Originally Posted by
PoppaJo
Rex might have a bucket of cash at the moment but the challenge the new operators continue to have down under is the ongoing ability to actually generate sustainable and continued earnings in the medium to long term.
Tiger was negative -$50m a year from the start. Could never ever stabilise any form of earnings. Sure they had very expensive equipment however Rex has the opposite issue, cheap equipment however questionable revenue.
It’s very easy for these type of players to generate a couple of million in earnings one year, then sink to something like negative tens of millions the following year. There is going to be a lot of capacity added in FY22 and 23 by the big players which will continue to dilute any earnings opportunity Rex has.
I’m not saying it’s not completely possible, but it’s going to be bloody hard for them to make any form of return that justifies continuing the operation into the future.
The biggest challenge will be trying to stand on their own feet once this cash injection dries up. If Virgin want to play games with capacity then they have no hope. I still think they should have gone down the ultra low cost route. Take the Tiger share, however they don’t have the expensive equipment that they did so earnings shouldn’t be as challenging.
To be honest, REX may be the last Airline standing who knows! one thing is for sure QF will be loosing money like they haven't before, we will know in August, how long can QF pay for a idle international business. As for VA far out I wouldn't leave REX to go back I don't think they will survive Bain don't seem like the company to keep tipping in money in a business thats based in a country that is backwards and third world. Would Rex accept a 320 rated pilot?!.
Like I have posted before, you're kidding yourself if you think you're flying Internationally by 2023.