apacau
7th May 2004, 02:13
From today's OZ.
I wonder what these new routes might be??? In terms of new aircraft, I know they have secured 2 "new" Saab340As.
Inspect a Rex and wag the tail
By Steve Creedy
May 07, 2004
REGIONAL Express has recovered from the brink of collapse to a profitability that the airline's co-chairman predicts will produce a return on capital most airlines still dream about.
Bleeding money at the end of last financial year, the restructured Rex expects a $1million profit in 2003-04 with a conservative estimate of a $5million windfall next financial year. Chairman and main investor Lim Kim Hai says this will allow a return on capital of at least 10 per cent as targeted by his executives.
It may be petty cash for the likes of Rex's cashed-up interline partner Singapore Airlines, but it marks a significant milestone for an airline almost written off as a basket case after a management spill last year.
"Obviously the numbers are mind-boggling for Singapore Airlines but if you bring it down to the same size we will be a more profitable company than this plane that is flying off to the horizon," Mr Lim said yesterday as a Singapore Boeing 747 roared past the window of the Rex lounge at Sydney Airport.
The 47-year-old Singaporean businessman was one of Rex's founding shareholders when the airline was formed from former Ansett subsidiaries Kendell and Hazelton in August 2002 and was instrumental in the changes that rocked the airline last year.
The shareholders ousted the existing board and management to take over direct control of Rex to address problems with its commercial viability.
The airline needed another cash injection and the investors were unsure at that stage whether it was worth saving.
Ultimately, said Mr Lim, it was the staff who helped save the day and convinced investors to refinance an existing loan and inject another $5 million into the carrier. "We realised that the company had a tremendous amount of human potential," he said.
"Most of the staff were passionate about their jobs and were very dedicated and they really wanted the company to succeed. That was actually the main reason why we decided as shareholders we would one more time put together the financial support that was needed to at least give it another chance - to see if we could bring the company around and make Rex a viable commercial venture."
Restructuring and a switch in strategy saw Rex move back into the black last October and it has remained there except for January. A particularly good March allowed the airline to claw back the losses of last year.
With two profitable quarters under his belt and a new management team in place, Mr Lim emerged this week to announce Rex is here to stay.
"We have two quarters of profit and we are confident this is going to be the trend ... we are sure this is going to happen - it's not our wishful thinking," he said.
"It's not our style to say things we're not confident of, so we've kept very quiet. Our managers have worked very hard and now we feel this is the right time to say we're here to stay and we're here to make a difference."
Much of the turnaround, according to Rex executive general manager, commercial, Hans van Pelt, was due to the airline's decision to change its pricing and marketing strategy.
Part of the airline's move to reduce costs involved a scheme to convince local councils to lower airport charges by offering to translate the savings to cheaper airfares. The council partnership and Rex's own initiatives have halved fares in some markets and cut them by 30 per cent in others.
Rex backed this with solid television campaigns in its key markets aimed at dispelling perceptions that it is too expensive to fly in regional Australia.
"The branding and marketing that was done was based on establishing the brand and creating some awareness about Rex," said Mr van Pelt. "One of the other changes we made last year was to forget all that and just start telling people what they needed to hear -- how much, how often and at what time. And that's really changed perception and awareness."
The good news for the airline's 584 staff is that increased awareness has translated into a 51 per cent increase in passenger numbers, enabling the airline to boost frequencies to markets such as the NSW regional centres of Lismore and Ballina.
With investors now convinced of the airline's viability, management is looking at expanding services to and beyond its 29 destinations in southeastern Australia and adding to the fleet of 20 34-seat Saab 340 planes and seven 19-seat Metro 23s.
A realisation in the market that the airline was here to stay had also sparked interest from international carriers and opened up "several opportunities", Mr Lim said. But the conservative Singaporean is not counting chickens before they are hatched.
"We'll still be very prudent for the next 12 months and we will not take giant steps," he said.
"But in our own small way we are already looking at expanding our fleet. We are in the process of buying some more aircraft. We have bought one and we are probably going to buy another three or four."
I wonder what these new routes might be??? In terms of new aircraft, I know they have secured 2 "new" Saab340As.
Inspect a Rex and wag the tail
By Steve Creedy
May 07, 2004
REGIONAL Express has recovered from the brink of collapse to a profitability that the airline's co-chairman predicts will produce a return on capital most airlines still dream about.
Bleeding money at the end of last financial year, the restructured Rex expects a $1million profit in 2003-04 with a conservative estimate of a $5million windfall next financial year. Chairman and main investor Lim Kim Hai says this will allow a return on capital of at least 10 per cent as targeted by his executives.
It may be petty cash for the likes of Rex's cashed-up interline partner Singapore Airlines, but it marks a significant milestone for an airline almost written off as a basket case after a management spill last year.
"Obviously the numbers are mind-boggling for Singapore Airlines but if you bring it down to the same size we will be a more profitable company than this plane that is flying off to the horizon," Mr Lim said yesterday as a Singapore Boeing 747 roared past the window of the Rex lounge at Sydney Airport.
The 47-year-old Singaporean businessman was one of Rex's founding shareholders when the airline was formed from former Ansett subsidiaries Kendell and Hazelton in August 2002 and was instrumental in the changes that rocked the airline last year.
The shareholders ousted the existing board and management to take over direct control of Rex to address problems with its commercial viability.
The airline needed another cash injection and the investors were unsure at that stage whether it was worth saving.
Ultimately, said Mr Lim, it was the staff who helped save the day and convinced investors to refinance an existing loan and inject another $5 million into the carrier. "We realised that the company had a tremendous amount of human potential," he said.
"Most of the staff were passionate about their jobs and were very dedicated and they really wanted the company to succeed. That was actually the main reason why we decided as shareholders we would one more time put together the financial support that was needed to at least give it another chance - to see if we could bring the company around and make Rex a viable commercial venture."
Restructuring and a switch in strategy saw Rex move back into the black last October and it has remained there except for January. A particularly good March allowed the airline to claw back the losses of last year.
With two profitable quarters under his belt and a new management team in place, Mr Lim emerged this week to announce Rex is here to stay.
"We have two quarters of profit and we are confident this is going to be the trend ... we are sure this is going to happen - it's not our wishful thinking," he said.
"It's not our style to say things we're not confident of, so we've kept very quiet. Our managers have worked very hard and now we feel this is the right time to say we're here to stay and we're here to make a difference."
Much of the turnaround, according to Rex executive general manager, commercial, Hans van Pelt, was due to the airline's decision to change its pricing and marketing strategy.
Part of the airline's move to reduce costs involved a scheme to convince local councils to lower airport charges by offering to translate the savings to cheaper airfares. The council partnership and Rex's own initiatives have halved fares in some markets and cut them by 30 per cent in others.
Rex backed this with solid television campaigns in its key markets aimed at dispelling perceptions that it is too expensive to fly in regional Australia.
"The branding and marketing that was done was based on establishing the brand and creating some awareness about Rex," said Mr van Pelt. "One of the other changes we made last year was to forget all that and just start telling people what they needed to hear -- how much, how often and at what time. And that's really changed perception and awareness."
The good news for the airline's 584 staff is that increased awareness has translated into a 51 per cent increase in passenger numbers, enabling the airline to boost frequencies to markets such as the NSW regional centres of Lismore and Ballina.
With investors now convinced of the airline's viability, management is looking at expanding services to and beyond its 29 destinations in southeastern Australia and adding to the fleet of 20 34-seat Saab 340 planes and seven 19-seat Metro 23s.
A realisation in the market that the airline was here to stay had also sparked interest from international carriers and opened up "several opportunities", Mr Lim said. But the conservative Singaporean is not counting chickens before they are hatched.
"We'll still be very prudent for the next 12 months and we will not take giant steps," he said.
"But in our own small way we are already looking at expanding our fleet. We are in the process of buying some more aircraft. We have bought one and we are probably going to buy another three or four."