Australian carrier Rex to buy Cobham Aviation's mining charter service unit
ReutersJuly 15 (Reuters) - Australian carrier Regional Express
(REX.AX) said on Friday its unit would buy aviation operator Cobham's fly-in fly-out (FIFO) business National Jet Express (NJE) for A$48 million ($32.41 million), marking its entry into the charter servicing sector.
The deal comes at a time when regional heavyweight Qantas Ltd
(QAN.AX) is looking to expand its footprint in the charter business, with the proposed acquisition of Alliance Aviation Services
(AQZ.AX) in an A$610.8 million deal.
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Report an adRex's bigger peers Qantas, Virgin Australia and Alliance Aviation are the dominant players in the Australian FIFO sector, where service providers ferry workers and miners to remote mining sites instead of total relocation.
The acquisition of NJE, which provides freight services from Sydney to other neighbouring states, as well as air charter services in Papua New Guinea, gives Rex additional eight Bombardier Q400 turboprops and six Embraer E190 jets, it said
Report an adNJE generated a revenue of A$142 million in 2021, Rex added.
The carrier will fund about 50% of the deal through its joint venture partners who agreed to convert debt funding into newly issued shares in NJE to ease the carrier's "debt burden".
"The joint venture will invest in modern aircraft and technology to enable NJE to expand from its traditional bases of WA (Western Australia) and SA (South Australia) and bring our unique brand of FIFO services also to Queensland and Northern Territory," Rex Executive Chairman Lim Kim Hai said.
Cobham Aviation counts diversified natural resource company Glencore Plc
(GLEN.L) and nickel-lithium miner IGO Ltd among its customers.
Rex's shares were up 4.1% at A$1.27 as of 0011 GMT. The stock, however, has lost nearly 12% in value so far this year.
(This story corrects to South Australia and not South Africa in paragraph 7)
($1 = 1.4808 Australian dollars)