And just to complicate everything further, Rex has announced the purchase of Sunshine Express - their march continues and the rumour of moving to Qld is confirmed...
Press release attached below;
Media Release
REGIONAL EXPRESS TO ACQUIRE SUNSHINE EXPRESS
14 August 2006
Regional Express Airlines (Rex) announced today that it has fast tracked discussions
with Sunshine Express Airlines of Queensland to acquire its entire regional airline
operation.
In a joint media release made today, Managing Director of Sunshine Express, Mr Steve
Padgett, revealed that Sunshine Express and Rex had been in dialogue regarding the
possible merging of the two operations.
“We identified last year that as a small regional airline we have limited economies of
scale and a high cost of operation and regulatory compliance. We also needed
significant investment in new aircraft and resources to better serve the growing regional
Queensland market and to be a viable activity in the long term.” Mr Padgett added that
this requirement, had led to the commencement of discussions with Rex about a merged
operation.
“The need for greater support became more apparent recently when an accident caused
substantial damage to one of our Metro 23 aircraft during routine maintenance by a third
party resulting in the aircraft being permanently grounded. This led to a substantially
reduced capability to meet our schedules with the high degree of integrity necessary for
a regional airline,” Mr Padgett said.
Giving details of the background to the merger, Rex Managing Director, Mr Geoff Breust
said that Rex first held discussions with Sunshine Express last year but was reluctant at
that time to take on the added responsibility given its own significant expansion plans.
“However, the grounding of the damaged Sunshine Express aircraft and difficulty in
finding replacement aircraft resulted in Rex being informed that Sunshine Express’
position was becoming untenable and the future of its services and the 40 staff of the
airline were at stake. In discussions between the airlines, Rex and Sunshine Express
agreed in principle to merge so that there was a future for the airline, the air services and
the staff.
“We at Rex have gone through this experience twice in the last five years and we fully
empathise with Sunshine Express and its staff. We believe that they are motivated, loyal
and passionate about their work and we feel that they too deserve renewed
opportunities, just as what Rex was given after its precarious first ten months of
operations,” Mr Breust said.
“Then came QantasLink’s announcement late last Friday of its intention to fly into Hervey
Bay and Biloela from Brisbane, flying in competition with its alliance partner, Sunshine
Express.
“Rex’s initial reaction was to abandon the whole idea of a merger with Sunshine Express
as Rex already has a major expansion and a lot of work on its plate. Nevertheless, we
felt that such a reaction was selfish and not consistent with our mission of connecting
regional Australia. Taking the easy way out could mean the potential loss of vital air
services to seven regional centres from Brisbane and 40 jobs at Sunshine Express. We
felt we have an obligation to step up to the mark,” Mr Breust said.
“Rex will consult with all stakeholders involved – Sunshine Express, the local councils
representing the communities involved and the State Government of Queensland. If
there is a strong consensus and resolve, Rex will take up the challenge to take over and
improve on the current network.”
Commenting on QantasLink’s decision, Mr Padgett said that he was very disappointed
by this outcome. “QantasLink withdrew from the Wide Bay in 2002. Whilst Sunshine
Express has been able to operate the routes profitably, the situation is not much
changed today and I do not see any commercial reason for QantasLink to recommence
flying from Brisbane to Hervey Bay and Bileola.”
The parties have reached agreement in principle on the key commercial terms of the
deal. In the proposed transaction, all the shares in Sunshine Express will be transferred
to Rex for a nominal consideration. Following the acquisition, Rex will use its best
endeavours to bring in the resources necessary to improve the quality and reliability of
the services and to upgrade the services in ports that have potential. These proposed
initiatives are intended to provide for the continu ation of air services between Brisbane
and the regional centres of Maryborough, Hervey Bay, Biloela, Port Macquarie, Coffs
Harbour, Armidale and Tamworth.
Mr Breust added, “We have given our commitment to a mixed 34 seat Saab / 19 seat
Metro operation just as we have successfully done in other States. We plan to eventually
bring two Saab 340s into the Sunshine Express network.”
Rex will spend the rest of the week in consultation with the stakeholders.
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