Originally Posted by
1A_Please
They are able to keep going because their regional franchise is profitable so the cash isn't running out as fast as it would otherwise. At some point, some shareholders are going to start asking some questions as to why so much money is being pi$$ed up against the wall at which point a class action against directors is not out of the question.
I think it’s burning more than you think. Rex during last decade only had earnings of around $15m after tax each year.
They don’t give a whole heap of detail around operating costs inside the 737 operation but you can get a rough estimate with the detail they have given, plus or minus won’t be a whole lot off. Say an average operating cost of $10k per flight assuming unhedged and based on today’s rising oil price. Assuming leasing costs have now doubled which was quoted somewhere. Average load seems to be about 30 bodies. $3k revenue/ flight, 120 flights a week, $1M loss per week.
Tiger also burnt about $50m year on startup however had the opposite issue with high equipment costs/full loads, we are dealing with low equipment costs, high oil prices and little revenue in this situation. Rex needs to slash airfares to save itself.