still regional services, VA doesn't really have a single regional service.

If QF really wanted to they could launch onto many of the Rex routes overnight and theoretically destroy them. QF has launched onto several Rex routes over the past 12 months and this is clearly upsetting Rex hence why ZL has been very vocal about QF recently.

If I were Rex I'd be worried, whilst the QF Dash-8 fleet is quite busy right now, the reintroduction of larger aircraft is a concern, a B787/A330 frees up B737's which can free up B717's which can free up Dash 8's.

Its not as simple as that, Qantas dont have enough small Dash 8 200s and 300s to cover the smaller regional towns that Rex operate to. Even Dash 8 -400s are too many seats for many Rex destinations.

Reactivating large aircraft and capacity dumping in the larger cities just to free up smaller aircraft would destroy yields and drive Jetstar out of business because if you can fly SYD-MEL for $19 on Qantas then Jetstar has no reason to exist, and would crush the only profitable part of Qantas at the moment, its domestic ops.

If there were an endless cheap supply of low time Dash 8 -200s and -300s sized aircraft then Rex might be worried.

Whats the point of sending Rex broke anyway? Rex could go broke tomorrow and hand back its B737s to leasors and I garantee you that by Thursday an act of parliment would be in place supporting someone else (maybe even Bain?) flying Saab 340s from capital cities to regional towns. Because no politician wants to tell a regional town they cant have an air service and if they dont have an air service then they have to start closing hospitals, government services and police stations, and thats a sure way to lose an election.

Other peoples points about Rex and Virgin having definite synergies is blindingly obvious to everyone in the industry, except for the current and previous blockheads in the board rooms of Virgin and Rex.

 

[HS-TQE]

Considering both VA and ZL are majority owned/run by Private Equity (USA's Bain and Singapore's PAG) it would take convincing of the stubborn lot in both entities that a JV will "make a return" on their investments.

 

[dajop]

Considering both VA and ZL are majority owned/run by Private Equity (USA's Bain and Singapore's PAG) it would take convincing of the stubborn lot in both entities that a JV will "make a return" on their investments.

Would have thought that the return for Bain would come when they want to float or sell VA. Competitor gone and a profitable regional business as a side bonus would increase what they could get for VA. Is that enough for PAG though?

 

[MooTime]

No chance VA2/Bain would be interested in Rexy....they have old old VA 737's, no customers & lot of regional routes with various plane types that VA are simply not interested in. Saab's that VA def don't want.

The stretch of VA competing with QF on regional routes is just not reality.

Interesting to see where Rexy goes from here, but I'm very happy with VA, QF & JQ, great range of options for all flyers IMO.

 

[dajop]

No chance VA2/Bain would be interested in Rexy....they have old old VA 737's, no customers & lot of regional routes with various plane types that VA are simply not interested in. Saab's that VA def don't want.

It's not about the assets, who cares about a few 737's? But they are no doubt putting some pressure on VA margins, in the short term. If Bain were interested at all (hypothetical, not saying they are interested), it's about shutting down competition to inflate the sale price when they put VA on the market. I'm sure they're also not interested in the Saabs to operate, but can the markets the Saab operate in, add additional margin to deal when they sell as well. They probably don't care what happens beyond, say 2025/26, just need to get the valuation of the business up before then to dupe someone who wants to make a small fortune ( ) in aviation to by the whole package.

 

[AIRwin]

Rex should GA-rab them:

Garuda Indonesia says to return two Boeing jets to lessor

Flag carrier Garuda Indonesia (GIAA.JK) will return two Boeing B737-800 jets to one of its lessors before their lease term ends as part of its efforts to improve its finances, the airline said in a statement on Monday.

www.reuters.com

 

[henrus]

Rex should GA-rab them:

Garuda Indonesia says to return two Boeing jets to lessor

Flag carrier Garuda Indonesia (GIAA.JK) will return two Boeing B737-800 jets to one of its lessors before their lease term ends as part of its efforts to improve its finances, the airline said in a statement on Monday.

www.reuters.com

I think there are plenty of other 737's that they could also get before them.

Regardless, most of the Australian public doesn't rate Indonesian aviation very highly (our media do a good job bashing on them) and I can just imagine headlines like "Rex gets two new 737s from Garuda Indonesia", it probably wouldn't go down very well.

Garuda has some very old 20+ year 737's (perhaps the two in question) which I guess could fit in well with Rex's aged fleet however with J12 Y150 or J12 Y162 configs it'd mean Rex would end up with less than 10 aircraft and 3 different configs.

 

[Bagpuss]

They probably don't care what happens beyond, say 2025/26, just need to get the valuation of the business up before then to dupe someone who wants to make a small fortune ( ) in aviation to by the whole package.

You think every shareholder in every company thinks of the long term future? Of course not, there’s day trading and lots of strategy’s .
Quite simply, anyone who invests in a company does so to make a profit. Private equity, shareholders, loans etc etc.
Also, most of these investments have touch points at the least to get their funding from pensions / superannuation.
Even some companies you wouldn’t expect have an investment arm, which includes Coca-Cola.

 

[dajop]

You think every shareholder in every company thinks of the long term future?

No, of course not. I'm not sure I was suggesting they would care about long term future, no judgement. Most analysts and amateurs alike seem to talk about Bain's strategy in the context of the idea they flip companies within a 4-5 year timeframe. As a result, I'd suggest they're not concerned about profitability in the next year or two, but want to dress it all up for a sale around the 2025/6 timeframe. Thus don't really care one way or another if their lumbered with a few old 737s if it eliminates a competitor before they want to sell (of course Rex probably will kick an own goal anyway and eliminate themselves).

 

[Bagpuss]

No, of course not. I'm not sure I was suggesting they would care about long term future, no judgement. Most analysts and amateurs alike seem to talk about Bain's strategy in the context of the idea they flip companies within a 4-5 year timeframe. As a result, I'd suggest they're not concerned about profitability in the next year or two, but want to dress it all up for a sale around the 2025/6 timeframe. Thus don't really care one way or another if their lumbered with a few old 737s if it eliminates a competitor before they want to sell (of course Rex probably will kick an own goal anyway and eliminate themselves).

I do understand the comment and lots of people make it. However, the context is totally out of place.
VA went into administration which allowed contracts to be torn up, cost reductions and a total (including future liability) of $6 billion.
Granted Bain may pour in $1 billion and already have liabilities of $1 billion.
But the thought of Bain selling it at a profile saddling it with future debt so they get a healthy profit is strange as that's almost saying they would saddle with more than $6 billion.

Chances are they will sell for $3 to $4 billion. Having poured in around $1. 5 billion and the company having about $1.5 billion in liabilities.

That's just great business which took advantage of the voluntary administration.

 

[jakeseven7]

No, of course not. I'm not sure I was suggesting they would care about long term future, no judgement. Most analysts and amateurs alike seem to talk about Bain's strategy in the context of the idea they flip companies within a 4-5 year timeframe. As a result, I'd suggest they're not concerned about profitability in the next year or two, but want to dress it all up for a sale around the 2025/6 timeframe. Thus don't really care one way or another if their lumbered with a few old 737s if it eliminates a competitor before they want to sell (of course Rex probably will kick an own goal anyway and eliminate themselves).

Agree and of course they don’t care, that’s the Bain/PE model and anyone else thinking they will be making decisions any differently with Virgin mark 2.0 is in cloud cuckoo land.

Now that doesn’t mean a Bain VA2 won’t be better than VA1 - because VA1 was a disaster from a business perspective, so in order to sell it it will have to be in better shape than when they picked up the ashes!