Rex to fly between Australian capital cities

[MooTime]

Thats going to burn some Singaporean dollars…

VA2 are burning through their master Bains money too - apparently have had a big fat US dollar cash injection to stay afloat…

And QF are burning through Shareholders money via last placement.

 

[eastwest101]

I think once this round of state border restrictions is over - if it were any other industry except the airlines it would have been good for the management of Qantas, Virgin, Rex, Jetstar and Alliance to all get together and issue a joint statement that the next state to impose a state border restriction will be made an example of, and will get a month of absolutely no interstate or intrastate flights operating to any of that state for a few weeks, including all freight and possibly resource charter/football flights etc.

I reckon a month of that would alter nearly any state premier's behavior, especially the large geographic states. They would only need to do it to one state and that would be a pretty sufficient warning for any other megalomaniac premiers to draw some learnings from.

 

[henrus]

I reckon a month of that would alter nearly any state premier's behavior, especially the large geographic states. They would only need to do it to one state and that would be a pretty sufficient warning for any other megalomaniac premiers to draw some learnings from.

Just the thought of that is quite amazing but I'd guarantee if any airline (or all ) tried to pull that stunt, the feds would step in quite quickly.

 

[jakeseven7]

And QF are burning through Shareholders money via last placement.

Absolutely. At least they have a vast majority of all freight domestically.

 

[HS-TQE]

Thats going to burn some Singaporean dollars…

VA2 are burning through their master Bains money too - apparently have had a big fat US dollar cash injection to stay afloat…

Not good for the Singapore PE and USA PE companies trying to outdo each other, especially when the former at times seems to be trying to get their USA counterparts to buy em.

 

[eastwest101]

Just the thought of that is quite amazing but I'd guarantee if any airline (or all ) tried to pull that stunt, the feds would step in quite quickly.

What are the Federal Government going to do? Cancel their AOCs? Commandeer their aircraft and fly them around empty with a few airforce pilots trained for the type? I could see the ACCC making noises about cartel behavior but that would take years to go through the courts.

Airlines can't be compelled to fly routes with their own crew and aircraft, they are privately run businesses and make their own decisions about where and when they operate.

 

[henrus]

What are the Federal Government going to do?

Hasn't this kind of already happened. Rex complained that they'd ditch routes and magically $$$ appeared. I'd imagine if they offered enough funding then any airline couldn't say no.

 

[moa999]

I reckon a month of that would alter nearly any state premier's behavior, especially the large geographic states.

Given the WA and Qld election results, I think theyd just tell them to ... Off

 

[eastwest101]

Given the WA and Qld election results, I think theyd just tell them to ... Off

I think a month of no freight, no mail, all tourism operators shut down, no pax services, and shutting down all the FIFO resource operations might be pretty persuasive.

 

[moa999]

Interesting to compare the relative share price performance of REX and AQZ (Alliance) post this announcement..

REX leased 737s for capital city route.
AQZ leased Embraer 190s for regional/FIFO routes and has placed most of the aircraft with Qantas.

 

[jakeseven7]

Interesting to compare the relative share price performance of REX and AQZ (Alliance) post this announcement..

REX leased 737s for capital city route.
AQZ leased Embraer 190s for regional/FIFO routes and has placed most of the aircraft with Qantas.

And Bain/VA2 will be fuming they took those extra 737s now which will just be sitting on the tarmac What a giant mess for all.

 

[HS-TQE]

And Bain/VA2 will be fuming they took those extra 737s now which will just be sitting on the tarmac What a giant mess for all.

What probably saved Bain some $ in the losses is the the per/hour lease agreement with the lessors, which in other times would be a standard lease agreement would be more costly in losses..

 

[henrus]

And Bain/VA2 will be fuming they took those extra 737s now which will just be sitting on the tarmac What a giant mess for all.

Doubt it... VA and ZL are both paying per hour they use their 737's. Whilst there are some small ongoing costs like parking them (some of which may also have been reduced by airports), it shouldn't be that big of an impact compared to other carriers who are leasing the aircraft regardless of use.

 

[HS-TQE]

Doubt it... VA and ZL are both paying per hour they use their 737's. Whilst there are some small ongoing costs like parking them (some of which may also have been reduced by airports), it shouldn't be that big of an impact compared to other carriers who are leasing the aircraft regardless of use.

I know of VA operating with a lease agreement of per-hour basis on many of their 737s, but wasn't aware REX was as well.

My first thought is the lessors would have a cheaper fixed rate for REX (although a bit more expensive than the per-hour basis).

 

[jakeseven7]

Doubt it... VA and ZL are both paying per hour they use their 737's. Whilst there are some small ongoing costs like parking them (some of which may also have been reduced by airports), it shouldn't be that big of an impact compared to other carriers who are leasing the aircraft regardless of use.

Basically you are correct but there are more overheads than that unfortunately including a retainer to the lessor… which is increased sunk costs now.

And it also bites them when they do start flying because for that flexibility they pay more in variable costs which means their cost base is higher than JQ, Rexy and probably QF Link.

 

[henrus]

I know of VA operating with a lease agreement of per-hour basis on many of their 737s, but wasn't aware REX was as well.

Scrap that... you're right (my mistake), Rex isn't getting power-by-hour leases. VA definitely is with all their aircraft but ZL is paying ~$60,000 per month for each 737 they lease (according to an Australian article). If that article is correct Rex is paying ~$1970 per aircraft per day which across their fleet of 6 aircraft is $11,820 per day or ~$82,740 per week.

I wonder if they have renegotiated to power by hour instead? given the next few weeks are going to cost them big time!

 

[HS-TQE]

Scrap that... you're right (my mistake), Rex isn't getting power-by-hour leases. VA definitely is with all their aircraft but ZL is paying ~$60,000 per month for each 737 they lease (according to an Australian article). If that article is correct Rex is paying ~$1970 per aircraft per day which across their fleet of 6 aircraft is $11,820 per day or ~$82,740 per week.

I wonder if they have renegotiated to power by hour instead? given the next few weeks are going to cost them big time!

The Per Hour basis doesn't apply to all leased aircraft. If I recall it applies to those aircraft that went back to the USA and have since returned to the fleet.

VA's former outright owned 737 aircraft is still under a mortgage arrangement with the banks, which is one of the few remaining legacies from their VA Mk I days.

 

[jb747]

Power by the hour refers to engines, not aircraft. They are dealt with separately.

 

[Must...Fly!]

Power by the hour refers to engines, not aircraft. They are dealt with separately.

It refers to aircraft, they are leased per hour in some cases, it became rather important and more popular for both sides last year. Few alternatives.

Aircraft lessors test charging ailing airlines by the hour

Today's stopgap power-by-the-hour agreements with ailing airlines test the viability of a future all-inclusive leasing model.

theaircurrent.com

 

[Scarlett]

I think once this round of state border restrictions is over - if it were any other industry except the airlines it would have been good for the management of Qantas, Virgin, Rex, Jetstar and Alliance to all get together and issue a joint statement that the next state to impose a state border restriction will be made an example of, and will get a month of absolutely no interstate or intrastate flights operating to any of that state for a few weeks, including all freight and possibly resource charter/football flights etc.

Whilst this would be very interesting to see, the respective PR departments will never let it happen. Especially not when there is an easier alternative: the airlines get together and go see the minister for transport and tell them they're all going bankrupt at pretty much the same time. Same effect: no mail, no airfreight, no regional services (actually that should say 'minimal' not 'no'). Watch the federal guarantees for funding of loans fly then!

You know, I remember flying in a C-130E between SYD-MEL (or vv) back in 1989 was it? Might we see Trojan Air (C-130J) or Dragon Air (KC-30A) flying stranded domestic pax some time in 2021...