Originally Posted by
Icarus2001
Well that is what the market thought of REX yesterday. Around a 13% drop in the share price. The graph shows five years of activity.
There is no question that their jet plan relied on Virgin being out of the market. I am not sure they had a contingency for if Virgin continued to operate.
Given that in 2020 VA were less than 50/50 to survive and become the next AN, REX would have had rocks in it's head not to take a chance on filling the potential void
1) Covid impact would not last forever
2) Big chance VA were history
3) Even if VA were saver it was looking like the revived airline would resemble Ansett Mark 2
3) Plenty of cheap 737s available, along with crew
Very few people counted on what Bain managed to achieve with VA though
This obviously left REX in a dilemma as to which way to go forward
Rather than a rapid growth to 30+ frames, they slowed growth way down and seem to be doing ok thus far
Where did they go wrong ?
They took a punt on VA going busto
That said, I have thought all along that their disconnected regional network was too reliant on their interline deal with VA in the first place
Even without the VA potential collapse, they could likely have put 30-40 pax on their 737s just from connecting pax they gave to VA, eg Wagga to Brisbane, add another 70-80 walk ups and you at least break even
Now REX will open new routes and add frequencies gradually topping up their fleet with 2-4 frames per year
As far as I am concerned, they have adapted well