REX to transition to ATRs, start domestic jet ops

[SHVC]

How far does $150m take 6 jets? Surely longer than 6 months?

[galdian]

During the interview for a position mention was made that they (being the beancounters/upper management I assume) had done their homework and expected substantial oncarriage from their regional routes, sounded a bit iffy at the time purely based on volume of travellers.

Clearly the incumbents offer enough so that REX have not established a presence ML-SY-ML and probably won't....for now.

Only hope would appear to swing into the Tiger leisure market, maybe try and develop new/under served routes and then maybe....maybe have another go at the golden triangle later with better brand recognition.

Unless there's a desire or need to lose XXXX amount of $$ you can't sustain the unsustainable.

[1A_Please]

It will last a while but directors have a responsibility to protect their shareholders' and creditors' money. If directors are found to have acted recklessly, they do make themselves personally liable. If they are hopelessly losing money, they have to take action before the end.

VA directors did the responsible thing last year and called in administrators rather than waiting until receivers were brought in which probably ended up with a much poorer outcome for employees and creditors including Velocity members.

[pinkpanther1]

Interview with John Sharp on the today show this morning. Claiming Qantas has been capacity dumping, says QF flights are up 80% since rex started ML to SYD (somehow doesn't make the link between borders opening and flights increasing). You'll need a 9 account but worth a watch.
https://www.9now.com.au/today/2021/clip-cko7rr88e000s0ip1n9sb2vnb

[1A_Please]

JS just on 3AW and told some classic porkies.

When asked if he was losing money on $39 fares, he said REX has always been profitable since it was founded but didn't answer the question. He did say passenger handling charges by gov't and airports is $30 per passenger. So if he has 40 passengers on a flight (good but unlikely for REX!!!) he has a whole $360 to cover leases, maintenance, fuel and staff.
He also said they are debt-free and owe no-one anything which is a complete mischief when the jet fleet is leased which accounting standards say must be held as liabilities on the balance sheet.
He was asked if he would consider only taking pax who had vaccination passports. Given his current situation, he'd probably gladly take the revenue of a person straight out of ICU with Covid.

[blubak]

JS just on 3AW and told some classic porkies.

When asked if he was losing money on $39 fares, he said REX has always been profitable since it was founded but didn't answer the question. He did say passenger handling charges by gov't and airports is $30 per passenger. So if he has 40 passengers on a flight (good but unlikely for REX!!!) he has a whole $360 to cover leases, maintenance, fuel and staff.
He also said they are debt-free and owe no-one anything which is a complete mischief when the jet fleet is leased which accounting standards say must be held as liabilities on the balance sheet.
He was asked if he would consider only taking pax who had vaccination passports. Given his current situation, he'd probably gladly take the revenue of a person straight out of ICU with Covid.


Heard some of the same interview,didnt seem worried or concerned but good spin doctors are gifted in that area.

[MickG0105]

Heard some of the same interview,didnt seem worried or concerned but good spin doctors are gifted in that area.
You know the saying, if you can keep your head when all about you are losing theirs ... then there's a very good chance that you have no idea what's going on.

[430W]

Does JS really think about what he says. QF and VA are only putting back capacity that they removed due to Covid-19 and they are still not back where they were pre the pandemic.

They have a responsibility to compete and protect their market share particularly when you have someone like Rex that are using the fact they they received a very big payment from JS's mates in the Coalition that wasn't provided like for like to both VA and QF. This is going to end in tears and is another example why governments should not try and pick winners.

I wonder how JS performs with the other aviation companies he is involved in. They are certainly not parading him around!

[Agent_86]

Jet* and VA have both dropped MEL/SYD fares to $39 after JS baited them...

[MickG0105]

Jet* and VA have both dropped MEL/SYD fares to $39 after JS baited them...
Baited?!

As Green.Dot noted at #997 (https://www.pprune.org/australia-new-zealand-pacific/633642-rex-transition-atrs-start-domestic-jet-ops-50.html#post11037396) Virgin had released $39 MEL-SYD fares yesterday, well before Sharp's media run this morning.

And spare a thought for the financial mechanics of what's going on here. There is a marked difference financially between an airline with 80-odd percent load factors offering $39 fares and an airline with sub-30 percent load factors offering them.

[1A_Please]

Baited?!

As Green.Dot noted at #997 (https://www.pprune.org/australia-new-zealand-pacific/633642-rex-transition-atrs-start-domestic-jet-ops-50.html#post11037396) Virgin had released $39 MEL-SYD fares yesterday, well before Sharp's media run this morning.

And spare a thought for the financial mechanics of what's going on here. There is a marked difference financially between an airline with 80-odd percent load factors offering $39 fares and an airline with sub-30 percent load factors offering them.
The mechanics are very different as you point out. VA can sell 10 $39 seats that they would have previously sold as Velocity reward seats and actually be better off financially and still have an average seat price across the plane of, say, $175 and have successfully diverted 10 pax away from REX. REX are unable to sell 20 seats on a flight when they are only charging $69. Even if they double their seats sold to 40 @ $39, they are only clearing $9 per pax once airport and gov't charges are included so that is a whole $360 for themselves for the whole flight....hardly a recipe for success.

[pinkpanther1]

At this point it's simply a war of attrition. Surely JS can see that he will be the weakest player here?

[ANstar]

Jet* and VA have both dropped MEL/SYD fares to $39 after JS baited them...

Jetstar are down to $30. Unlike Rex, both VA and JQ have buy on board that can help boost revenue.

[On eyre]

At this point it's simply a war of attrition. Surely JS can see that he will be the weakest player here?

And they worry about people who play the pokies ? I suppose it’s different when you’re using other people’s (shareholders) money 😳

[Australopithecus]

The mechanics are very different as you point out. VA can sell 10 $39 seats that they would have previously sold as Velocity reward seats and actually be better off financially and still have an average seat price across the plane of, say, $175 and have successfully diverted 10 pax away from REX. REX are unable to sell 20 seats on a flight when they are only charging $69. Even if they double their seats sold to 40 @ $39, they are only clearing $9 per pax once airport and gov't charges are included so that is a whole $360 for themselves for the whole flight....hardly a recipe for success.

They aren’t clearing $9/pax because there’s still the other $10,000/hr expenses to cover. So a Mel-Syd has something like a $14,640 loss. So they are probably planning to lose a tonne of money on every flight and make it up with frequency. Oh wait...

[pinkpanther1]

So at around 5 SYD-MEL daily, 7 days a week that's just over $1mil lost a week on that route alone...

[Ladloy]

They aren’t clearing $9/pax because there’s still the other $10,000/hr expenses to cover. So a Mel-Syd has something like a $14,640 loss. So they are probably planning to lose a tonne of money on every flight and make it up with frequency. Oh wait...
Their leases are 25k per month for each aircraft. Is that quite cheap? Understandably that is only one cost of many.

[PoppaJo]

The Australian

Regional Express Airlines will pay as little as $60,000 a month per aircraft to lease six former Virgin Australia Boeing 737s, which will be used on the lucrative Melbourne-Sydney route.

Although deputy chairman John Sharp would not discuss the leasing arrangements, it is understood the $60,000 a month cost will rise to $100,000 a month after the first 12 months.

[TBM-Legend]

....plus reserves, plus insurance, plus enroute and landing and terminal fees plus plus plus....

[turbantime]

Judging by lead-in fares for the next couple of days it appears that VA have mostly sold their $39 fares whereas Rex’s cheapies are still for sale. Make of that what you will.

[Australopithecus]

$60K AUD per month is dirt cheap. In 1990 a 737 cost $300,000/ month. Interest rates on commercial leases were (I think) 11%

Figure out if you'd be happy to get that kind of return on a $100 million asset. (I know, I know...they’re old aircraft but since 737s are only really good for about 20 years, you really would need about $7 million/yr average to break even. (Back of the envelope calcs)

I wonder if they are paying for engine time separately?

[PoppaJo]

So at around 5 SYD-MEL daily, 7 days a week that's just over $1mil lost a week on that route alone...

Tiger lost 20m in its first four months and 50m the following FY. However they had fuel at $150 and equipment costs about x10 that of Rex.

However Tiger did have a LF at 90%. Some form of revenue to cushion the blow.

[Paragraph377]

Their leases are 25k per month for each aircraft. Is that quite cheap? Understandably that is only one cost of many.
Yep, a very cheap deal. And one you would expect during ‘these unprecedented times’ and having so much tin parked in deserts and around empty airports. But as has been mentioned, add ancillary costs to that and all the other bits and bobs and the grand total is a little bit more than $25k. Regardless, at $39 per passenger head and let’s say a (generous) load factor of 40%, REX are simply not making money on the 737 operation. It’s a dud. Sharp is a dud. Their so-called business strategy is the behemoth of all duds.

But wait, with JQ dropping fares to $30 Mr Sharp will be crying into a tissue on the A Current Affair hotline and over Rod Sims desk by 0900 Tuesday morning.

[Chris2303]

But wait, with JQ dropping fares to $30 Mr Sharp will be crying into a tissue on the A Current Affair hotline and over Rod Sims desk by 0900 Tuesday morning.

But didn't Sharp challenge the others to match him? Rod Sims will laugh him out of the office if that is the case.

https://australianaviation.com.au/2021/05/rex-beckons-rivals-to-match-its-39-sydney-melbourne-sale/?utm_source=AustralianAviation&utm_campaign=03_05_2021&utm_medium=email&utm_content=1&utm_emailID=868b40e94843dda62b254a4ee32eba8a19cb139cdc0f1085 44b4eb88ba48d592

[TimmyTee]

According to Sharp, $30 fares between Mel and Syd are:

"This is why Rex is good for Australia and why Australia needs Rex. For the first time ever Australians can have premium reliable domestic air services at honest prices"

An honest price? It doesn't even cover the cabin crews' wages alone with the loads his airline is carrying.
Operating deliberately at a huge loss and claiming it's the standard is absolutely not "honest"

[pinkpanther1]

Would someone with a bit of Knowledge of the relevant laws be able to clarify, is this kind of practice even allowed? To sell fares that rex knows are completely unviable, surely this breaches some sought of competition regs?

[Paragraph377]

According to Sharp, $30 fares between Mel and Syd are:

*This is why Rex is good for Australia and why Australia needs Rex. For the first time ever Australians can have premium reliable domestic air services at honest prices"

An honest price? It doesn't evem cover the cabin crews wages alonen with the loads his airline is carrying.
Operating deliberately at a huge loss and claiming it's the standard is absolutely not "honest*
If it is such a good thing then one would expect airfares to stay consistently at $30 for say the next 12 months, on every route?

Sharp sounds a little ‘Bransonesque’. When the billionaire tosser set up Virgin Blue he was dribbling crap like ‘Australia has been held ransom to an evil duopoly for too long’ and ‘this is for Australians, you deserve cheap airfares’. Perhaps old mate Sharp has been reading ‘Losing my Virginity’ or is he just using his political BS skills?

[MickG0105]

Would someone with a bit of Knowledge of the relevant laws be able to clarify, is this kind of practice even allowed? To sell fares that rex knows are completely unviable, surely this breaches some sought of competition regs?
The legality of pricing strategies under the Competition and Consumer Act 2010 largely comes down to a matter of intent. Generally it's not illegal to sell an item 'below cost', particularly if that decision forms part of a legitimate marketing strategy such as attracting new customers and gaining market share. Similarly, it is not illegal for Qantas and Virgin to match Rex's prices so long as their intent is simply to protect their business.

It would have been illegal if Qantas had have rolled out $39 fares that started a week before Rex launched and then carried on selling them till say the end of the year. That would likely meet the three elements of the test for predatory pricing, specifically that Qantas:

a. had substantial market power,
b. that the pricing strategy had an anti-competitive purpose, and
c. that the very low prices were sustained.

The fact that it is Rex who is leading the charge on low prices essentially absolves Qantas and Virgin from any entanglements when they price match. Just another master-stroke from dumb as a bag of hammers Sharp and Co. in Rex's self-induced exsanguination.

[Australopithecus]

Thanks for the explanation Mick.

also:


exsanguination.

triple word score

[pinkpanther1]

The legality of pricing strategies under the Competition and Consumer Act 2010 largely comes down to a matter of intent. Generally it's not illegal to sell an item 'below cost', particularly if that decision forms part of a legitimate marketing strategy such as attracting new customers and gaining market share. Similarly, it is not illegal for Qantas and Virgin to match Rex's prices so long as their intent is simply to protect their business.

It would have been illegal if Qantas had have rolled out $39 fares that started a week before Rex launched and then carried on selling them till say the end of the year. That would likely meet the three elements of the test for predatory pricing, specifically that Qantas:

a. had substantial market power,
b. that the pricing strategy had an anti-competitive purpose, and
c. that the very low prices were sustained.

The fact that it is Rex who is leading the charge on low prices essentially absolves Qantas and Virgin from any entanglements when they price match. Just another master-stroke from dumb as a bag of hammers Sharp and Co. in Rex's self-induced exsanguination.

Thanks for the explanation. So essentially, Rex is doing Qantas and Virgin a favour? They can beat these low price wars and do so quicker if rex is giving them the tools! Hilarious.

[TBM-Legend]

Would someone with a bit of Knowledge of the relevant laws be able to clarify, is this kind of practice even allowed? To sell fares that rex knows are completely unviable, surely this breaches some sought of competition regs?


Loss leaders occur everyday in supermarkets and in other places to entice customers to spend or to clear surplus or old inventory. That does not breach the TPA. Airline seats are inventory, but as the saying goes you cannot sustain a business by selling $10 tickets for $9......

[1A_Please]

The legality of pricing strategies under the Competition and Consumer Act 2010 largely comes down to a matter of intent. Generally it's not illegal to sell an item 'below cost', particularly if that decision forms part of a legitimate marketing strategy such as attracting new customers and gaining market share. Similarly, it is not illegal for Qantas and Virgin to match Rex's prices so long as their intent is simply to protect their business.

It would have been illegal if Qantas had have rolled out $39 fares that started a week before Rex launched and then carried on selling them till say the end of the year. That would likely meet the three elements of the test for predatory pricing, specifically that Qantas:

a. had substantial market power,
b. that the pricing strategy had an anti-competitive purpose, and
c. that the very low prices were sustained.

The fact that it is Rex who is leading the charge on low prices essentially absolves Qantas and Virgin from any entanglements when they price match. Just another master-stroke from dumb as a bag of hammers Sharp and Co. in Rex's self-induced exsanguination.
There is also the issue of the directors' duty of care to the shareholders. Directors cannot deliberately pursue a strategy that worsens the wealth of the shareholders and, if found to be acting against their fiduciary duties, they can be personally liable for losses. I would imagine class action lawyers are already paying careful attention to the behaviour of ZL's directors and may look to launch an action if the losses continue.

[MickG0105]

There is also the issue of the directors' duty of care to the shareholders. Directors cannot deliberately pursue a strategy that worsens the wealth of the shareholders and, if found to be acting against their fiduciary duties, they can be personally liable for losses. I would imagine class action lawyers are already paying careful attention to the behaviour of ZL's directors and may look to launch an action if the losses continue.
True but the good faith and best interest obligations on Directors are notoriously low bars to clear. And bear in mind that Rex's majority shareholding sits in the hands of half a dozen people headed by Lim. It would not be difficult to manufacture majority shareholder approval for any strategy that they want to run. Moreover, price point competition is a legitimate 'break in' tactic despite the overpowering whiff of desperation associated with this effort.

[1A_Please]

True but the good faith and best interest obligations on Directors are notoriously low bars to clear. And bear in mind that Rex's majority shareholding sits in the hands of half a dozen people headed by Lim. It would not be difficult to manufacture majority shareholder approval for any strategy that they want to run. Moreover, price point competition is a legitimate 'break in' tactic despite the overpowering whiff of desperation associated with this effort.
Getting a majority vote from a few large shareholders won't relieve the BoD of its responsibilities. It would be minority shareholders who didn't have board representation who would initiate an action against the BoD not the larger shareholders who the court would say had Board influence Class action lawyers are skilled in grouping these small shareholders together and getting funding from US investors who fund the claim action and take lots of the upside if they win.

[MickG0105]

Getting a majority vote from a few large shareholders won't relieve the BoD of its responsibilities. It would be minority shareholders who didn't have board representation who would initiate an action against the BoD not the larger shareholders who the court would say had Board influence Class action lawyers are skilled in grouping these small shareholders together and getting funding from US investors who fund the claim action and take lots of the upside if they win.
No one batted a class action eyelid as VA's board embarked on a decade of trashing shareholder value and VA had something like five times as many ordinary shareholders as Rex.

Never say never but I just can't see Rex shareholders going down that path - where's the pay day for a litigation funder? Rex's market cap is less than $150 million and less than half of that is in the hands of minority shareholders.

If it was to happen, it'd be on Rex's grave - the race will be well and truly run by then.

[flyhigherflybetter]

This onerous and ambitious jet foray by REX was only on the basis that Virgin disappeared, hoping for an Ansett-like collapse.

Now we have a price war where a meal and coffee at the terminal costs more than the fare itself. I’d imagine an A320 load of $30 fares + ancillaries would still bring in some sort of profit for Jetstar, but $39 fares on REX with single digit pax is just a nightmare.

If sustainability is of the question, methinks it’s going to be a very painful blow for those at REX, PAG will essentially own half the operation very soon. Wonder how the 737 and 340 crews are feeling at the moment, nerve wracking stuff going on...

[Paragraph377]

No one batted a class action eyelid as VA's board embarked on a decade of trashing shareholder value and VA had something like five times as many ordinary shareholders as Rex.

Never say never but I just can't see Rex shareholders going down that path - where's the pay day for a litigation funder? Rex's market cap is less than $150 million and less than half of that is in the hands of minority shareholders.

If it was to happen, it'd be on Rex's grave - the race will be well and truly run by then.

In the bigger scheme of things inside the corporate world, REX is a piddly little granule of sand on a large beach. Shareholders are too few and small in number to risk all for a few possible crumbs via litigation or a shareholder revolt. If REX was Amazon or Microsoft that would be a different story. Besides, BOD’s have it all in hand and have a plethora of legitimate excuses for any bad financial decisions - it was COVID’s fault, Alan was anti-competitive, the Stockmarket tanked, a sunspot affected the flight deck equipment in the old 737’s, Sharpies Mum fell over and broke her leg, someone pinched the keys to the corporate safe....and so it goes.

[Green.Dot]

Any updates? Are the $39 fares bumping up their load factors?

[Bull_Shark]

Any updates? Are the $39 fares bumping up their load factors?

Don’t know about $39 fares bumping up load factors, but it’s certainly not bumping up the share price!

[pinkpanther1]

$39 fares still available 40 mins prior to departure on a Friday. Hey, that's cheaper than my staff travel! 😂

[1A_Please]

$39 fares still available 40 mins prior to departure on a Friday. Hey, that's cheaper than my staff travel! 😂
Probably the best time to buy them. At least you know there is a good chance they'll still be flying in 3/4 of an hour.

[minigundiplomat]

That's the difference between Rex and Winter, right?

Winter will still be around after July.........

[On eyre]

That's the difference between Rex and Winter, right?

Winter will still be around after July.........

Nah - Winter will be here in June 😳😳

[SHVC]

Well, they're still employing pilots, they must be doing O.K and see some kind of future. They will still be around next yr.

[Going Nowhere]

Another Rex route sees competition from QF
https://www.qantasnewsroom.com.au/media-releases/qantas-heads-back-to-burnie/

Also doubling flights to Mount Gambier
https://www.qantasnewsroom.com.au/media-releases/new-routes-more-flights-as-jets-to-call-adelaide-home/

I can only imagine what Rex will have to say about that!

[transition_alt]

Another Rex route sees competition from QF
https://www.qantasnewsroom.com.au/media-releases/qantas-heads-back-to-burnie/

Also doubling flights to Mount Gambier
https://www.qantasnewsroom.com.au/media-releases/new-routes-more-flights-as-jets-to-call-adelaide-home/

I can only imagine what Rex will have to say about that!

Naturally, there'll probably be an announcement tomorrow they're commencing services to Devonport.

[SHVC]

$9 seats maybe

[airdualbleedfault]

Well, they're still employing pilots, they must be doing O.K and see some kind of future. They will still be around next yr.
Yep, sound logic, Air Australia (Strategic) were operating as if nothing was wrong 12 hours before they shut the doors

[430W]

Another Rex route sees competition from QF
https://www.qantasnewsroom.com.au/media-releases/qantas-heads-back-to-burnie/

Also doubling flights to Mount Gambier
https://www.qantasnewsroom.com.au/media-releases/new-routes-more-flights-as-jets-to-call-adelaide-home/

I can only imagine what Rex will have to say about that!


Was always going to happen.

[MickG0105]

Another Rex route sees competition from QF
https://www.qantasnewsroom.com.au/media-releases/qantas-heads-back-to-burnie/

Also doubling flights to Mount Gambier
https://www.qantasnewsroom.com.au/media-releases/new-routes-more-flights-as-jets-to-call-adelaide-home/

I can only imagine what Rex will have to say about that!
The usual. https://youtu.be/9PPv2R1laCo

[Stationair8]

In The Weekend Australian Business Review, high flying Hazelton hails Rex resurgence.

Somebody may be able to post the article, mine is the old fashioned newsprint version.

[MickG0105]

In The Weekend Australian Business Review, high flying Hazelton hails Rex resurgence.

Somebody may be able to post the article, mine is the old fashioned newsprint version.

Here you go, apologies if it hasn't formatted correctly.
High-flying Hazelton hails Rex resurgence
With the little airline he started in a paddock now taking on the likes of Qantas and Virgin, Max Hazelton sees good days ahead for Australian aviation.
By DAMON KITNEY

Of all the aircraft Max Hazelton has flown on over his 95 years, the Regional Express flight from Orange to Sydney on the afternoon of February 28 was extra special.

At his side was his only son Graham, better known by his nickname Toby, who often calls his dad “boss”.

The next morning, as the clock at Sydney Airport ticked over to 8.25am, they stood together at the arrival gate to greet Rex’s inaugural 737 jet service from Melbourne. The carrier was formed two decades ago from the merger of Kendall Airlines and the regional carrier Max Hazelton and his brother Jim started in 1953 called Hazelton Airlines.

“It was very hard not to have wet eyes because it was such a big day. They were looking after me extremely well with a wheelchair. It was an amazing day,’’ Max tells The Weekend Australian, his now permanently bloodshot eyes again turning misty for a moment behind his spectacles.

The jet was flown by captains John Veitch and Brett Brown, both ex-Hazelton pilots who took voluntary redundancies from Virgin Australia last year.

“They came home again,” Max says with a beaming smile. “ (Rex deputy chairman and former federal transport minister) John Sharp has been a magnificent person promoting things.”

After decades of competing head-on with Qantas on regional routes, Max is excited by what is known internally at Rex as “Project Mother”, its move onto Australia’s busiest air route using jets previously leased by the collapsed and now private equity-resurrected Virgin.

Rex is also flying jets from Melbourne to Adelaide and from Melbourne and Sydney to Coolangatta.

“The areas have got so big — like Melbourne, Sydney — and once this pandemic is over, I think people will start travelling tremendously. I think that Rex, with the service they are providing on the 737s, will take a lot of beating,” Max says.

This week Rex started a price war with its rivals, offering $39 trips between the two cities, less than the cost of a bus fare.

It sparked the biggest day of fare sales in Rex’s history, generating 10 times its normal daily ticket revenues.

“If they went any lower, we would have to pay people to fly with us. The $39 fare we are charging, most of that goes in airport taxes and charges and government taxes and charges. This is as low as they can go,” John Sharp quips.

He’s not surprised by the competitive response, which saw Virgin drop its fares to as low as $30. Jetstar and to a lesser extent Qantas also cut their prices. “We thought they would follow suit — they had to,” he says.

The move was about giving the public an incentive to try out the new Rex services.

Sharp describes Max Hazelton as the nation’s “greatest living aviator and an absolute pioneer in regional and agricultural aviation”.

“Because of his ingenuity, the regulator had to keep changing the laws to accommodate new things Max came up with,’’ he says.

“One of the great legacies of Max and Laurel is they created a family business culture which still runs thick through our business today and is the reason we have survived and a reason we are competitive not just in the regional space, but now the domestic space.”

Sharp is speaking of Hazelton’s wife of 64 years, who was missing from his side that February morning in Sydney after she couldn’t make the trip from Orange.

For decades she kept the Hazelton business wheels turning while her husband took to the skies, organising catering, pilot rosters and looking after the books.

Today she is sitting alongside him in their cosy home not far from the Orange city centre after Max, who now has a deep stoop when he stands, invited her to join our interview.

Above the dining table atop a cabinet are a decorated array of model Rex and Hazelton planes. On the adjacent wall hangs a stunning painting of one of Hazelton’s first Saab aircraft taking flight.

On the table is a signed copy of the book on Max’s life by author Denis Gregory titled “The Hazelton Story”, launched in 2014 by famed entrepreneur Dick Smith.

“I think I got caught. It was a busy life, I can assure you. Aviation is a very interesting, challenging life,” Laurel says. “We had well over 200 employees and they were fantastic employees.”

In 1953 Max started his charter airline service in a paddock at Toogong near Orange, after borrowing money from his mother to buy an old aeroplane.

He famously survived being lost for six days after walking 100km through thick bush when his plane crashed in bad weather returning from Sydney to Toogong, sparking what was then Australia’s biggest single rescue effort.

In 1959 he moved his operation to nearby Cudal where he and his pilots hand-built a runway and terminal and Hazelton Airlines soon became renowned for its cropdusting and then night aerial cropping, aerial fire fighting, flood relief and rescue work.

It gradually expanded to be a major passenger airline feeding country areas employing 270 staff, carrying 400,000 passengers a year to 23 country ports.

Max still drives his immaculately maintained white Holden ute around the streets of Orange, occasionally falling foul of the law.

“A policemen stopped me six months ago driving from downtown to home. He asked to see my licence. I said it was in my wallet, which I had lost the day before, and that I was going to the motor registry to get another copy of it. He went back to his car, got on the radio and came back to me and said I was OK to drive. But a few weeks later a letter came with a $150 fine,’’ he says.

“I rang the local member and he told me to write a letter so I wrote to Transport NSW and told them what I thought of them. And they dropped the fine.”

Also in his garage is a 20-year-old luxury Holden Statesmen, which has only travelled 50,000km, including a single trip across the Nullarbor Plain to Perth.

Max once famously locked horns with Bob Hawke and the ACTU by defying a union ban to fly live merino sheep out of Australia.

He also recalls flying Kerry Packer on several occasions from Sydney to his Ellerston polo property near Scone. “If you had any magazines on board, he would say ‘What have you got this bloody rubbish for?’ He wasn’t very talkative, but his wife was. His kids were small then,’’ Max says.

While he hasn’t flown in an aircraft for many years, he has fond memories of his time in the air, especially running Hazelton’s commuter operations.

“The flying was great. It was always a challenge. No two days were the same. From a very young age, I was very keen to fly,” he says.

But what he doesn’t miss is battling bigger rivals. “Everywhere we went, like Armidale and Tamworth, it was working quite well but then Qantas came in, cut the fares considerably, and basically killed us. Because we couldn’t operate because we were paying higher fees each month on the SAABs. We couldn’t cut prices to match them,’’ he says.

“They were fair old buggers doing that. Anywhere we went, they would cut the fares. That is the battle we had. Taking on the big boys like that is a very difficult situation.”

Rex has been criticised over the past year for the level of government subsidies it received at the same time as it was launching capital city jet services.

$62m of subsidies — including JobKeeper — kept it alive during the COVID pandemic when passenger numbers fell 80 per cent and the airline posted a bottom line $19.4m loss.

Rex’s move to launch jet services prompted Qantas chief executive Alan Joyce to reiterate his long-held belief that there was only room for two competitors in the domestic market, a position rebuffed by John Sharp.

Max Hazelton applauds Rex’s expansion plans, which are being partly bankrolled by Asian private equity PAG after it invested $150m into the company via a convertible note issue last November.

He still believes the 1994 decision to list Hazelton Airlines on the Australian Stock Exchange was wrong. A year later he stepped down as CEO of the airline after a boardroom fight for control of the company.

In 2001 the Hazelton family sold its Hazelton Airlines stake to Ansett after the then haemorrhaging domestic carrier won a takeover battle with Qantas. In September that year, Ansett collapsed and Hazelton and Kendall Airlines were also put into administration.

While he was no longer involved with Hazelton, Max was devastated.

“It was a silly mistake to go public and the whole thing was out of control. The float was the undoing of the whole show. Laurel and I were in America and someone from Ansett rang me at midnight US time and said they were going to make a bid for Hazelton. I said ‘You can do that if you want to’ because I was fed up with the board,’’ he says.

“I thought Ansett would be the best thing for us the way things were going. Ansett were good to us over the years. Then Ansett went under. We were horribly disappointed then because the whole thing had gone. We thought there would be no future for it at all. Then the Singaporeans came in and it lived another day.”

The executive chairman of Rex, Singaporean businessman Lim Kim Hai, bought majority control of Rex with his business partner Lee Thian Soo after it was launched from the merger of Hazelton and Kendall in August 2002. Interests associated with Lim now own 65 per cent of Rex.

While the Hazelton family has parted ways with Rex, Max and Laurel still have $10,000 worth of shares and attend each annual meeting as ambassadors of the airline.

The Hazelton name lives on in aviation through Toby Hazelton, who now runs his father’s agricultural flying operation, Hazelton Agricultural Services.

“It made it easier for me clientele-wise, because the name was there. But then I had to live up to the name. It has been a great thing for me,’’ Toby says of taking over the business three decades ago.

His daughter Georgia is now also flying, while his youngest son Jock is studying for his pilot’s licence while he completes year 12.

“It is a great thing for the family. I didn’t have to encourage it (flying) with my kids — it is in their veins I think,’’ he says.

Other members of the wider Hazelton family also fly for Rex, Qantas, Cathay Pacific and pilot private jets for wealthy clients in America.

Max will always consider his greatest contribution to aviation was to help country people travel further, faster than ever before. His legend will live on in Rex’s motto plastered on the livery of its new jet fleet: “Our heart is in the country”.

“In the early days we were using very small planes. It meant a hell of a lot to those people to spend the day in Sydney and be able to get home at night. That was the aim,” he says. “The aeroplanes coming up to the country towns, it has certainly helped them get bigger to support them.”

[minigundiplomat]

That’s so sweet,

He’ll be gutted when Sharpie tanks the company.

[MickG0105]

That’s so sweet,

He’ll be gutted when Sharpie tanks the company.
I was wondering if Max had a view on the recent FWC finding that Rex's General Manager – Engineering, the Deputy General Manager – Engineering and a Human Resources Adviser had engaged in persistent bullying of a LAME over his reporting of safety issues.

[dijical]

Anyone have any update on their loads? Has their dogfight with QF resulted in any more pax?

[Paragraph377]

Here you go, apologies if it hasn't formatted correctly.
Is Wendy still flying?

[regional_flyer]

-PAG was chartered by the Brumbies to fly CBR-BNE, gotta offset those $39 fares somehow.

[MickG0105]

Is Wendy still flying?
Qui est Wendy?

[PoppaJo]

Wendy is Max’s niece. Daughter of the late Jim Hazelton.

First female captain at Tiger. Last I heard was in SE Asia on the Airbus.

[MickG0105]

Wendy is Max’s niece. Daughter of the late Jim Hazelton.

First female captain at Tiger. Last I heard was in SE Asia on the Airbus.
Muchas gracias.

[SHVC]

-PAG was chartered by the Brumbies to fly CBR-BNE, gotta offset those $39 fares somehow.

Some how I don’t think they will offset their $39 fares. This would be a dirt cheap money loosing charter. Just trying to drum up future business. They could actually do ok put it I think.

[MickG0105]

High-flying Hazelton hails Rex resurgence
...
By DAMON KITNEY

... This week Rex started a price war with its rivals, offering $39 trips between the two cities, less than the cost of a bus fare.

It sparked the biggest day of fare sales in Rex's history, generating 10 times its normal daily ticket revenues.

​​​​​​...
I doubt very much that that '10 times its normal daily ticket revenues' could be true.

Pre-pandemic, pre-jet fleet Rex's daily passenger revenue averaged around $763,000. The notion that they took in $7.6 million in fare sales in one day is very highly unlikely. That would have meant that their jet ops raised something like $6.9 million in fare sales in one day, the equivalent of over 175,000 $39 fares.

Even if you allow for a mix of fare prices, to hit that '10 times its normal daily ticket revenues' number would mean selling about 100,000 fares (50,000 return trips). That's the equivalent of them selling a return trip every 1.7 seconds constantly across a 24 hour period. That just doesn't seem likely.

[Ollie Onion]

There is a massive difference between a single day of big revenues with the launch of loss making fares and maintaining that momentum over the medium term.

[MickG0105]

There is a massive difference between a single day of big revenues with the launch of loss making fares and maintaining that momentum over the medium term.
Absolutely. Rex is trying to play catch-up against two bigger gorillas with deep pockets. It's going to end in tears.

Of most concern for anyone associated with Rex is that they appear to be entirely bereft of anything even vaguely approaching a launch strategy. It was going to be nine return flights a day Sydney-Melbourne, followed by Brisbane. Instead we've got somewhere between three and six return flights a day between Sydney and Melbourne, and Adelaide and Gold Coast in the mix.

Gold Coast was only ever going to be a sugar hit during school holidays so now where are they? Playing a card that is guaranteed to lose money in the hope that it will eventually stop them losing money. It's like giving blood in the hope it will stop a critical haemorrhage.

Alan and Jayne must be loving this.

[SHVC]

I think they will do ok, QF will have massive losses with their international arm grounded untill 2023-2024 at least, how long can domestic carry those cost for?! VA well they’re not out of the woods yet. Don’t write Rex off just yet.

[dr dre]

I think they will do ok, QF will have massive losses with their international arm grounded untill 2023-2024 at least, how long can domestic carry those cost for?!

QF Domestic has been carrying International for most of their post privitisation existence. A lot of government backed charters, travel bubbles will pop up over the next year or so providing work for 787s and 330s and then it's only really the 380s that'll be on the ground for a substantial time. Government providing wage subsidies and refresher training costs for international crew.

Domestic is always the money spinner, and fact is for Rex they can't make money if domestically they're barely carrying any pax....

[Thumb War]

I think they will do ok, QF will have massive losses with their international arm grounded untill 2023-2024 at least, how long can domestic carry those cost for?! VA well they’re not out of the woods yet. Don’t write Rex off just yet.

Not sure what QF international doing little work has to do with the survival or otherwise of Rex. Unless you’re implying Rex will outlast QF and fill their shoes similar to DJ / AN in 2001?

[Ladloy]

Rex just announced that they expect a 'breakeven situation' for this FY

[Brakerider]

Rex just announced that they expect a 'breakeven situation' for this FY

Reading Rex media releases is akin to reading Chinese media

[MickG0105]

Rex just announced that they expect a 'breakeven situation' for this FY
I don't know who put that ASX announcement (https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02373080-2A1297328?access_token=83ff96335c2d45a094df02a206a39ff4) together but it is full of nonsense like this:

Rex’s cash position has improved exponentially. Without counting the cash injection of $50
million from the convertible note issued to PAG (out of a maximum of $150 million), Rex’s
unencumbered cash reserves increased by 1,000% compared to March 2020 due to the very
strong advanced bookings on its five new domestic and two new regional routes. Rex expects
this to improve further as more routes are introduced.
Monies received from ticket sales are not unencumbered, they are covered off on a dollar for dollar basis as Unearned Revenue under Current Liabilities.

It's worth noting that breaking even would likely mean that their jet ops is losing around $3 million a month, back of the napkin.

[KRUSTY 34]

I dunno,

How do you make a small fortune in the Airline business?

[minigundiplomat]

I hope Rex aren't deliberately misleading the ASX......

[airdualbleedfault]

Ah yes, the old "we're not making any profit but we have plenty of cash" now where have I heard that before. I tell you, you could not make this 5hit up :}

[MickG0105]

I hope Rex aren't deliberately misleading the ASX......
They're certainly being highly selective. Take the statement that they have improved their cash position by 1000 percent since March 2020 for example. The first thing to note is that 1000 percent of, or ten times, nothing is still nothing. Those who have been following along at home will remember that in March last year Rex were making media statements saying that cash was fast running out.

Their cash position as at March 2020 would likely have not exceeded around $3 - 4 million, if that. So now they might have $30-odd million in cash for forward ticket sales. That number means jot if it will cost them $50 million to operate the flights to satisfy those sales. There's the rub.

Separately, I'd be interested in how effective Rex's hedge book is - fuel prices are not going to be kind to them. Back of the napkin, even at $79 a ticket they need something like 40 pax on a Sydney-Melbourne flight just to cover the fuel (at $39 they effectively need a full aircraft just to cover fuel). I don't think that they are routinely hitting that number. When you add lease costs, wages and maintenance the numbers become diabolical.

[Bull_Shark]

So according to the Rex ASX statement,

- “..overall regional demand is back to 60% of pre COVID levels”,

- “..so regional capacity is therefore 35% of what it was pre COVID”

- .“Rex’s regional operations appear to be slightly loss making..”

- but “Rex’s cash position has improved exponentially”

So Rex expects to finish the FY in a “break even situation”.

So the cash position has improved exponentially from just 5 new domestic and 2 new regional routes?

[machtuk]

I hope REX survive for the foreseeable future as I have friends that got gigs with them that otherwise would have gone to the wall! Watching their share price trend downward is concerning -(
its an ugly industry these days full of uncertainty, I wish all employees luck-)

[minigundiplomat]

I hope REX survive for the foreseeable future as I have friends that got gigs with them that otherwise would have gone to the wall! Watching their share price trend downward is concerning -(
its an ugly industry these days full of uncertainty, I wish all employees luck-)

Agreed, but I think they would be ok if Rex went bang. Most of the routes are subsidised regional routes and someone will end up flying them. Personally I'd like to see more smaller players on those routes, especially if they are local, rather than one operator sucking money out of the Feds and employing failed pollies.

[Chris2303]

https://australianaviation.com.au/2021/05/rex-retaliates-and-says-it-will-rival-qantas-on-more-routes/Rex has promised it will launch more services on Qantas exclusive routes as the bitter row between the airlines over network expansion continues.

The regional carrier made the announcement alongside revealing its demand is back to 60 per cent of pre-COVID levels and suggesting the business expects to break even during FY2021.

Rex’s promise to take on Qantas marks another escalation in the war of words between the two airlines, which have for months (https://australianaviation.com.au/2021/02/qantas-attacks-rex-tantrum-as-it-axes-routes/) been launching services to destinations previously exclusive to each other.

In the last few weeks alone, Qantas’ chief executive Alan Joyce has mocked Rex’s “empty aircraft” (https://australianaviation.com.au/2021/04/joyce-says-propellers-literally-falling-off-rex-aircraft-in-withering-column/) while Rex deputy chairman John Sharp has said his rival is “technically insolvent”. (https://australianaviation.com.au/2021/04/rexs-sharp-says-desperate-qantas-is-technically-insolvent/)

more

[crosscutter]

Rex the street fighter has entered the boxing ring and come up against seasoned professionals. They are punching as hard as they can but a resurgent Virgin has everyone’s attention. Rex will need recapitalising to continue their battle and so their position will depend on the willingness of their Singaporean masters. Virgin is the real story to come (best LF last few months) no matter how often JS wants to pretend he’s significant or relevant.

[1A_Please]

Rex the street fighter has entered the boxing ring and come up against seasoned professionals. They are punching as hard as they can but a resurgent Virgin has everyone’s attention. Rex will need recapitalising to continue their battle and so their position will depend on the willingness of their Singaporean masters. Virgin is the real story to come (best LF last few months) no matter how often JS wants to pretend he’s significant or relevant.
You're right. VA appears to e doing very well at the moment. JH has forced a discipline on the business that it lacked over the past decade. She has not engaged in the stupid word games with Sharp leaving that the AJ but instead is responding as necessary taking advantage of the existing VA and Velocity customer bases.

It looks increasingly like Bain is going to make millions from its VA investment. I doubt Bain is interested in saving REX from its folly even though I think that was Sharp's fallback plan.

[PoppaJo]

JH has forced a discipline on the business that it lacked over the past decade.
Debatable. Possibly an optical illusion from what I’ve been told. Some old habits have apparently started to re surface again.

[DanV2]

Jayne did mention about carrying the pain of paying the costs of the $39 fares herself (against REX) for a bit.

https://www.afr.com/companies/transport/virgin-ceo-says-financial-pain-of-39-airfares-are-worth-it-20210505-p57p7x

[industry insider]

You're right. VA appears to be doing very well at the moment.

Deservedly. I have been using VA often over the last 3 months for inter and intra state business travel. The service has been top notch.

[pinkpanther1]

https://simpleflying.com/rex-orders-more-boeing-737/?utm_term=Autofeed&utm_medium=Social&utm_content=echo&utm_source=Facebook#Echobox=1620797820

Looks like they're so happy with the services that another 4 737s are on the way with JS claiming things are going better than planned! 🤔

[Colonel_Klink]

https://simpleflying.com/rex-orders-more-boeing-737/?utm_term=Autofeed&utm_medium=Social&utm_content=echo&utm_source=Facebook#Echobox=1620797820

Looks like they're so happy with the services that another 4 737s are on the way with JS claiming things are going better than planned! 🤔

Things are going that well.....or this was always the plan and they had no way of getting out of the additional 4 aircraft?

Having said that - they do need some sort of economies of scale to make this whole thing work....

[Bull_Shark]

So going back to the initial Rex strategy this is what they had to say about operating statistics and projections;

The best way to have a good handle on the revenue projections is to consider the following (using the Syd-Mel route as a guide) ▪ One aircraft carries about 300,000 pax a year at 80% load factor
▪ Average ticket price is $200 (pre-Covid)
▪ If Rex’s cost advantage is 30% then that means $60 per ticket
▪ Giving up $20 as fare discount and assuming the $40 as profits would translate to $12M profits per aircraft
▪ 10 aircraft would translate to $120M profits
▪ In reality, the average cost per passenger (crew, fuel, engineering, lease etc) for typical carrier would be about $50 ▪ Depending on where the average ticket price will land, the profits per aircraft could be very significant

Are Rex getting an 80% load factor?
Is the average ticket price $200?
Do they still think that 10 aircraft are going to “translate to $120M profits”?

[MickG0105]

https://simpleflying.com/rex-orders-more-boeing-737/?utm_term=Autofeed&utm_medium=Social&utm_content=echo&utm_source=Facebook#Echobox=1620797820

Looks like they're so happy with the services that another 4 737s are on the way with JS claiming things are going better than planned! 🤔
You cannot reasonably trust anything that bloke says. The other 4 737s are on the way likely for one reason - that's how Rex structured the leasing deal back late last year. The leasing would have been arranged as a package - there would have been some float in the delivery/acceptance schedule and Rex will have pushed that as far back as they can within the bounds of the deal. And given Rex's management and all the hoopla, another factor that is likely playing out is saving face.

Sharp also said
“I was talking to one of our pilots this morning. He says he’s never done a flight between Melbourne and Adelaide, or back the other way without 160 passengers onboard the aircraft that takes 165 passengers. So it gives you an idea of the load factors that we’re getting.

Does anyone believe any of that? ZL437 from Melbourne to Adelaide this morning will be flat out cracking 100 pax and ZL444 from Adelaide to Melbourne this afternoon will almost certainly have no better than a 50-60% load. And, of course, the Deputy Chairman seems unaware that 'the aircraft' actually takes 176 pax - 8 J, and 168 punters.

[1A_Please]

Quote:
The best way to have a good handle on the revenue projections is to consider the following (using the Syd-Mel route as a guide) ▪ One aircraft carries about 300,000 pax a year at 80% load factor
▪ Average ticket price is $200 (pre-Covid)
▪ If Rex’s cost advantage is 30% then that means $60 per ticket
▪ Giving up $20 as fare discount and assuming the $40 as profits would translate to $12M profits per aircraft
▪ 10 aircraft would translate to $120M profits
▪ In reality, the average cost per passenger (crew, fuel, engineering, lease etc) for typical carrier would be about $50 ▪ Depending on where the average ticket price will land, the profits per aircraft could be very significant
Are Rex getting an 80% load factor?
Is the average ticket price $200?
Do they still think that 10 aircraft are going to “translate to $120M profits”?

That is pretty damning. Cost per pax was estimated at $50 with a load factor of 80%. Currently it seems REX is getting a LF of around 40% at best meaning cost per pax is $100. At the same time they are flogging tickets for $39 so they are nowhere near their planned $200. $120M could still be the right figure just with a negative sign in front.

[flyhigherflybetter]

Just waiting for the entire operation to fizz out whilst munching on popcorn.

Sure, mid year school holidays might add some punters to backfill what would’ve been Tiger’s operation but other than that it’s bleeding.

Mates (who used to work at Rex) have issues with their terrible middle management and staff morale is at a terrifying low.

Qantas and Jetstar will live another day.
So too, will Virgin. I heard at the terminal the other day: “Rex who?”
Virgin still has name recognition and a loyalty scheme. What’s Rex going to offer? DingoDollars? RexDollars?

Everyone in Australia was already sold on the idea that if you ain’t going Qantas, then you going Virgin. JH seems to be doing a better job at V then at the star, as long as their old ways don’t creep back in, Rex will be gone in under 18 months.

[slice]

The question is, will the financial problems of the 737 operation bring the whole company to a halt ? Or have they managed to financially quarantine the profitable turboprop operations from the 737 ops ?

[KRUSTY 34]

The question is, will the financial problems of the 737 operation bring the whole company to a halt ? Or have they managed to financially quarantine the profitable turboprop operations from the 737 ops ?

Not sure of any “financial quarantine”, but it’s my understanding that both operate under the one AOC?

[MickG0105]

The question is, will the financial problems of the 737 operation bring the whole company to a halt ? Or have they managed to financially quarantine the profitable turboprop operations from the 737 ops ?
From publicly available information there's no financial firewalling between any of Rex's operations. The "parent" Regional Express Holdings has deeds of cross guarantee with all the Rex entities (eg Pel-Air, Rex Freight and Charter, Rex Investment Holdings, the Pilot Academy, etc). The debts of any entity become the debts of the parent and vice versa. Much like Billy Joel sang, "we'd all go down together".

[Trevor the lover]

What a bunch of morbid bastards you are, particularly the knob with the popcorn

[TimmyTee]

Probably no more morbid than the published REX playsheet which openly planned to capitalize on Virgin's demise.
I'd say that would have put more than a few affected people offside.

[Lookleft]

For those who remember Compass Mk I and II it all looks very familiar.

[minigundiplomat]

What a bunch of morbid bastards you are, particularly the knob with the popcorn

Got popcorn and beer to watch the John Sharpe sh1tshow end.... hate to think what that makes me.

[SHVC]

I have a beer and jerky watching his show.

[pinkpanther1]

What a bunch of morbid bastards you are, particularly the knob with the popcorn

If John Sharp and Rex weren't such poor sports people might be a little more supportive. The fact that they cry, moan and stomp their feet the second they don't get their way just puts people off. Any bad feelings people have for them have be brought upon themselves.

[Ladloy]

Can confirm it's a separate operation.

[Trevor the lover]

Sorry to call you morbid bastards with your popcorn and coke. Rather than reflecting on Sharp's behaviour, I tend personally to think of the huge amount of decent people trying to feed their kids. But if eating popcorn and hoping more people lose their livelihood is what brings you joy.....well, drink up.

[Trevor the lover]

Minigun......in my book, it makes you a heartless moron.

[snakeslugger]

What a bunch of morbid bastards you are, particularly the knob with the popcorn

Agreed! Some of the comments are absolutely appalling and to think some you were previous colleagues, beggars belief.

[cloudsurfng]

None of you batted and eyelid when other regionals were on the receiving end of rex’s predatory tactics though did you.

[Ladloy]

None of you batted and eyelid when other regionals were on the receiving end of rex’s predatory tactics though did you.
You don't think we all hated the company and their actions too?

[PoppaJo]

Looks like they are taking another Tiger Route. MEL/CBR Jet Ops twice a day from next month.

[minigundiplomat]

Minigun......in my book, it makes you a heartless moron.

Heartless I'll take. If you think John Sharp is leading Rex anywhere but the curved section of the dunny, then there is a moron responding to my post and its not this end......

[MelbourneFlyer]

Rex to start CBR-MEL B737 flights (not CBR-SYD Saabs) from June 10: https://www.executivetraveller.com/news/rex-melbourne-canberra-flights

[itsnotthatbloodyhard]

Rex to start CBR-MEL B747 flights (not CBR-SYD Saabs) from June 10: https://www.executivetraveller.com/news/rex-melbourne-canberra-flights

Goodness. They really are going all-in with their expansion into jets, aren’t they?

[SHVC]

When are they going to invest in some lounges? That’s what is need to lure the big paying business ppl JS wants to attract!

[MickG0105]

Rex to start CBR-MEL B747 flights (not CBR-SYD Saabs) from June 10: https://www.executivetraveller.com/news/rex-melbourne-canberra-flights
You've got to wonder what Rex's thinking is on route selection. CBR-MEL is not even in the top 10 of city pairs by pax volumes, typically seeing less than half the pax of ADL-MEL. And it's currently serviced by QF and VA.

Seems like Rex has more jets than good ideas currently.

[MelbourneFlyer]

I think the Rex strategy is to see which airports and tourism bodies will throw them the most money, and open routes to suit! But at the rate they're going launching into new routes with cut-rate fares and not seeing the sort of high passenger loads you'd want to be profitable, I have to wonder if Rex is going to be in this jet game by the end of the year, or even if it will just have cut back to a handful of triangle routes providing connections for its regional customers.

[No Idea Either]

Can confirm it's a separate operation.

I imagine that it would be very remiss, even a ‘corporate crime’ to have the two operations exposed to each other so I had assumed they were siloed. But since PAG is investing in the jets but converting their investment into general Rex shares, if the jets fall over and PAG takes a 42% (?) interest, diluting the shares in the process, how does this stand with the business and the Aussie shareholders......I guess they don’t get a say in the matter as the company is majority foreign owned.

[Ladloy]

I imagine that it would be very remiss, even a ‘corporate crime’ to have the two operations exposed to each other so I had assumed they were siloed. But since PAG is investing in the jets but converting their investment into general Rex shares, if the jets fall over and PAG takes a 42% (?) interest, diluting the shares in the process, how does this stand with the business and the Aussie shareholders......I guess they don’t get a say in the matter as the company is majority foreign owned.
if you look at the top 20 shareholders there's not much left to aussies.

[MickG0105]

Can confirm it's a separate operation.
Can I ask how they accomplished this separation? The jet ops are being flown under the same AOC as the Saab ops, aren't they? That AOC is held by Regional Express Pty Limited (ACN 101 325 642). Regional Express Pty Limited is also the registered operator for both the Boeings and the Saabs.

They may have separate operational staff and cost centres but from both the regulatory and financial perspectives both the jets and the Saabs sit under Regional Express Pty Ltd, the wholly owned subsidiary of Regional Express Holdings Limited (ACN 099 547 270). Regional Express Holdings Limited is the ASX-registered traded entity. Regional Express Pty Limited and Regional Express Pty Limited are bound by both ownership and deeds of cross guarantee.

Where's the separation?

[Ollie Onion]

Same as Qantas and Jetconnect or Jetstar and Jetstar NZ, technically both of these companies are crewing Companies that supply Pilots, Cabin Crew and RPT services to Qantas and Jetstar, Qantas and Jetstar ‘Lease’ the aircraft and trading facilities to these entities so that Jetconnect and Jetstar NZ use the AOC’s and Regulatory structure of the Clients. If Jetconnect or Jetstar NZ went bust then that operation would be wrapped up as a seperate entity and the ‘leasing’ ceases meaning that Qantas and Jetstar OZ have no liabilities from the bankruptcy.

[1A_Please]

Same as Qantas and Jetconnect or Jetstar and Jetstar NZ, technically both of these companies are crewing Companies that supply Pilots, Cabin Crew and RPT services to Qantas and Jetstar, Qantas and Jetstar ‘Lease’ the aircraft and trading facilities to these entities so that Jetconnect and Jetstar NZ use the AOC’s and Regulatory structure of the Clients. If Jetconnect or Jetstar NZ went bust then that operation would be wrapped up as a seperate entity and the ‘leasing’ ceases meaning that Qantas and Jetstar OZ have no liabilities from the bankruptcy.
Yes, but a deed of cross guarantee means the debts are assumed by everyone. If the jet operation goes down, the banks, lessors, airports etc who hold the guarantee would pursue all parties to the guarantee for recompense which would then trigger breaches on a whole lot of other contracts under Act of Bankruptcy provisions and the whole edifice will crumble down.

[1A_Please]

JS's stuff-up will take lots of $39 seats to pay off
Rex Airlines has been slugged $66,000 after its deputy chairman told members of the media of its plans to expand domestic flights before updating the market.

Corporate regulator ASIC fined Rex after it revealed in an interview with the Australian Financial Review its plans to expand routes as part of a major expansion of its domestic operations.

In the interview in May 2020, deputy chairman John Sharp told AFR journalist Tony Boyd of the airline’s plans to invest $200m to start new capital city services.Following the publication of the interview Rex was placed in a trading halt.In its market update Rex revealed it had been approached by several parties “interested in providing the equity needed for Rex to start domestic operations in Australia”.

“The preliminary estimate of equity required is in the vicinity of $200m and the structure of equity raising is yet to be determined,” it said.
https://cdn.newsapi.com.au/image/v1/acb9428c570ea20a352e711e3168ff59?width=650 (https://cdn.newsapi.com.au/image/v1/acb9428c570ea20a352e711e3168ff59)Rex deputy chairman John Sharp’s interview caused the problem. Picture: Jerad Williams Following the announcement Rex opened at $1.26, before rising to a high of $1.31 and closing at $1.19, a 32 per cent jump on its closing price the previous trading day.

The $66,000 fine was based on the market capitalisation when the conduct occurred.

ASIC said it found Regional Express Holdings had failed to comply with its continuous disclosure obligations after the interview.

“Following the release of the article on May 12, 2020, ASX contacted Rex about the article and Rex was placed in a trading halt,” ASIC said.

“Later that day, Rex disclosed to ASX that it was considering the feasibility of commencing domestic operations.”

ASIC found there were reasonable grounds to conclude that Rex was in breach by failing to inform the ASX “that it was considering the feasibility of commencing domestic operations in addition to its regional operations”.

But Rex executive chairman Lim Kim Hai maintained its position that “it did comply” with its obligations to inform the market.

“Be that as it may, Rex has elected to comply with the infringement notice and pay the penalty of $66,000 on a no-admission basis,” the airline said in a market update.

The ASIC fine hit follows a move by the regulator to restrict Rex from issuing a reduced content prospectus and using exemptions for reduced disclosure in fundraising documents until December 14, 2021.

[MickG0105]

Same as Qantas and Jetconnect or Jetstar and Jetstar NZ, technically both of these companies are crewing Companies that supply Pilots, Cabin Crew and RPT services to Qantas and Jetstar, Qantas and Jetstar ‘Lease’ the aircraft and trading facilities to these entities so that Jetconnect and Jetstar NZ use the AOC’s and Regulatory structure of the Clients. If Jetconnect or Jetstar NZ went bust then that operation would be wrapped up as a seperate entity and the ‘leasing’ ceases meaning that Qantas and Jetstar OZ have no liabilities from the bankruptcy.
It is a bit different when you have companies registered in different jurisdictions such as Qantas (Australia) and Jetconnect (NZ). There is also no deed of cross guarantee between Qantas and Jetconnect. Jetconnect files its own financial reports under New Zealand regulations; they are not rolled into the Qantas Group reporting.

That is a very different structure and arrangement to how Rex's domestic operations are set up.

[turbantime]

https://www.news.com.au/travel/travel-updates/regional-express-cops-66000-fine-but-says-it-did-no-wrong/news-story/8d982a81ff5336f86c7a4af8f1cf10a2

[No Idea Either]

I personally have no idea about anything corporate, but wouldn’t this ‘cross guarantee’ deed be the vehicle for PAG to take the part ownership of the parent company. But it sounds risky as it appears, how I see it, that’s this deed/vehicle may also leave the entire show open to all the debt...........risky business if that’s correct.

[TBM-Legend]

It is a bit different when you have companies registered in different jurisdictions such as Qantas (Australia) and Jetconnect (NZ). There is also no deed of cross guarantee between Qantas and Jetconnect. Jetconnect files its own financial reports under New Zealand regulations; they are not rolled into the Qantas Group reporting.

That is a very different structure and arrangement to how Rex's domestic operations are set up.


For Mick the oracle:

Jetconnect as filed in NZ
IDENTIFIER SYSTEM IDENTIFIER CATEGORIES

NZ Business Number 9429036875672 Business
details (https://opencorporates.com/statements/259808136)Shares issued SHAREHOLDER NUMBER OF SHARES VOTING PERCENTAGE

Qantas Airways Limited ABN 16 009 661901 (Australia) 100 n/a
details (https://opencorporates.com/statements/745902940)

[MickG0105]

For Mick the oracle:

Jetconnect as filed in NZ
IDENTIFIER SYSTEM IDENTIFIER CATEGORIES

NZ Business Number 9429036875672 Business
details (https://opencorporates.com/statements/259808136)Shares issued SHAREHOLDER NUMBER OF SHARES VOTING PERCENTAGE

Qantas Airways Limited ABN 16 009 661901 (Australia) 100 n/a
details (https://opencorporates.com/statements/745902940)
Thanks. I was aware of that, I checked it before I posted just as I checked that Jetconnect filed their own reporting in NZ and aren't covered by a deed of cross guarantee with Qantas.

The relationship between Qantas and Jetconnect is nothing like the Rex set-up.

[Ladloy]

Can I ask how they accomplished this separation? The jet ops are being flown under the same AOC as the Saab ops, aren't they? That AOC is held by Regional Express Pty Limited (ACN 101 325 642). Regional Express Pty Limited is also the registered operator for both the Boeings and the Saabs.

They may have separate operational staff and cost centres but from both the regulatory and financial perspectives both the jets and the Saabs sit under Regional Express Pty Ltd, the wholly owned subsidiary of Regional Express Holdings Limited (ACN 099 547 270). Regional Express Holdings Limited is the ASX-registered traded entity. Regional Express Pty Limited and Regional Express Pty Limited are bound by both ownership and deeds of cross guarantee.

Where's the separation?
Jet ops are under Rex Airlines Pty limited as a subsidiary while saab operations are part pf Regional express Pty limited.

Not saying it means much, but they're supposed to be separate

[MickG0105]

Jet ops are under Rex Airlines Pty limited as a subsidiary while saab operations are part pf Regional express Pty limited.

Not saying it means much, but they're supposed to be separate
Rex Airlines Pty Limited is a wholly owned subsidiary of Regional Express Pty Limited - there's no regulatory or financial separation there.

[MickG0105]

I personally have no idea about anything corporate, but wouldn’t this ‘cross guarantee’ deed be the vehicle for PAG to take the part ownership of the parent company. But it sounds risky as it appears, how I see it, that’s this deed/vehicle may also leave the entire show open to all the debt...........risky business if that’s correct.
No, deeds of cross guarantee are generally used for related entities, not funding deals. The PAG funding was covered by Rex issuing first ranking senior secured convertible notes to PAG. Convertible notes are basically a debt covenant that says if the debt isn't repaid it will be satisfied by being converted into shares.

[plainmaker]

Rex Airlines Pty Limited is a wholly owned subsidiary of Regional Express Pty Limited - there's no regulatory or financial separation there.
In fact there is a separation. Different legal entities, different ABN's. There is no obligation of a Principal to guarantee a subsidiary's debt, unless a Deed of Guarantee has been executed by the Principal.
I have not researched the corporate make-up of the organisation........but if the B373's were leased by the parent say and then dry leased to the subsidiary, with operational costs (wages, fuel, airway charges and airport fees borne by the subsidiary in its own name, then that is a very neat way to cocoon the operation from the Principal

[MickG0105]

In fact there is a separation. Different legal entities, different ABN's. There is no obligation of a Principal to guarantee a subsidiary's debt, unless a Deed of Guarantee has been executed by the Principal.
I have not researched the corporate make-up of the organisation........but if the B373's were leased by the parent say and then dry leased to the subsidiary, with operational costs (wages, fuel, airway charges and airport fees borne by the subsidiary in its own name, then that is a very neat way to cocoon the operation from the Principal
As the Zen Master said, "We'll see." Come end of year reporting the subsidiary will have to submit its own financial report if it's a truly separate entity. Do you think that is likely?

Rex didn't go down the path of separating Pel-Air or the Pilot Academy so it would at least be out of character for them to have gone down that route with the 73 ops.

[zanthrus]

So why did REX pay the $66000 fine if they deny being guilty? Why did they pay if the fine is unenforcable and they face no legal action? It all sounds like bull**** to me and REX is running scared.

[No Idea Either]

Thanks Mick👍

[MickG0105]

In fact there is a separation. Different legal entities, different ABN's. There is no obligation of a Principal to guarantee a subsidiary's debt, unless a Deed of Guarantee has been executed by the Principal.
I have not researched the corporate make-up of the organisation........
I've now looked at the Forms 389 and CF06 for Rex Airlines Pty Ltd ACN 642 400 048 and, as expected, that business is bound to both its immediate parent, Regional Express Pty Ltd, and the ultimate holding entity, Regional Express Holdings Limited, by deeds of cross guarantee. Thus there's no effective separation between the jet ops and the rest of the business.

[Lookleft]

So the upshot of all this discussion is that if the Rex Jet experiment loses more money than the jet and turboprop operation can cover then the whole Rex operation gets shutdown. So this would be similar to Kendell, Hazelton, Skywest and Flight West being shutdown because Ansett owned them and there was no corporate separation?

[MickG0105]

So the upshot of all this discussion is that if the Rex Jet experiment loses more money than the jet and turboprop operation can cover then the whole Rex operation gets shutdown.
No, a shut-down (bankruptcy or administration) this year would be unlikely. Short of an astounding turnaround or some fancy accounting they'll likely post a loss this financial year. Wouldn't be the first time an airline’s been run at a loss. That will mean tapping further into that PAG money and/or their own reserves.

The bottom-line result for this FY will drive what happens next, we won't find out what that is till late August/early September.

[aviation_enthus]

So the upshot of all this discussion is that if the Rex Jet experiment loses more money than the jet and turboprop operation can cover then the whole Rex operation gets shutdown. So this would be similar to Kendell, Hazelton, Skywest and Flight West being shutdown because Ansett owned them and there was no corporate separation?

Upshot??

Not sure having a previously successful regional carrier closedown would be considered much of an “upshot” for all the regional communities they serve. Or perhaps the 1000+ staff that work there...

But hey, dancing gleefully on someone’s grave makes it all worth it huh?

[SHVC]

Well, it’s been done before. Remember Ansett and a certain carrier and staff jumping for glee!

[cloudsurfng]

Upshot??

Not sure having a previously successful regional carrier closedown would be considered much of an “upshot” for all the regional communities they serve. Or perhaps the 1000+ staff that work there...

But hey, dancing gleefully on someone’s grave makes it all worth it huh?

despite the hypocrisy in REX’s whinging, I don’t think there is anyone who would want to see REX fail, simply because of the catastrophic effect it would have on so many people.

However, you’d probably have to join a long que in order to have a shuffle on JS’s career grave.

[Lookleft]

I'm not dancing on anyone's grave but was trying to get clarity around the discussion on ownership and the consequence of the jet operation failing. You might want to read the post and reign in the moral indignation.

Well, it’s been done before. Remember Ansett and a certain carrier and staff jumping for glee!

There were two carriers jumping for glee when Ansett collapsed. The pilots who had been with Impulse were also clapping and cheering when Ansett went under. How do I know that? They were still quite happy to tell me when I started with Jetstar.

[Ken Borough]

I witnessed st very close hand some quite senior members of the Qantas ‘Blue Team' rubbing their hands with glee and chortling like the crazies they were when Ansett was going down. I can never forget their lack of empathy and even self-awareness - ignorant bastards.

[Paragraph377]

There were two carriers jumping for glee when Ansett collapsed. The pilots who had been with Impulse were also clapping and cheering when Ansett went under. How do I know that? They were still quite happy to tell me when I started with Jetstar.
Dualing swords removed for a brief moment. This is probably the only thing we will ever agree on Lookleft. I happened to be sitting in an AN flight deck jump seat on their final day of operation. I clearly recall VB ground staff on the tarmac who were turning around two of their aircraft and they were flipping us the bird and then laughing, clapping and waving goodbye. Another AN acquaintance of mine also reported a similar thing at his location with the added bonus that there were VB employees in both the fwd and aft cargo holds and they were ‘mooning’ the AN aircraft as it taxied past them on an adjacent aircraft bay.

[Lookleft]

We probably agree on more than we are willing to acknowledge but it is good to cease hostilities for the moment and reflect on the short sightedness of those who revel in another's demise. Aviation is very much a game of snakes and ladders so people need to be careful to not think that those below you are worthy of contempt and those above need to be feted as lords. I wonder what the people from VB who were so nasty at the time of Ansetts demise are doing now? The ex-Impulse pilots who so kindly pointed out that they were happy to see Ansett go under with the loss of 16000 jobs have all in one way or another moved on from flying.

[megan]

I clearly recall VB ground staff on the tarmac who were turning around two of their aircraft and they were flipping us the bird and then laughing, clapping and waving goodbye. Another AN acquaintance of mine also reported a similar thing at his location with the added bonus that there were VB employees in both the fwd and aft cargo holds and they were ‘mooning’ the AN aircraft as it taxied past them on an adjacent aircraft bayI very much doubt the same would not have happened if the positions were reversed.

[Lookleft]

I disagree Megan. The staff at Ansett would, at the worst, been indifferent to VB not surviving. I very much doubt that they would have done what P377 has described. It even went beyond the demise where the sons of pilots from that year were interviewed by VB to deliberately humiliate them and reject them from employment at VB.

[Bull_Shark]

Virgin have just announced up to 700 new flights per week along with some new destinations, mainly into leisure markets such as Queensland and also the bread and butter ‘golden triangle’.

Makes you wonder why Rex are throwing money and resources at Canberra, a destination more than stitched up by the bigger airlines with their frequent flyer programs, lounge access and superior on board product?

[Buster Hyman]

I very much doubt the same would not have happened if the positions were reversed.
I very much doubt it would have happened. VB was not a threat to AN as much as AN Management was.

QF was AN's focus and VB merely filled a vacuum & even then, didn't take all of the free market share on offer.

[morno]

I disagree Megan. The staff at Ansett would, at the worst, been indifferent to VB not surviving. I very much doubt that they would have done what P377 has described. It even went beyond the demise where the sons of pilots from that year were interviewed by VB to deliberately humiliate them and reject them from employment at VB.

I call bull****

[Paragraph377]

I very much doubt it would have happened. VB was not a threat to AN as much as AN Management was.

QF was AN's focus and VB merely filled a vacuum & even then, didn't take all of the free market share on offer.

You and LL can doubt it all you like. I stand by my words. I was there. I saw it. And so did others. it had nothing to do with ‘threat’ but everything to do with attitude.

You are forgetting that the then VB ramp staff were mostly not long term aviation folk. Most were fresh from other industries, or have you forgotten that also? VB did not want to hire unionised AN or QF rampies, flight attendants, or pilots where possible. They were mostly youngsters with a mere 12 months experience when AN folded, they had yet to learn the principles of loyalty and how you shouldn’t **** in your nest in the aviation industry as you never know what is just around the corner. I know that for a fact because I unfortunately happen to know a Mr B. Highfield extremely well. They didn’t want people who might rock the boat, they wanted fresh meat that could be manipulated and moulded so they hired a lot of youngsters who worshipped Lord Branson like he was some kind of Messiah, and the monkeys got paid peanuts. They were dancing around on the tarmac, face painting, making funky announcements, even challenging Darth Dixon from QF to don a flight attendant dress and makeup and be part of the FA crew on the first International VB flight from London to Sydney. The look on old Scrotum Face Dixon’s face was priceless. Like the Queen at a Manpower stage show. Hell, Amanda Chappell even got her tits out in the flight deck on one of the flights. VB certainly didn’t operate the way AN and QF did and those ramp staff flipping the bird and waving goodbye to AN won’t be forgotten by those who saw it.

[Lookleft]

P377 I am agreeing with you, not doubting your observations. The statement put forward was that Ansett staff would have done the same thing if VB had gone under. Thats what Buster and I are disputing.

I call bull****

Call whatever you like morno, it happened and was indicative of what P377 is referring to regarding the behavior of VB staff when Ansett collapsed.

[morno]

Uh huh. Are we still carrying on about Ansett 20 years later?

[Lookleft]

If you are not interested then don't post.

[aviation_enthus]

I'm not dancing on anyone's grave but was trying to get clarity around the discussion on ownership and the consequence of the jet operation failing. You might want to read the post and reign in the moral indignation.

You talk about Ansett etc but this whole thread is filled with comments effectively “praying” that Rex don’t survive. Sorry if I picked you in particular, just sick and tired of reading the same BS.

And now we are descending into yet another argument about Ansett!!

I for one hope that Rex AND Virgin survive. The industry will be better for it. Isn’t it about time we can squeeze in a 3rd jet airline? The population then VS now sure says the market is much bigger!!

[Lookleft]

Well to be fair Rex did rise out of the Ansett ashes so there is at least a link, albeit tenuous. I doubt anyone of any religion is praying for the demise of Rex but JS has put his head above the trench and shot his mouth off so people are just shooting back. The reality is the domestic market is very reliant on international tourists and at the moment 3 players are chasing a smaller market than 20 years ago.

[Paragraph377]

My thoughts have certainly changed in recent weeks. I think less about the airlines being competitive and combative which is BAU in times of a normal operating environment, to thinking more of a wanting them all to survive. Why? Because the aviation sector is well and truly buggered. In turn, the flow down effect upon our economy, and global economies is immeasurable. Virtually every single business and industry survives because of aviation. Pressure needs to be applied to the correct area - which is the political sphere. They are the ones calling the shots and they need to provide better direction, solutions and workable measures.

Whether we think he is right or wrong, the Prime Minister has made the decision to allow border closures. That’s a third of the job done. JobKeeper and JobSeeker were a third of the job done. Now it’s time for some kind of workable solution to assist the thousands who are still out of work, about to lose their homes or have lost their nest eggs. We should be financially compensated. It sounds extreme but why not. They spend hundreds of billions of dollars on other crap. If we are as resilient as they say, then surely a half competent Government would be able to compensate its people adequately and then recoup those expenses down the track? I notice our politicians are not losing their jobs, businesses and nest eggs. It would be interesting to see the shoe on the other foot. Assholes.

[TBM-Legend]

The official unemployment rate announced today is a very low 5.5% and 30,000 jobs available in Qld alone remain to be filled.

[Paragraph377]

The official unemployment rate announced today is a very low 5.5% and 30,000 jobs available in Qld alone remain to be filled.
Does your source of information come from Josh Fraudenberg’s office? If these are Government statistics then I would trust that information as much as I trust the inmates of Woodford Jail. Governments are filled with liars and spin doctors. Even an unemployed person who picks up 2 hours work is now classed as an ‘employee who is in a job’. Oh well, it’s good to see all of those cafe, restaurant, tourism and aviation workers must now all be employed.

[morno]

Does your source of information come from Josh Fraudenberg’s office? If these are Government statistics then I would trust that information as much as I trust the inmates of Woodford Jail. Governments are filled with liars and spin doctors. Even an unemployed person who picks up 2 hours work is now classed as an ‘employee who is in a job’. Oh well, it’s good to see all of those cafe, restaurant, tourism and aviation workers must now all be employed.

Go out to outback Queensland where the number of job vacancies is bordering on ridiculous. They can’t get enough people to run the tourist attractions, the restaurants, the roadhouses, etc.

[DanV2]

You talk about Ansett etc but this whole thread is filled with comments effectively “praying” that Rex don’t survive. Sorry if I picked you in particular, just sick and tired of reading the same BS.

And now we are descending into yet another argument about Ansett!!

I for one hope that Rex AND Virgin survive. The industry will be better for it. Isn’t it about time we can squeeze in a 3rd jet airline? The population then VS now sure says the market is much bigger!!

Well they had multiple goes at it. Compass, Impulse, Ansett Mk2, Tiger Airways, Tigerair, Virgin Mk 2 (Australia).

Only 3rd airline that actually had a go at it is Virgin Mk 1 (Blue), which unfortunately morphed into the unprofitable Virgin Mk 2 (Australia) once Borghetti and the Singaporean/Abu Dhabi mob took over.

[Buster Hyman]

You and LL can doubt it all you like. I stand by my words. I was there. I saw it. And so did others. it had nothing to do with ‘threat’ but everything to do with attitude.
:confused: You saw AN staff celebrating VB's demise? I think you've misunderstood my post.

[KRUSTY 34]

I think we need to get back on track everyone.

[dijical]

I think we need to get back on track everyone.

REX seems to be getting full loads around the weekends, and reducing some frequency mid-week SYD MEL.
So far, their actual roll out of routes has been very modest compared to the volume of noise being generated.
Could it be that they're being strategic? Baiting QF/Virgin, then sensibly waiting for the initial overreaction to die down, before pushing on?
Or simply clueless as per the consensus of this thread?

[crosscutter]

Not clueless. They rolled the dice and it’s not gone their way. Their entire operation has now become marginalised with their core Saab operation now an ageing unessential contributor in Australian aviation. They might find in a few years they need to cannibalise their own fleet for spare parts should they continue.

They might hang around for quite a while yet, but shareholder wealth destruction is a pretty sure thing. It’s a dead operation walking as a resurgent Virgin and of course Qantas literally steal their daily lunch. Only one of Virgin and Rex will survive in any significance…it’s clear to me who that is at the moment.

[43Inches]

Not sure who's clueless. There's only one airline that's significantly bleeding cash at the moment in Australia and it isn't R or V. This from actual ASX statements, not warm and fuzzy feelings about who you want to survive.

[Paragraph377]

:confused: You saw AN staff celebrating VB's demise? I think you've misunderstood my post.
I never said that I saw AN staff celebrating VB’s demise.

[crosscutter]

Bleeding cash…QF? I wouldn’t use those words which is actually incorrect based on yesterday’s announcement. Free cash, vs underlying vs statutory. I’d be surprised if the A380s haven’t been significantly written down, along with all those buildings being replaced. In terms of free cash QF is fine. I’m not having a go at Rex, or those that work there. Irrespective, I’ve had a fair crack at QF over the years too. I mean, haven’t we seen this game so many times over the years?

[43Inches]

Bleeding cash…QF? I wouldn’t use those words which is actually incorrect based on yesterday’s announcement. Free cash, vs underlying vs statutory. I’d be surprised if the A380s haven’t been significantly written down, along with all those buildings being replaced. In terms of free cash QF is fine. I’m not having a go at Rex, or those that work there. Irrespective, I’ve had a fair crack at QF over the years too. I mean, haven’t we seen this game so many times over the years?

Not quite sure what you don't understand about a $2 billion loss for the year vs Rs break even. Cash position is a red herring, a company usually has to maintain a minimum cash liquidity to assure certain loan requirements. And the old, 'underlying profitability', yes that old chestnut, how many times did Virgin pull that out, before suddenly "oops we're insolvent" came along. Don't get fooled by smoke and mirrors, a loss is a loss, a profit is a profit.

BTW, part of the $4 billion in cash liquidity is $1.6 billion in unused loan facilities, that's right more debt. How much of the remaining $2.4 billion in cash liquidity is actual debt?

[crosscutter]

It will be interesting to see who is exposed when the tide of government handouts goes out. When the borders reopen and operations are no longer hamstrung. QF have certainly received their share, but not the 15-20% of total revenue like some others. I would be cautious comparing financial results at this point.

You are correct though, a loss is a loss. Time will tell who is sprouting smoke and mirrors.

[MickG0105]

Seems to be a lot of terms being thrown around willy-nilly. Liquidity includes cash and facilities you can quickly convert to cash such as approved lines of credit. If you've borrowed the cash it will be reflected as a liability on the other side of the balance sheet such that the net position at the bottomline is essentially just the interest payable. Thus, cash and net debt are the numbers of interest.

In keeping with that, the instructive pieces of information coming out of yesterday's QF announcement were (a) that their cash position as of 30 April was $2.4 billion and (b) that net debt had peaked in February and was expected to be lower than $6.05 billion by 30 June.

That all augurs well for them. Compared to their 30 December numbers per their half-year report, it shows that they have significantly slowed their cash burn and almost certainly have an improving outlook so long as further lockdowns/travel restrictions are avoided.

If you want to cut through the bumf and hoopla look at how the market reacted - it really didn't blink. QAN is up over 1.5 percent since yesterday's announcement.

REX on the other hand ... they announce that they'll break even and their share price drops. Probably goes to credibility, your Honour.

[43Inches]

Two different companies as far as share market goes, one is a mainstream investor staple, one is a dividend cow with low available shares. In any case apart from the two spikes where Rex first said it might go bust (big drop) and then said it was expanding (big jump), the last ten years both QF and R have tracked along along with similar ups and downs. The worrying thing for QF is the debt, the same indicators that we looked at when virgin was heading downhill a few years back and now on the radar at QF. What makes the situation different, is that the two opposition carriers have equity partners, that will have long term agendas. Both will see that if they can beat QF down the Australian domestic and International market will be the prize, and a huge one at that. QF leadership is AJ who knows the ship wont sink during his term, which will be up soon, and I reckon he does not care much what happens after.

QF have certainly received their share, but not the 15-20% of total revenue like some others. I would be cautious comparing financial results at this point.

This is business, where you get cash from, the gov or the public, is irrelevant. Your management is there to ensure the cash keeps the doors open, the argument that getting the handouts/contracts is somehow foul play or illegal is just emotional BS. Lots of companies survive entirely on gov contracts, they are usually easy money if you can win the tenders.

If you've borrowed the cash it will be reflected as a liability on the other side of the balance sheet such that the net position at the bottomline is essentially just the interest payable. Thus, cash and net debt are the numbers of interest.

$1.6 bil of the cash they are claiming to have on hand is not in hand yet, therefore not borrowed, therefore not included in the liabilities/debt. The cash statement is just a nice line to say to investors "don't worry, we have money"

[EPIRB]

$1.6 bil of the cash they are claiming to have on hand is not in hand yet, therefore not borrowed, therefore not included in the liabilities/debt. The cash statement is just a nice line to say to investors "don't worry, we have money"

Sound like you’re accusing them of misleading the market. Somehow I don’t think what you’re alluding to in your statement would be legal.

[Trevor the lover]

All this talk of "a resurgent virgin" reminds me so much of all the yap going on about borghetti when he first started. He was the Messiah if you believed pprune. I remember everyone just jumping on the Borghetti bus. I even remember posting and saying something along the lines of wait until he gets results before continuing on the Messiah rubbish. Turned out that (for once) I was right. Look how things turned out under his rule.
I'm seeing the same yap now. Everyone is bandwagoning on the resurgent virgin phrase. The new virgin is still a tiny baby. Spare me the "resurgent Virgin" rhetoric until some financials are published which show an actual resurgence. Until that happens it is still a work in progress.

I wish both Virgin staff and Rex staff all the best for the future. And I stand by my previous comments that for everyone wanting to see Sharp fail and spewing their vitriol here, remember that the people operating those aircraft and everyone involved in getting them airborne are decent people like you and me. Sharp may be a toolbox, but the people on the frontline are good folks.

[43Inches]

Sound like you’re accusing them of misleading the market. Somehow I don’t think what you’re alluding to in your statement would be legal.

Not at all, just highlighting that quoting liquidity figures is not always what it seems. It's completely legal, the company statement is that they have X cash available to them, which is true. What is also true is that if they then converted that option into actual cash they would be increasing debt, by that relative amount.

In simple terms, a business signs an agreement to borrow $3 billion to cover a downturn, they use $1.4 billion and have $1.6 billion still available to take if required. The $1.6b can be considered available cash, and since it has not been taken yet, its not considered a debt.

[blubak]

Two different companies as far as share market goes, one is a mainstream investor staple, one is a dividend cow with low available shares. In any case apart from the two spikes where Rex first said it might go bust (big drop) and then said it was expanding (big jump), the last ten years both QF and R have tracked along along with similar ups and downs. The worrying thing for QF is the debt, the same indicators that we looked at when virgin was heading downhill a few years back and now on the radar at QF. What makes the situation different, is that the two opposition carriers have equity partners, that will have long term agendas. Both will see that if they can beat QF down the Australian domestic and International market will be the prize, and a huge one at that. QF leadership is AJ who knows the ship wont sink during his term, which will be up soon, and I reckon he does not care much what happens after.



This is business, where you get cash from, the gov or the public, is irrelevant. Your management is there to ensure the cash keeps the doors open, the argument that getting the handouts/contracts is somehow foul play or illegal is just emotional BS. Lots of companies survive entirely on gov contracts, they are usually easy money if you can win the tenders.



$1.6 bil of the cash they are claiming to have on hand is not in hand yet, therefore not borrowed, therefore not included in the liabilities/debt. The cash statement is just a nice line to say to investors "don't worry, we have money"
They can say 'dont worry,we have cash' but $6bn debt is exactly that $6bn debt.
Dont know if i would be comfortable investing in an airline with $6bn debt no matter how much positive spin they put on it.

[MickG0105]

$1.6 bil of the cash they are claiming to have on hand is not in hand yet, therefore not borrowed, therefore not included in the liabilities/debt. The cash statement is just a nice line to say to investors "don't worry, we have money"
This is getting a tad tiresome. Read QF's ASX statement from yesterday. They didn't claim to have the $1.6 billion in undrawn facilities as cash on hand - that seems to be your mistaken interpretation.

QF state quite clearly that,
Liquidity levels remain strong with total funds of $4.0 billion, including cash of $2.4 billion and $1.6 billion of undrawn debt facilities as at 30 April 2021.

The keen observers will note that the terms "cash" and "undrawn debt facilities" are used in a mutually exclusive fashion.

In simple terms, a business signs an agreement to borrow $3 billion to cover a downturn, they use $1.4 billion and have $1.6 billion still available to take if required. The $1.6b can be considered available cash, and since it has not been taken yet, its not considered a debt.
In simple terms, no, the $1.6 billion in undrawn facilities cannot be considered as available cash, at all. That would be "magic pudding" accounting . The $1.6 billion in undrawn facilities is considered liquidity. Liquidity is different to, but includes, cash and cash equivalents.

[43Inches]

This is getting a tad tiresome. Read QF's ASX statement from yesterday. They didn't claim to have the $1.6 billion in undrawn facilities as cash on hand - that seems to be your mistaken interpretation.

QF state quite clearly that,

You are technicallly correct, they are stating $4 billion of liquidity. Which as I said includes $1.6 billion of undrawn debt, the result is the same as i have explained, it changes nothing that has been said since. If they wish to convert that option into actual cash, it will increase net debt.

If you are getting tired you should take a nap, rather than harping on about semantics.

[MickG0105]

You are technicallly correct, ...
And we'll leave it at that.

[SHVC]

Soooooo a thread about Rex has turned in to a QF finances thread. Question is, can QF out survive Rex or will Rex beat VA then Rex buy QF or will VA buy Rex then buy QF after Alliance buys a charter company then buys QF

[43Inches]

FlyPelican, the dark horse, comes from behind and buys them all out, only to pipped at the post by brad air.

[ANstar]

Soooooo a thread about Rex has turned in to a QF finances thread. Question is, can QF out survive Rex or will Rex beat VA then Rex buy QF or will VA buy Rex then buy QF after Alliance buys a charter company then buys QF
I think Rex's strategy will be to make as much noise as possible to hinder VAs IPO which in turn will make Bain buy them out to get the IPO across the line. Thats if Rex doesn't fail before that.

[Buster Hyman]

I never said that I saw AN staff celebrating VB’s demise.
You just need to reply to posts in the context that they were set in, rather than making assumptions...anyway, back to the thrilling Rex thread.

[Deano969]

I have heard that REXs loads are on the improve
Particularly on Canberra-Sydney, Melbourne-Adelaide, even Sydney-Melbourne are mostly in the triple digits now
Apparently they are starting to get a bit of a following
Is anyone still counting heads?
Also curious to see how Coffs and Port Maq are performing...

[SHVC]

From what I have observed out of Sydney I would say otherwise. Same if not worse in numbers.

[MickG0105]

I have heard that REXs loads are on the improve
Particularly on Canberra-Sydney, Melbourne-Adelaide, even Sydney-Melbourne are mostly in the triple digits now

Be a bit hard to hit triple digit pax loads CBR-SYD in a Saab.

They would not routinely be hitting 100+ (60+% LF) SYD-MEL - that route has been a disaster for them. Tomorrow they look like they'll be flat out averaging sub-50% LF SYD-MEL and they don't appear to have sold a single J class fare for the day.

MEL-ADL seems to be Rex's best jet route by LF - they might be hitting 100+ half the time.

[MickG0105]

Noting the issues of potential sample bias with such a small sample, if you look at QF, VA and Rex midday/1pm SYD-MEL flights today, QF have a somewhat astounding 90% LF, VA around 55% and Rex will post something like 35-40%.

[1A_Please]

Noting the issues of potential sample bias with such a small sample, if you look at QF, VA and Rex midday/1pm SYD-MEL flights today, QF have a somewhat astounding 90% LF, VA around 55% and Rex will post something like 35-40%.
I think the QF 90% load is probably explained by the cancellation of the 12:30 flight so a lot of its pax will have been shifted onto the 1PM departure.

[MickG0105]

If your looking for loads on online platforms like Expert Flyer the loads won’t be accurate until after flight had left.
Yep, I'm aware of that limitation. The QF and VA numbers are from a more reliable source, Rex less so but I've applied a generous fudge factor there (the Rex LF could be as low as 30%).

[MickG0105]

I think the QF 90% load is probably explained by the cancellation of the 12:30 flight so a lot of its pax will have been shifted onto the 1PM departure.
Would depend on when they cancelled the 12.30pm but yes, that most assuredly could explain that very high LF. The same 1pm flight tomorrow looks like a 70% LF presently.

[Ladloy]

Hearing whispers of rex crew leaving for VA

[43Inches]

Load factors for this year are a waste of time comparing. Many flyers would have credits and FF points from last year they might be cashing in on QF and VA, hard to say what is revenue and whats pre-sold bookings being honored. Next year the LFs might be more reflective of actual sales. End of year results will tell the story for those listed companies.

[Colonel_Klink]

Hearing whispers of rex crew leaving for VA

With Virgin’s re-employment policy - it was always going to be risky hiring a heap of redundant WB pilots.

[slice]

AFAIK VA haven’t re-employed any crew just yet?

[Ladloy]

AFAIK VA haven’t re-employed any crew just yet?
It sounds like it's in the pipeline.

[rcoight]

Load factors for this year are a waste of time comparing. Many flyers would have credits and FF points from last year they might be cashing in on QF and VA, hard to say what is revenue and whats pre-sold bookings being honored. Next year the LFs might be more reflective of actual sales. End of year results will tell the story for those listed companies.

I’ve certainly booked several flights recently on Virgin simply to get rid of points.
Not because I necessarily wanted to fly with them.

Don’t want to get caught in another Ansett.

[Seriously]

Why do so many of you care what the LF are? Have you not got something better to do than be searching what Rexs load factors are? It appears some of you have no life what so ever. Get a life. It’s not important.

[Trevor the lover]

Seriously
Post of the year for me. And notice so much of it all comes from the same boring, repetitive offenders.

[Bull_Shark]

So does anyone know what the loads were like today out of Melbourne considering the new restrictions?

[crosscutter]

I do not have intimate knowledge of the funding agreement between REX and PAG Asia Capital. I know this though:
1. PAG would give REX $1.50 per share in what is essentially a cash for equity swap.
2. The first $50M gives PAG a 23% stake in REX
3. However, the remaining $100M gives PAG a far less attractive conversion rate. PAG would then have a 48% stake in REX.
4. The current share price is $1.24 and the YTD trend is bad. Put it all another way…REX has a total market Capitalisation well less than the $150M in the PAG agreement.

Now LF might matter nothing to you or I, but do they matter to PAG? Without them it’s game over in the Jet space….and how keen will they be to inject the remaining $100M? In a congested domestic market, load factors means more to REX than anyone when their half year government grants and subsidies represented 1.5 times their entire passenger revenue. Private Equity will decide, and you can be sure they are watching LF carefully.

It matters not what level of debt QF have, or the finances of Virgin (Bain). The first decision point will be for PAG capital to show their intent, commitment and stomach to keep playing.

[anonfly]

Looks like Rex may be in the market for some pilots. 88 pilots due to be re employed back at Virgin by years end is the word on the street. 44 CPT and FO spots coming back.

[On Guard]

Looks like Rex may be in the market for some pilots. 88 pilots due to be re employed back at Virgin by years end is the word on the street. 44 CPT and FO spots coming back.

Who was the clever Richard who employed ex wb senior pilots. Extra training only to have some of them bug off.

[The Bullwinkle]

Who was the clever Richard who employed ex wb senior pilots. Extra training only to have some of them bug off.
And yet they missed an opportunity to employ an experienced VA 737 Captain who had no right of return to Virgin.
Go figure!

[SHVC]

Allegedly, ADL-ML-ADL route was REX best performing that has now potential to be canceled as SA will tighten their border today with VIC, expected case numbers to blow out. Their very poorly performing SY-ML-SY will almost be reduced to ferrying empty A/C after today as NSW will tighten their travel requirements.

Will this accelerate their permanent grounding, or, will JS have money in the bank to pay for a non flying 737 op!

[TimmyTee]

Allegedly, ADL-ML-ADL route was REX best performing that has now potential to be canceled as SA will tighten their border today with VIC, expected case numbers to blow out. Their very poorly performing SY-ML-SY will almost be reduced to ferrying empty A/C after today as NSW will tighten their travel requirements.

Will this accelerate their permanent grounding, or, will JS have money in the bank to pay for a non flying 737 op!

surely as they made the decision to launch an airline during the midst of a pandemic, the 737 shouldn’t and won’t receive a cent of tax payer money to prop it up during these lockdowns..?

[43Inches]

Not sure where the doom is coming from, Rex is breaking even this year, a few managed cancellations is not going to affect that much. Flyers don't pay for tickets at the gate so empty airplanes just get cancelled, tickets deferred, money is in the bank, this actually helps operators with low LF as the passengers are then combined onto flights later with more paying passengers for a higher LF. Its not like they are losing $2 billion a year at the moment,or are coming out of insolvency.

[minigundiplomat]

Not sure where the doom is coming from, Rex is breaking even this year, a few managed cancellations is not going to affect that much. Flyers don't pay for tickets at the gate so empty airplanes just get cancelled, tickets deferred, money is in the bank, this actually helps operators with low LF as the passengers are then combined onto flights later with more paying passengers for a higher LF. Its not like they are losing $2 billion a year at the moment,or are coming out of insolvency.

Yep, passengers love cancellations; it's such a guaranteed method for long term success I am not sure why QF and VA don't do more of it. Plus, you can just not pay leases, staff, crew, insurance and all the other fixed costs, right?

Rex are bloody champs!

[43Inches]

Yep, passengers love cancellations; it's such a guaranteed method for long term success I am not sure why QF and VA don't do more of it. Plus, you can just not pay leases, staff, crew, insurance and all the other fixed costs, right?

I don't think you are following the thread, the cancellations being due to empty airplanes due to passengers not being able to fly due to covid restrictions. Of which i'm pretty sure all companies have a refund or defer policy for tickets affected by such.

[minigundiplomat]

Surely John Sharpe can just shout at someone and accuse COVID of predatory behaviour?

[ANCDU]

How about we just wish them well. Fellow pilots and cabin crew who have had an atrocious 12 months have finally got some sort of stability back in life. It doesn’t matter what name is on the side of an aircraft if it’s giving fellow aviators a job why do we get so uptight about it ?

[SHVC]

Well let’s see if JS lives up to his own hype and gives a no questions ask refund on all request. That was his sale pitch after all. Any flight canceled due covid full refund.

[1A_Please]

Well let’s see if JS lives up to his own hype and gives a no questions ask refund on all request. That was his sale pitch after all. Any flight canceled due covid full refund.
With their current loads, REX would make more money by cancelling the flights rather then operating them.

[Tom Sawyer]

Not sure where the doom is coming from, Rex is breaking even this year, a few managed cancellations is not going to affect that much. Flyers don't pay for tickets at the gate so empty airplanes just get cancelled, tickets deferred, money is in the bank, this actually helps operators with low LF as the passengers are then combined onto flights later with more paying passengers for a higher LF. Its not like they are losing $2 billion a year at the moment,or are coming out of insolvency.

Think your missing the fact the due to a cancellation the aircraft and crew could be in the wrong place, so it could still have to be flown somewhere empty to place where it needs to be to maintain the schedule. So crew time, airport fees, any overnight allowances and fuel are potentially still payable.

Secondly, not sure how it works these days with internet direct bookings etc, but the airline never used to receive the money until the sector had been flown and ticket used. I remember the old paper ticket stubs were treated like cash as they were used to claim the money through IATA or booking agent. Does an unused ticket's cash get held in some form of escrow until the sector is flown? Modern technology and booking engines may have negated this though. A passenger may also cancel their booking, so the airline doesn't get (all) the cash at the end of the day either.

[43Inches]

Think your missing the fact the due to a cancellation the aircraft and crew could be in the wrong place, so it could still have to be flown somewhere empty to place where it needs to be to maintain the schedule. So crew time, airport fees, any overnight allowances and fuel are potentially still payable.

Pretty sure you are not in the airline industry asking these questions. Domestic crew and aircraft schedules are multiple sectors, a crew and plane wont be stranded from a single or even multiple cancellations, planes, crew, stranded in destinations only happens from breakdowns or other unforeseen occurrence. As far as the financial arrangement you are talking of, that's purely if you book through a travel agent, which during covid was very hit miss if you'd ever see the money again, even if your airline did offer refunds. As far as I know all Australian airlines now offer refund or defer tickets if the flight was affected due to covid, also I think Rex was the first to make a deal out of that, forcing the others to follow.

I had some travel options booked directly with operators that were cancelled and they gave full refunds. I heard of travelers booked with the same operators who were booked through travel agents who struggled to get even part refunds, only offered deferrals etc. Travel agencies often get commissions directly from the operator, so refunds become murky and funds transfer is obviously handled differently.

[Tom Sawyer]

Pretty sure you are not in the airline industry asking these questions.

Yeah....only 30 years plus in the ops side of things, mainly engineering, so I think I've got a decent grip on how things work. If it is not a factor having aircraft misplaced, then why did it take VA 24 hours or so to get things back on track post the Sabre failure last week? By their own advice it was because of aircraft out of place along with their crews. I've dealt with plenty of aircraft out of place due to cancellations and support empty ferry flights, so I'm pretty sure I know what I'm talking about.

However, maybe not be a major factor for Rex due to small B737 network and operation..................seems they'd rather fly the aircraft no matter what the load, even if it is 1 pax travelling SYD-MEL as per Friday's early morning flight. The other pax were no shows more than likely due to the VIC Covid situation. Two SYD-MEL flights cancelled in the afternoon though due to lack of pax, so probably that aircraft/crew was a paired operation.

[43Inches]

If it is not a factor having aircraft misplaced, then why did it take VA 24 hours or so to get things back on track post the Sabre failure last week? By their own advice it was because of aircraft out of place along with their crews. I've dealt with plenty of aircraft out of place due to cancellations and support empty ferry flights, so I'm pretty sure I know what I'm talking about.

Very simple answer to that.

The Sabre failure was a sudden, unexpected fault that prevented departures network wide. Instant chaos, and duty time issues probably run into the equation with restoring operations.

I'd say airlines have major port lock down now as a contingency plan. A single port lock down like Melbourne being knocked out of the system, with forewarning, would be a simple event, where ops would have a plan of action that will avoid what you are saying. Headache for ops for a day or so, no one is going to be stranded etc, a significant weather event would have more effect. A day of operations is a controlled event, so if all planes fly, they wanted that, if they cancelled then that is what they wanted.

[pinkpanther1]

From the Australian. Has anyone actually seen this advertisement in the newspaper? If true it's a new low in this war!


Australian domestic airlines are in a huge feuding battle. Rex is fighting for survival and advertising heavily to attract business, but is struggling to sell profitable seats. Dirty advertising tactics have stepped the war to a new level with Qantas angry over Government handouts to Rex resulting in Rex posting a profit.

News article follows "The bitter feud between Qantas and Rex has stepped up a notch after Rex took out full page advertisements highlighting public discontent with the Flying Kangaroo over refunds.

The ad uses dozens of social media posts made about Qantas to emphasise problems with the refund process during the Covid crisis which has resulted in thousands of flight cancellations.

Rex deputy chairman John Sharp said in contrast, they had refunded every passenger who had requested their money back for an eligible fare bought before April 1,2021.

The ad suggested Qantas could owe as much $1bn to passengers caught up in Covid-related flight cancellations.

Throughout the pandemic, Qantas has strived to manage a huge number of travellers disrupted by border closures and lockdowns, by offering refunds, rebookings or travel credits.

On its website, Qantas points out that refunds could take up to eight weeks to process, and may be conditional on the sort of fare purchased.

The advertisements are expected to stir up more animosity between the carriers, which have clashed over regional routes and government grants.

Rex has previously accused Qantas of deliberately adding capacity to regional routes in an effort to squeeze out the smaller carrier as “payback” for Rex’s decision to compete on capital city routes.

Since the start of the pandemic Qantas has added more than 40 new routes, including several that were operated solely by Rex.

In response Rex threatened to pull off a number of routes, many of which were not the subject of competition from Qantas.

To date Rex has not come good on its threats.

Government grants given to Qantas and Rex throughout the pandemic have also been fodder for the fight.

Qantas claimed the considerable financial assistance given to Rex was disproportionate to the airline’s size.

Qantas Group CEO Alan Joyce said if Qantas had received the same level of assistance as Rex, they would have got over $7 billion.

Mr Joyce’s suggestion that there was only room for two airline groups on major domestic routes in Australia also inflamed Rex management.

The fight then took a bizarre turn when Mr Sharp accused Qantas and Virgin Australia of colluding to try to sink Rex.

In their recent half year results, Qantas posted a $1.09 billion statutory loss, compared to Rex’s $9.9 million profit for the six months to December 2020.

As well as Sydney-Melbourne, Rex has added Melbourne-Gold Coast and Sydney-Canberra to its network using former Virgin Australia 737s.

Qantas has been contacted for comment on the advertisements.

[PoppaJo]

Here’s an idea Rex. Worry about your own backyard.

The public don’t give two ****s about any of this. Every time it’s competition make a business decision in regards to its operation, are we going to hear Rex’s opinion every single time?


https://cimg0.ibsrv.net/gimg/pprune.org-vbulletin/650x1000/6c5c13ed_0bb3_4e5d_a5e6_7c962b9da3ff_ad02e648384f0febaf455de 4b26b1831dd2c52f0.jpeg

[AerialPerspective]

surely as they made the decision to launch an airline during the midst of a pandemic, the 737 shouldn’t and won’t receive a cent of tax payer money to prop it up during these lockdowns..?

Especially since they carried on for months making threats to the government to get a package that none of the other operators got (favors for political mates perhaps....) and then accuse QF of being technically insolvent after taking their 'rescue package' pushed by the NP and spending it on a new operation instead.
If I was the government, the day they announced it I would have said "Hand the money back".
The unbridled arrogance and scatter-gun rubbish that comes out of their Chairperson's mouth is become old very fast

[No Idea Either]

You know, an airfare war with advertised competing prices is just part of the game but selectively drawing on adverse social media posts and putting them in print is anticompetitive and an attempt to damage a brand IMHO. I think JS may have overstepped again and will most likely find himself in a legal battle again.

[crosscutter]

It seems JS’s strategy to build brand awareness is by trying to trash the reputation of the incumbents. It’s the easiest way he can get/buy media coverage. JS seems a relic of bygone times who has somehow avoided extinction.

[SHVC]

This is disgusting. JS should be in hot water over this. Hopefully AJ takes JS to task over this.

[EPIRB]

I don't think that this is an effective way to attract passengers. REX should be selling their attributes.

[Bull_Shark]

This is what happens when you get the work experience kid trying to run the marketing department.

Rex have missed the point entirely and just don’t get that by personally attacking your competitors you’ll get little sympathy.

Sure, there may be some convoluted strategy to drum up brand awareness by constantly attacking the opposition, but it’s not going to bode well for them in the long run.

Trying to digest that wall of text made my head hurt, the target audience Rex are trying for aren’t going to be captured by that (and what’s funny is that under the link to this advertisement on their own Facebook site, Rex customers themselves are querying where their refunds are and why they’re on hold for hours waiting for a response. Although it seems they are deleting a lot of those comments as they appear!)

And for everyone else it doesn’t take much digging to realise that Rex themselves are not only a foreign owned company but have a history of bullying and intimidating their staff and regional Australian communities along with a breathless arrogance over how great they think they are by making money off monopoly routes to piss pot towns and then spitting the dummy when they get competition.

Not to mention the massive and skewed government handouts they manipulated to kick start an expansion into jets.

This whole thing reeks of desperation by a rudderless and sinking ship. No doubt accelerated by the latest lockdown in Melbourne and the realisation that travel will be constrained for a long time yet, whoever thought it a good idea launching a new airline in the midst of the worst aviation crisis in history must be regretting the decision.

[Lookleft]

whoever thought it a good idea launching a new airline in the midst of the worst aviation crisis in history must be regretting the decision.

That would be John Sharp wouldn't it? All that lovely Government money from his mates and a competitor about to expire and leave the field open to Rex. Why wouldn't you start a new airline?

[Oriana]

I would suspect it would be easier for Rex to refund 100 tickets, than it is for Qantas to refund 100,000.

[MELKBQF]

https://www.theage.com.au/business/companies/rex-speeds-up-capital-city-attack-on-qantas-virgin-20210602-p57xbe.html

[SHVC]

JS approach are actions of a desperate company, I would think their jet ops since start, now and future bookings are bleak and JS actions are a very good indication of such. I would think the further jets he suggest are his attempt at raising capacity are apart of an already signed agreement by the lesser and he has no choice but to take these jets on.

[unobtanium]

I would suspect it would be easier for Rex to refund 100 tickets, than it is for Qantas to refund 100,000.

I would also be easier to refund 100s of tickets on their expensive + monopoly + highly subsidised regional routes. How many domestic/international tickets did REX refund?

[PoppaJo]

Are they now refunding tax payers for all these half price airfares that are now not going ahead?

[Ladloy]

Supposedly they're deleting negative comments on their instagram. That's pretty pathetic.

[Chris2303]

Supposedly they're deleting negative comments on their instagram. That's pretty pathetic.

Rex you mean?

[Ladloy]

Rex you mean?
Indeed. Try your luck and say something negative on their qantas post.

[Arnold E]

Boy you blokes will really be crying in your beer if REX makes the grade, which I certainly hope they do:rolleyes:

[Green.Dot]

Don’t rule out “brad” either. They have already raised 0.58% towards their initial startup costs.

[KRUSTY 34]

Boy you blokes will really be crying in your beer if REX makes the grade, which I certainly hope they do:rolleyes:

That’s the spirit Arnie!

[SIUYA]

Don’t rule out “brad” either. They have already raised 0.58% towards their initial startup costs.

GOLD Green.Dot :}

[PoppaJo]

The Sydney dream soon to be over?

https://www.google.com.au/amp/s/thenewdaily.com.au/finance/finance-news/2021/06/07/rex-airfares-sydney/amp/

[SHVC]

JS will get his way. Another tantrum to the gov they will give in as usual

[pinkpanther1]

Anyone got access to the AFR article where Rex makes 'no apology for deleting comments on Facebook'

[PoppaJo]

Throwing stones that’s for sure.
Forgive us for returning to the topic, but Rex’s bombastic entrance into the domestic aviation market (https://www.afr.com/companies/transport/rex-takes-on-virgin-with-79-melbourne-sydney-flights-20201202-p56jry) just keeps on giving.

Last week, the former regional airline booked full-page ads across the News Corp newspapers highlighting the ACCC’s June 2020 rebuke of Qantas (https://www.smh.com.au/business/companies/accc-takes-qantas-to-task-over-covid-19-flight-refunds-20200619-p5547n.html)after many customers complained the flying kangaroo was giving people credits instead of refunds for cancelled flights.

Qantas responded then by contacting customers with refund offers, and says it currently processes owed money in six to eight weeks. But Rex still reckons Qantas passengers legally entitled to a refund “may be owed over a billion dollars”. And it made the point by publishing a colourful selection of recent complaints that have been directed at Qantas’ social media channels.

Mind you, a motivated look through Rex’s social media channels can also unearth plenty of gripes. And the most intriguing are those that disappear.

Sent a smattering of such, Rex responded with a statement saying it “makes no apologies” for restricting public access to comments deemed “abusive, vulgar, racist” or (even merely) “biased or unreasonable”. And that some comments may be restricted by Facebook itself.

In one now-invisible response on the very post sharing Rex’s eye-catching ad, a man asked how he could actually go about getting a promised refund from Rex. “Jetstar you click a button and it’s refunded or you have a live chat option. Rex ... on hold for over an hour yesterday and nothing ....”.

“Tried to contact all methods,” another silenced woman lamented. “Maybe try to look after the customers you have, before you start posting about other companies?”

Some noticed the erasures. “You cannot delete negative comments,” one insisted. “Talk about throwing stones. I hope you go to the wall, you deserve it.”

Others sent warnings. “I’ve set up an analytics program that records when each comment is made, its content and the time it is deleted,” one man wrote.

Meanwhile, on Twitter, where Rex cannot easily moderate what appears, complaints about call centre times are legion.

Something about stones and glass houses comes to mind ...

[90jj]

Moderation keeps Rex’s skies blueMyriam RobinColumnistJun 8, 2021 – 5.00amForgive us for returning to the topic, but Rex’s bombastic entrance into the domestic aviation market just keeps on giving.

Last week, the former regional airline booked full-page ads across the News Corp newspapers highlighting the ACCC’s June 2020 rebuke of Qantas after many customers complained the flying kangaroo was giving people credits instead of refunds for cancelled flights.

Rex’s bombastic entrance into the Sydney-Canberra market has ruffled plenty of feathers. Sam D’Agostino

Qantas responded then by contacting customers with refund offers, and says it currently processes owed money in six to eight weeks. But Rex still reckons Qantas passengers legally entitled to a refund “may be owed over a billion dollars”. And it made the point by publishing a colourful selection of recent complaints that have been directed at Qantas’ social media channels.

Mind you, a motivated look through Rex’s social media channels can also unearth plenty of gripes. And the most intriguing are those that disappear.

Sent a smattering of such, Rex responded with a statement saying it “makes no apologies” for restricting public access to comments deemed “abusive, vulgar, racist” or (even merely) “biased or unreasonable”. And that some comments may be restricted by Facebook itself.
In one now-invisible response on the very post sharing Rex’s eye-catching ad, a man asked how he could actually go about getting a promised refund from Rex. “Jetstar you click a button and it’s refunded or you have a live chat option. Rex ... on hold for over an hour yesterday and nothing ....”.

“Tried to contact all methods,” another silenced woman lamented. “Maybe try to look after the customers you have, before you start posting about other companies?”

Some noticed the erasures. “You cannot delete negative comments,” one insisted. “Talk about throwing stones. I hope you go to the wall, you deserve it.”

Others sent warnings. “I’ve set up an analytics program that records when each comment is made, its content and the time it is deleted,” one man wrote.

Meanwhile, on Twitter, where Rex cannot easily moderate what appears, complaints about call centre times are legion.

Something about stones and glass houses comes to mind ...

[pinkpanther1]

Wow, pretty interesting report to say the least

[SHVC]

Well, why should QF,VA and JQ give up anything so Rex can have them? I bet they wont give QLink any of their regional slots to expand.

[PoppaJo]

Big heavies bring in more cash for Sydney so I don’t think they will be permanently allocating those foreign slots off to Rex. This is just a bump in the road. The big toys will be back.

Virgin will no doubt find a use for the pussycats slots.

No Sydney slots. So I guess full page newspaper ads are in order? Billboards? Any other ideas folks? They seem lost on the fact, that the public don’t give two ****s.

[EdPilot84]

Latest ASX release from Rex today, now expecting a $15 million loss, apparently due the latest lockdown in Melbourne.

Guess its a good excuse....

[1A_Please]

The Australian is reporting that REX has announced to stock exchange that t now expects to lose$15M this year but bizarrely blames the loss on the latest Victorian lockdown. Seriously!!! The Victorian Government has a lot to answer for in its incompetent management of the Covid crisis but I don't think we should blame them for REX's disastrous management decisions.

[Ladloy]

The Australian is reporting that REX has announced to stock exchange that t now expects to lose$15M this year but bizarrely blames the loss on the latest Victorian lockdown. Seriously!!! The Victorian Government has a lot to answer for in its incompetent management of the Covid crisis but I don't think we should blame them for REX's disastrous management decisions.
It doesn't add up.

Re: vic government. Wait until you find out about the feds incompetency

[Green.Dot]

The Australian is reporting that REX has announced to stock exchange that t now expects to lose$15M this year but bizarrely blames the loss on the latest Victorian lockdown. Seriously!!! The Victorian Government has a lot to answer for in its incompetent management of the Covid crisis but I don't think we should blame them for REX's disastrous management decisions.

What a perfect opportunity for them to blame this disaster on something but their own incompetence. The jet operation was always going to haemorrhage money with the prices they are charging and lack of pax.

[greenslopes]

It's not what they're charging that's the issue, ultimately its what they're earning that lets them down.

[MickG0105]

The Australian is reporting that REX has announced to stock exchange that t now expects to lose$15M this year but bizarrely blames the loss on the latest Victorian lockdown. Seriously!!! The Victorian Government has a lot to answer for in its incompetent management of the Covid crisis but I don't think we should blame them for REX's disastrous management decisions.
They've had fourteen days of lockdown impacted business to deal with and that has ostensibly cost them over a million dollars a day. Further proof, to the extent that it was required, that establishing jet ops routes that were 90 percent exposed to the unchallenged lock down capital of the country showed no signs of any risk management thinking.

That said, Rex's total cost base would probably only run to about $1.1 million a day when running at full tilt. Very difficult to reconcile what they've announced today with their break-even announcement less than a month ago.

[Flingwing47]

Working fine now - maybe it was on a coffee break?

[430W]

They've had fourteen days of lockdown impacted business to deal with and that has ostensibly cost them over a million dollars a day. Further proof, to the extent that it was required, that establishing jet ops routes that were 90 percent exposed to the unchallenged lock down capital of the country showed no signs of any risk management thinking.

That said, Rex's total cost base would probably only run to about $1.1 million a day when running at full tilt. Very difficult to reconcile what they've announced today with their break-even announcement less than a month ago.

And that's the rub. This will be smoke and mirrors and will not show the true case. They appear to be masters at it. Everything they are doing is to try and divert attention from themselves. To be going after QF the way they do just doesn't make sense.

Break even case will have been after the subsidies and a reversal of their profitable position before getting into the B737's. That could easily be all of a 70M or more turnaround from last year. Now it is a further 15M loss after just a few weeks of that release. It is almost the end of Financial Year and the full year reporting due in August I believe. The truth will come out very soon I suspect.

The thing that surprises me is that the press give air to all this without any analysis. Lets see what they do during reporting season.

[SHVC]

Well they’re giving every indication they want the 737 op to keep going. ASX announcement acquired FFS to be maintained by Ansett in Brisbane with intent to be moved in 2 yrs to sydney.

[pinkpanther1]

https://australianaviation.com.au/2021/06/rex-welcomes-boeing-737-full-flight-simulator-ahead-of-anticipated-15m-fy-loss/

Anyone know if the Sim is ex VA? I'm assuming that they probably have a surplus after the fleet reduction.

[KRUSTY 34]

https://australianaviation.com.au/2021/06/rex-welcomes-boeing-737-full-flight-simulator-ahead-of-anticipated-15m-fy-loss/

Anyone know if the Sim is ex VA? I'm assuming that they probably have a surplus after the fleet reduction.

Anyone know the going rate for a FFS B737 Sim?