REX to transition to ATRs, start domestic jet ops

[Turnleft080]

Labor was going to bailout Virgin don’t forget. I do remember the scenes of Labor MPs and Shadow ministers on the pavement in front of T3, having a whinge at the Feds, in why they wouldn’t bail out a $10b mess. Labor would have rescued it. Would have been the Aussie Alitalia, in and out of rescue deals for years ahead if they saved Virgin 1.0.
As it turns out and now in hindsight, going into admin cleaned out all those exuberant leasing fees on the 330s and Embraers sitting idle in the States and renegotiated new leasing costs on the existing 73s. A gov handout wasn't going to cut all that. That is just talking leasing costs. Speaking of leasing costs since this is a Rex thread, PAG will want their leasing costs in full after March assuming they were in a discount arrangement for the first 12 months.

[SHVC]

And I’m sure the additional 30 737s they seek will be at a higher cost as the world opens. I’m JS will spin some BS to parrot and get NSW to pay something

[ontherise]

With REX booting up its 737 FO recruitment. What are they currently offering in terms of pay?

[aussieflyboy]

With REX booting up its 737 FO recruitment. What are they currently offering in terms of pay?

Not enough.

[Ladloy]

With REX booting up its 737 FO recruitment. What are they currently offering in terms of pay?
The award. No EBA in sight.

[Low Pass]

Big drive for FOs, instant reply almost after applying. Maybe DECs can still sneak in. Guys still leaving to VA and other jobs.

Cap 180k
FO 115k (ish)
Award allowances


EBA should bring 10 DDOs a month and a flight pay threshold

[Goat Whisperer]

Cap 180k
FO 115k (ish)

Not vastly different to VA rates at the moment. VA getting 12/28 days DDO though.

[Servo]

Not vastly different to VA rates at the moment. VA getting 12/28 days DDO though.
VA Captain is on $200K for 57.5 hours before overtime kicks in. 12/28 obove 57.5 hours and 13 if below, I think.

Should be on 13 days off at the moment due to the quiet rosters, but company reneged on that (new CAE bid system delayed as the IT up and left for better conditions). Unions have let it slide...... again.

[Budfox]

Whats the go with this job everyone? Advertised again yesterday for 737 FO.
I applied last year when they previously advertised and didn't even hear anything back.
Have time on type already but whats the secret to hiring? Or am I wasting my time here.

[PoppaJo]

Whats the go with this job everyone? Advertised again yesterday for 737 FO.
I applied last year when they previously advertised and didn't even hear anything back.
Have time on type already but whats the secret to hiring? Or am I wasting my time here.
Are you ex Tiger or Virgin? Might need to wait until they cycle crews from those two places before they start looking elsewhere.

[Ladloy]

75m of the 150m drawn. 30m cash on hand.

[SHVC]

30m does not seem like a lot to expand 1 jet every 2-3 months.

[Ladloy]

30m does not seem like a lot to expand 1 jet every 2-3 months.
Their turboprop crew will be leaving in droves in the coming months as the EBA negotiations start getting dirty. Qantas and Jetstar will start taking from hold files and that will hurt them. They were short pre covid and they have expanded the network since then.

[Colonel_Klink]

It is certainly going to be an interesting time for Rex over the next little while, especially if there continues to be a focus on expanding the jet operation. Will management lose focus on the fundamental part of their business (that being the SAAB operation) in the pursuit of shiny jets?

It also begs the question as to what is in store for the Australian aviation industry? QF will continue dominating the top end of the domestic RPT market, JQ will have more 320s than it did pre COVID and has the NEOs arriving mid year, Virgin has at least 85 737s and is targeting 1/3rd market share, Rex is saying they want to get an extra aircraft every 1-2 months up to 30 aircraft and target servicing every capital city in 2022, Bonza has at least 8(?) 737 Max aircraft on the way and Alliance is getting 30 odd Ejets. This seems like madness and surely something will have to give?

[PoppaJo]

It also begs the question as to what is in store for the Australian aviation industry?

Remove Tiger, Jetstar picks up 3/4 of that, Virgin the remainder. That’s what a sustainable market is. Long term that is also what’s best for employees and this profession. I’m not saying block competition I’m saying that nobody has proven in earnings, that a 4th or 5th operation is sustainable.

Will be a struggle later down the track to even man the above 3 let alone 5, as we cycle out Pilot generations, to a generation that has no interest in the career whatsoever.

[MickG0105]

Rex's HY1-22 results out - $52.979 million loss before tax, bottom line $36.658 million loss. That was off of $116.482 million in revenue.

[Icarus2001]

to a generation that has no interest in the career whatsoever. cough cough What are they interested in?

[KRUSTY 34]

cough cough What are they interested in?

Ultimately making money, one would assume/hope.

Which of course gives strength to PoppaJo’s post.

[Stationair8]

The next generation aren’t interested in any career unless it starts north of $100k, family friendly, flexible work hours( ie Tuesday, Wednesday and Thursday), quick promotion, bonuses, company they work for must have a social licence, pet friendly and work from home!

[Ladloy]

The next generation aren’t interested in any career unless it starts north of $100k, family friendly, flexible work hours( ie Tuesday, Wednesday and Thursday), quick promotion, bonuses, company they work for must have a social licence, pet friendly and work from home!
or it could be the cost of training is out of reach for most. Why spend upwards of 100k to work in GA when you could do a trade and buy a house. Seeing the majority of pilots stacking shelves for two years doesn't help either.

[Wizofoz]

The next generation aren’t interested in any career unless it starts north of $100k, family friendly, flexible work hours( ie Tuesday, Wednesday and Thursday), quick promotion, bonuses, company they work for must have a social licence, pet friendly and work from home!

As the father of two smart, well educated, hard working young adults, facing the absolute mess my generation has left them, this is a comment so stupid it borders on the offensive.

[Icarus2001]

facing the absolute mess my generation has left them,

The mess of stable government, democracy, Australia having over thirty years of growth, Medicare, low unemployment, pre covid cheap overseas travel, high rates of education, low disease, availability of good food with choice….
Yes what a mess.

[Ladloy]

The mess of stable government, democracy, Australia having over thirty years of growth, Medicare, low unemployment, pre covid cheap overseas travel, high rates of education, low disease, availability of good food with choice….
Yes what a mess.
Employment rate is a load of bollocks, 1 hour a month is considered employed. Underemployment is skyrocketing with a massive casualisation of the workforce. No affordable housing for anyone on median wage. Two decades of stagnant wages. Widening wealth inequality. Government debt tripling since 2013, government corruption worsening.

[MickG0105]

Employment rate is a load of bollocks, 1 hour a month is considered employed.
It's an hour a week, not a month. And it's an internationally applied metric, it's not like someone made it up recently to make the figures look better.

[SHVC]

The Gov debt tripling is really unavoidable.

If Albo gets in, we will plunge further.

[Arnold E]

If Albo gets in, we will plunge further.
Hmmm, what makes you so sure of that, and pleeeeese dont say look at the past:rolleyes:

[Wizofoz]

The mess of stable government, democracy, Australia having over thirty years of growth, Medicare, low unemployment, pre covid cheap overseas travel, high rates of education, low disease, availability of good food with choice….
Yes what a mess.
Housing prices that make ownership a pipedream, lowering real wages, rising cost of living- have a look at birth rates. The younger generation are having to choose not to be parents in order make enough for any xemblance of a descent life.

[Wizofoz]

Employment rate is a load of bollocks, 1 hour a month is considered employed. Underemployment is skyrocketing with a massive casualisation of the workforce. No affordable housing for anyone on median wage. Two decades of stagnant wages. Widening wealth inequality. Government debt tripling since 2013, government corruption worsening.
The only part I'd disagree with you on is employment- there is plenty of work out there.
It's just that, as you say, even someone working their rollicks off still can't afford a house.

Recent report said that someone on the average wage is out of the market for 70% of housing in the nation- so obviously a far higher percentage in the capitols.

[Icarus2001]

The younger generation are having to choose not to be parents in order make enough for any xemblance of a descent life. Yet every week I speak with twenty something cabin crew and terminal staff who are buying a house or getting pregnant, some even do both. Perhaps not subscribing to three streaming services, owning a $2000 mobile phone, visiting a nail spa every week and eating home delivery three times a week helps them make ends meet. Or is it the lack of smashed avocado...:ok:

I think you mean a decent life unlike a steep descent.

[PoppaJo]

or it could be the cost of training is out of reach for most. Why spend upwards of 100k to work in GA when you could do a trade and buy a house. Seeing the majority of pilots stacking shelves for two years doesn't help either.
Its hard to convince a 20 something that you need to, spend north of 100k to get an Instructor rating, spend the next decade on 50-60k, then find some meaningful employment to try and save for a house, then use the golden seat years (10-20 year wait) to build up a retirement. Very challenging to find a partner who is willing to put up with all that and move north, west, south while we build hours for the turbine job. You can see why the application numbers for cadet schemes are off the charts. I have had young two stripers in the past sit next to me, still live in the same suburb they got raised in.

[Wizofoz]

Yet every week I speak with twenty something cabin crew and terminal staff who are buying a house or getting pregnant, some even do both. Perhaps not subscribing to three streaming services, owning a $2000 mobile phone, visiting a nail spa every week and eating home delivery three times a week helps them make ends meet. Or is it the lack of smashed avocado...:ok:

I think you mean a decent life unlike a steep descent.

The average house price was 3 times the average annual wage 30 years ago. Now it's eight.

[Icarus2001]

The average house price was 3 times the average annual wage 30 years ago. Now it's eight.

Quote (https://www.pprune.org/newreply.php?do=newreply&p=11190657) That may be true, numbers are funny things.
That would be why now we have both people working not one. Leading to longer maternity leave and paid leave.
Young people are still buying houses or apartments and they have a better standard of living than their parents and grand parents, they live longer are healthier during their longer life.
Yes it really is doom and gloom.

Edited to add...https://www.aussie.com.au/content/dam/aussie/documents/home-loans/aussie_25_years_report.pdf

[Wizofoz]

That may be true, numbers are funny things.
That would be why now we have both people working not one. Leading to longer maternity leave and paid leave.
Young people are still buying houses or apartments and they have a better standard of living than their parents and grand parents, they live longer are healthier during their longer life.
Yes it really is doom and gloom.

Edited to add...https://www.aussie.com.au/content/dam/aussie/documents/home-loans/aussie_25_years_report.pdf

Actually, that's thed point- we have had an improvment in standard of living, life expectency and health generation on generation- until THIS one. All three are predicted to fall- we are the first generation to bring kids into the world likely to live shorter, worse lives than we did.
Do you think the necessity of two income just to live is an improvement?

[cloudsurfng]

Can be summed up in two words really.

greedy boomers

[Deano969]

People have pushed up house prices by offering more and more at auctions and offering above market value, particularly those on 2 incomes, the government can not be blamed for that
What they can be blamed for is stalling wages as the let overseas workers in the hundreds of thousands to fill unskilled vacancies
These jobs were filled by school leavers who likely also studied along with mostly unskilled workers, these unskilled workers are mostly now on welfare
There is now too much supply so employers have no need to offer up more to find suitable employees...
As an employer, through ought the boarder closures, labour was very hard to find and and I was having to offer more to find staff, which had the added knock on effect that I had to increase pay to my current staff to match the new ones, double ouch...

[Icarus2001]

All three are predicted to fall- we are the first generation to bring kids into the world likely to live shorter, worse lives than we did.

* Predicted - it has not happened and may not.
* The shorter lives issue relates to findings in the USA

Which ever way you cut, a twenty something now is FAR FAR better off than any previous generation, but the way they carry on about boomers you would not know it and they do not realise it.

[Wizofoz]

* Predicted - it has not happened and may not.
* The shorter lives issue relates to findings in the USA

Which ever way you cut, a twenty something now is FAR FAR better off than any previous generation, but the way they carry on about boomers you would not know it and they do not realise it.

No, us too- we have our own obecity/health/polution issues.

I REALLY REALLY don't see why you say that- my first house was worth slightly over twice my salary. That house would now be worth 5 times MY current salary- let alone the equivelent to what I earned then. In what way are my kids better off than we were?

[MikeHatter732]

* Predicted - it has not happened and may not.
* The shorter lives issue relates to findings in the USA

Which ever way you cut, a twenty something now is FAR FAR better off than any previous generation, but the way they carry on about boomers you would not know it and they do not realise it.
Said like a true boomer...

and you wonder why you have the reputation you do...

[Icarus2001]

Word of advice, never jump to conclusions. I am Gen X well and truly.

So outside of housing affordability how are they worse offf?

[industry insider]

Housing prices that make ownership a pipedream, lowering real wages, rising cost of living- have a look at birth rates. The younger generation are having to choose not to be parents in order make enough for any xemblance of a descent life.

But rising house prices mean boomer home equity is higher than ever. I agree, its hard for the younger generation to get on the housing ladder, that's why we will have to downsize and free some cash to provide a deposit. We need less as we get older anyway.

[Wizofoz]

Word of advice, never jump to conclusions. I am Gen X well and truly.

So outside of housing affordability how are they worse offf?

Umm...aside from the ability to aquire the single most important asset anyong can have?
WELL- affordability of just about every other staple of lfe!
Stagnant wages in the face of growing inflation, against a backgroud of disproportionatley low expenditure on public infrastructure.
An irrepairably damaged environment that will have both ecconomic and health outcomes forever.
The condensing of wealth and therefore political power in the increasingly smalll number of the very rich.
The destructon of collective bargsning, with assocuiated lack of rights regarding job security.

SO- we are in an inbalance. I've answered a question for you, while you ignored one from me- how are they better off?

[Wizofoz]

But rising house prices mean boomer home equity is higher than ever. I agree, its hard for the younger generation to get on the housing ladder, that's why we will have to downsize and free some cash to provide a deposit. We need less as we get older anyway.

Agreed- but we're the first generation to need to.

[TimmyTee]

So outside of housing affordability how are they worse offf?

Not so free uni? What's the average degree course cost now compared to the 70s?

Also I'm sure you've read the stats showing the average required deposit is growing at a greater rate than the average savings a young person can achieve over the same period..

May I ask you, hand on your heart, do you consider yourself to have come from a better than average family with regards to wealth?

[pinkpanther1]

Why don't we get back on track? I'm not sure this squabbling is helping anyone.

[PoppaJo]

Why don't we get back on track? I'm not sure this squabbling is helping anyone.

The latest from the SMH....Rex Airlines says it has started to lure some of Qantas’ lucrative corporate clients over to its new inter-city jet service, contradicting the larger carrier’s claim that the smaller airline posed no challenge to its market dominance.

.....Reminded me of this classic back in the day...

A board member of budget carrier Tiger Airways, Ryan said the “Porsches and Ferraris” were starting to park outside the Tiger terminal.

[RickNRoll]

No, us too- we have our own obecity/health/polution issues.

I REALLY REALLY don't see why you say that- my first house was worth slightly over twice my salary. That house would now be worth 5 times MY current salary- let alone the equivelent to what I earned then. In what way are my kids better off than we were?
Double your salary was the most you could borrow back then.

[Wizofoz]

Double your salary was the most you could borrow back then.

Combined salary= my wife worked.

[Chill]

Umm...aside from the ability to aquire the single most important asset anyong can have?
WELL- affordability of just about every other staple of lfe!
Stagnant wages in the face of growing inflation, against a backgroud of disproportionatley low expenditure on public infrastructure.
An irrepairably damaged environment that will have both ecconomic and health outcomes forever.
The condensing of wealth and therefore political power in the increasingly smalll number of the very rich.
The destructon of collective bargsning, with assocuiated lack of rights regarding job security.

SO- we are in an inbalance. I've answered a question for you, while you ignored one from me- how are they better off?

Yeaah, I'm with WIZ, SHVC, et al on this one. "This generation" (hard to say who that is exactly as there seems to be several in the Govt mix anyway) had things sorta in hand upto the 2020 whatever you wanna call it. I mean comparatively Oz rode out the 2009 GFC without QE, but this time the Govt/RBA has gone bonkers...
Trading Economics - M1 Supply (https://tradingeconomics.com/australia/money-supply-m1). The whole lot, M0, M1, M2, M3 have headed skyward and that doesn't bode well (and Oz isn't the only country to have done it). Icarus, Insider, et al, your mates maybe buying houses and having babies, but you're riding a wave of debt in the process, something some of the previous generations either managed and/or steered clear of. That combined with CoL increases in Oz over the last couple of years, plus the wage stagnation some have mentioned before is a lay-up for some pretty unpleasant future realities. Lab/Lib doesn't seem to matter really, both have screwed the pooch.

REX is just another example of an entity riding the debt wave, new money and all. I wouldn't know what kind of reserves QF has or how deep Bain's pockets go, but sure as dog-doo stinks REX is in the game with a pretty empty hand and a lot of bluff.

[SHVC]

The latest from the SMH....Rex Airlines says it has started to lure some of Qantas’ lucrative corporate clients over to its new inter-city jet service, contradicting the larger carrier’s claim that the smaller airline posed no challenge to its market dominance.

.....Reminded me of this classic back in the day...

A board member of budget carrier Tiger Airways, Ryan said the “Porsches and Ferraris” were starting to park outside the Tiger terminal.

The spread in the Australian tells a different story, makes Rex look desperate and going broke fast.

[43Inches]

Tiger never had business class seats and a regional network that offered connectivity for business travelers. In all honesty, the elephant in the room is QFs huge and growing debt in a world where interest rates are about to go ballistic. The build up of fleet is an indication the other airlines know this and smell blood in the water. QF will post another billion dollar loss this year, who knows what the debt bill will be up to, $6-$7 $10 billion before this is all over. Very hard for them to compete with such huge encumbrance, add to that a squeezed employment market and as the opposing fleets build up QF will be forced to cede slot times for competitive purposes as the ACCC will not allow a monopolistic hold on slots. This is why QF is so keen on the 60% line in the sand, if they lose market share they lose the ability to require/demand that market share of slots into Melbourne and Sydney.

Joyce made a fatal mistake for QF when it claimed it required no bailout money back in 2020, a ploy to force Virgin into administration. His bully tactic has backfired with now his own entity indebted to the teeth with two strong competitors growing with private equity partners with deep pockets and cheap leases. No other airline would touch QF unless to buy out the corpse and PE would be brave to step up against Bain and PAG with already established markets. Good luck to QF, but I don't see things being so rosy in the next 5 years. The government will not bail out QF as it is, the International sector is probably the only part they may consider, the rest will be pickings for VA and Rex to select what they want from the ashes.

[Beer Baron]

Interesting opinion 43” but I see it very differently. .
Qantas’s debt was actually lower this half than the previous half. Sold off underused property.
Net debt is now at $5.5bn. Prior to COVID it was at $4.7bn in a much higher interest rate environment.
Not much of an increase in debt and the terms of the debt will be much better.

Qantas have weathered the extreme adversity of COVID surprisingly well. Despite not asking for a bailout, they received hundreds of millions of dollars in government assistance. They have used the pandemic to be fairly ruthless in reducing costs. Ground handlers and cleaners all outsourced, pushing through company-wide multi-year wage freezes, or possibly worse for our cabin crew colleagues.

It is looking like the world (and even WA) is emerging from COVID restrictions so I expect Qantas to return to bumper profits, having trimmed their costs and increased their domestic market share.

All that being said, I think QF IR are a disgrace they treat their employees very poorly, but I don’t think they’ll be going broke.

[43Inches]

It is looking like the world (and even WA) is emerging from COVID restrictions so I expect Qantas to return to bumper profits, having trimmed their costs and increased their domestic market share.

The world in moving out of Covid and into international security issues, International travel will cop another hit and interest rates to pay for the military escalation and covid debts are starting to mount already. QF will not be in a low interest environment for long. To put this in perspective, Rex so far has $40 mil in actual loans debt out of $77m line of credit at currently 2% of used credit (as per the 1/2 year report), these amounts are group wide, so the loan amount is spread among the pel-air ventures AAPA and other things. It owes PAG $70mil out of a total of $150mil, however that is convertible notes, so PAG can be given/take Rex shares at discount instead of debt, the loss was more because of more draw down of PAG investment, however cashflow and net available liquidity was stable. Virgin will be the same arrangement with Bain supporting losses, if any, until it stands up on it's own and then there will be a float. The aim here will be for all entrants to take market share from QF and force openings in the slot system into the main hubs. QF has had to sell/lease back assets to keep debt to a minimum and does not have an equity partner it can trade shares for equity at present, it has run out of high value assets to sell, so you wont be seeing much more of that coming up. At present the QF sale act restricts it from selling anymore shares to an overseas investor so that avenue is blocked. From what I see of QF at the moment its loads are not huge and they are struggling to crew everything. Add to that industrial stands that spell last ditch efforts to cut costs like cutting loose EBAs instead of negotiating. QF is in trouble there is no doubt, and its enemies are no longer on their knees, with another seemingly well backed entity coming as well, while I don't see Bonza as a huge threat it will suck passengers from the system overall. I see absolutely no chance of QF returning to huge profits in any near term scenario.

[Potsie Weber]

QF is currently over 70% domestic owned. A couple of $b there in foreign investment if they really wanted, they just don’t want to dilute the share price whilst debt is a relatively cheaper option.

They also have much greater diversified business as opposed to Rex and even Virgin. A goliath FF program expanded into insurance etc and an exponentially growing freight business.

[43Inches]

Current foreign ownership as of the last notifications was just under 36%. No investment firm would be interested in 14% of a company unless they saw significant ROI, they would want significant returns and some for of meaningful board representation for Billions in investment, this has been the issue for a long time. Virgin had the same problem with too many entities spoiling the broth and none able to control direction to the point it was worth investing in. They just had Veto controls to ensure VA didn't cross their paths and interfere with their own agendas.

They also have much greater diversified business as opposed to Rex and even Virgin. A goliath FF program expanded into insurance etc and an exponentially growing freight business.

I agree to a point, but the cash cow for QF is its domestic operation, every opposition airline knows this, and it is always quoted as the "underlying profit maker". The FF program and other sundries are worth very little without QF airlines at the helm.

All you have to do is read the pilot responses to the customer complaint in the other thread about how QF pilots have no avenue to pass on critical customer suggestions to management that might be heard to see how fractured the company is.

[MickG0105]

... It owes PAG $70mil out of a total of $150mil, however that is convertible notes, so PAG can be given/take Rex shares at discount instead of debt, ...
Rex has currently drawn down $75 million, not $70 million. And PAG can't be given shares at a discount. The convertible notes issue to PAG is clear on a number of things. PAG determine the form of settlement - shares or cash - not Rex. And if PAG elect to take shares the issue price is $1.50 - if the shares are trading below that then Rex has to cover the difference. PAG are not going to be diddled by Rex on that deal.

... At present the QF sale act restricts it from selling anymore shares to an overseas investor so that avenue is blocked.
The Sale Act does not block another shares placement so long as subsequent to the placement foreign ownership doesn't exceed the threshold 49 percent articulated in Part 3 of the Act. Qantas could easily launch another $1.5 billion equity raising through institutional placements and manage the foreign component.


​

[PoppaJo]

has run out of high value assets to sell, so you wont be seeing much more of that coming up

They could partially float Jetstar. Could still keep a large chunk of it but looking at its numbers pre pandemic, certainly would generate many billions. I know that probably won’t happen under AJ but it will one day under a future boss. Certainly is a business ripe to be partially offloaded.

Sell off Jetstar Japan and for heavens sakes just close Jetstar Asia.

[43Inches]

The Sale Act does not block another shares placement so long as subsequent to the placement foreign ownership doesn't exceed the threshold 49 percent articulated in Part 3 of the Act. Qantas could easily launch another $1.5 billion equity raising through institutional placements and manage the foreign component.



That still doesn't buy them a partner willing to pump funds in the likes of Bain and PAG, QFs big partners in crime such as emirates are also treading water, and QF burned its bridge with SQ. On that point you will probably find SQ probably getting cosy with either VA or Rex soon for on carriage. Share dilution is not something you do willy nilly, if the books really start looking bad the share price is likely to tank. My thoughts are that VA is going to seriously challenge QF in the domestic scene over the coming years, Rex will eke out a niche like it did with regional services. QF will have to temper its fever pitched hold the line at 60% however as it will be bleeding cash to do so.

[MickG0105]

That still doesn't buy them a partner willing to pump funds in the likes of Bain and PAG, QFs big partners in crime such as emirates are also treading water, and QF burned its bridge with SQ. On that point you will probably find SQ probably getting cosy with either VA or Rex soon for on carriage. Share dilution is not something you do willy nilly, if the books really start looking bad the share price is likely to tank. My thoughts are that VA is going to seriously challenge QF in the domestic scene over the coming years, Rex will eke out a niche like it did with regional services. QF will have to temper its fever pitched hold the line at 60% however as it will be bleeding cash to do so.
You don't seem to understand how institutional placements work - why would you look for a partner when you can just get cash?

And share dilution isn't an issue because of those share buy backs, much maligned as they were from some quarters. The buy-backs afford Qantas significant flexibility in re-issuing shares via equity raisings. They could likely raise $1 billion next month without raising a sweat.

And it's probably worth noting that Qantas, even on the heels of those pretty ordinary HY1 results, is trading at a 37 percent premium to the placement price of the last institutional placement. As troubling as the last two years has been for the industry I'd much rather be in Qantas's shoes than Rex’s, or Bonza's (thongs, most likely for them).

[43Inches]

I think you really don't understand that a company can't just generate infinite shares from ever producing more shares. First they have to be worth something, to get the desired return, then there has to be willing buyers which is usually not an issue, and then you have to avoid diluting investors shares already invested. Every time you float more shares each share loses value, which turns off potential investors if that continues. Coles is going down a similar path to QF at the moment, its quest on dominating market share is seeing it setting up stores to compete with its other stores sometimes within a km of each other. The onus is then placing ever increasing pressure on labor to cut costs in staff numbers and conditions which are now below award. QF wont get away with that for pilots as its in a highly competetive environment so its starting with the stood down FAs and other segments. The writing is on the wall for both companies.

[MickG0105]

I think you really don't understand that a company can't just generate infinite shares from ever producing more shares. First they have to be worth something, to get the desired return, then there has to be willing buyers which is usually not an issue, and then you have to avoid diluting investors shares already invested. Every time you float more shares each share loses value, which turns off potential investors if that continues. Coles is going down a similar path to QF at the moment, its quest on dominating market share is seeing it setting up stores to compete with its other stores sometimes within a km of each other. The onus is then placing ever increasing pressure on labor to cut costs in staff numbers and conditions which are now below award. QF wont get away with that for pilots as its in a highly competetive environment so its starting with the stood down FAs and other segments. The writing is on the wall for both companies.
No one is talking about infinite shares; that's simply a nonsensical straw man. Qantas bought back well over 500 million shares between 2012 - 2019; that gives them the flexibility to re-issue share via an equity raising without significantly diluting share value. That is not something that Rex has in its bag of tricks.

Rex's HY1 results are comparatively much worse than Qantas's. Rex's revenue for the half of $116.5 million was down by just $9 million on HY1-21 but their operating loss (EBITDA) was over $33 million. That compares to an operating profit for HY1-21 of $24.8 million off of revenue of $125 million. That's nearly a $60 million swing over a year. What's the fundamental difference between the six months to December 20 and the six months to December 21? Jet ops. It should be ringing alarm bells.

[43Inches]

Yes, but its apples and oranges, Rex is in a rapid expansion phase, most would have a breakeven mark at two years plus with extremely steep startup costs in the first two years, I wont even add in Covid. QF is purely in damage control with its international ops on life support and its domestic just coming out of hibernation. Rex could probably drop a share float tomorrow and pick up 100mil in cash flow if it wanted to, as you said it's a matter currently of cheap loans add to that not wanting to dilute the share mix. Virgin did similar just before it crashed in a heap. There is a vast difference to floating shares for expansion or for life support and the market will respond accordingly.

PS in comparing the two airlines, they both had the same % increase in revenue of just over 34% Rex and 31% for QF. Comparing share value, Rex each share has a net tangible value of +$1.28 per share, where Qantas the tangible value has gone further negative to -0.35cents. That last bit really shows how bad QFs debt position is, the company has no tangible value if you broke it up.

[MickG0105]

Yes, but its apples and oranges, Rex is in a rapid expansion phase, most would have a breakeven mark at two years plus with extremely steep startup costs in the first two years, I wont even add in Covid. ...
Well, Rex's now halfway through that two year rapid expansion phase. How are they doing?

Rex could probably drop a share float tomorrow and pick up 100mil in cash flow if it wanted to, ...
You cannot possibly believe that. Rex essentially doubled its issued shares with the PAG deal. There is no way possible that they could issue another $100 million in shares. That's just rank nonsense.

... There is a vast difference to floating shares for expansion or for life support and the market will respond accordingly.

Well, we saw exactly how the market responded to Qantas's share placement "for life support" in late 2020. $1.36 billion raised from the institutional placement and the shares are currently trading at a 35 percent premium to the issue price.

... Comparing share value, Rex each share has a net tangible value of +$1.28 per share, where Qantas the tangible value has gone further negative to -0.35cents. That last bit really shows how bad QFs debt position is, the company has no tangible value if you broke it up.
Now you're getting close to what Qantas's short-term problem is - I'm surprised no analyst has commented on it yet. That said, that "market" you were quoting earlier values their shares just north of $5 a pop. That is how the market views their recovery and future earnings potential. Through the pandemic Qantas's FF program alone generated four times the revenue and eight times the profit that Rex could manage in a very good year. But if you want to go long on Rex, I doubt anyone will look to get in your way.
​​​​​​​
​​​​​​​

[43Inches]

Well, Rex's now halfway through that two year rapid expansion phase. How are they doing?

They are half way through their start up capital, so that says it all. The $150million was startup capital, that's what it's for, not sure what people expected that it just sits in a bank account and they would be profitable off the bat. They also just announced expansion to 30 aircraft so that says they are bullish on the next 12 months. So the answer is things look as though they are on plan, nothing spectacular, nothing bad.

You cannot possibly believe that. Rex essentially doubled its issued shares with the PAG deal. There is no way possible that they could issue another $100 million in shares. That's just rank nonsense.

Rex raised $150million to start up the jets on a share conversion deal, there is no doubt with the current 'actual' value of the company another deal worth $100 or even $150 million would be easy. Again this is QFs problem, they are losing big investors for blind faith mom and dads and other bets rather than commercial sense. If you were a large company looking to invest why would you bet on QF, theres no way to re-coop losses, the company is worth less than 1c per share in assets. You then have the issue that most of cash is tied up in the company maintaining profitability, so then the net tangible drops negative, thats why its worth -.35 cents a share. Rex you could buy in now and sell its assets for the price you paid for the shares, very low risk to a large player.

Well, we saw exactly how the market responded to Qantas's share placement "for life support" in late 2020. $1.36 billion raised from the institutional placement and the shares are currently trading at a 35 percent premium to the issue price.


Fools and their money soon parted. Joyce is good at spin, but the fundamentals are very bad for QF with all the competition going its way. QF and Telstra share the 'national' identity con, where Australians buy into anything at stupid prices just because they feel it's Australian. All they are doing is padding Joyces retirement plan as he spins creative accounting to make a lame duck look like it could win the Melbourne cup.

Now you're getting close to what Qantas's short-term problem is - I'm surprised no analyst has commented on it yet. That said, that "market" you were quoting earlier values their shares just north of $5 a pop. That is how the market views their recovery and future earnings potential. Through the pandemic Qantas's FF program alone generated four times the revenue and eight times the profit that Rex could manage in a very good year. But if you want to go long on Rex, I doubt anyone will look to get in your way.


This is far from short term, the creative accounting involved selling the silverware behind the scenes. The paydown in debt you mentioned that happened this half was bankrolled by the sale of QF owned Mascot land and facilities, some $600 million of assets gone exchanged to lease it back. QF has been gutted like VA was to the point its an operating shell with no physical value. That will never return to where it was.

[MikeHatter732]

Is that you John Sharp?

[43Inches]

Nope, just a realist, and I'm not just on Rex, I feel Virgin will be strong the next few years as its now in good position cashed up with cheap leases. As I said QF stuffed up and should have pushed for a handout for it and VA, it's better having debt nobbled opposition than a now financial giant backed lean operation.

[transition_alt]

I notice we haven’t heard from PoppaJo re pax loads for a while. That might be due to the fact load factors are really starting to pick up.

Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.

The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.

[SHVC]

Either way 43 is not an Aussie, not sure why they are so pro Rex all of a sudden.

The give is all in the spelling. We spell it Mum, not Mom. Post 1817.

[PoppaJo]

I notice we haven’t heard from PoppaJo re pax loads for a while. That might be due to the fact load factors are really starting to pick up.

Using the past two weeks as an example, the total seats available on a significant amount of flights are in the single digits. Furthermore future bookings are looking very strong.

The MEL-OOL route seems to be the exception where they aren’t making the numbers at the moment.
Has most certainly been an uptick in demand across the board within the last week, mask removal rules across the east coast will boost confidence. We are only 4 weeks to run until Q4 when the big players are planning on 100% capacity.

Looking at the Rex numbers, today was busy, yesterday some good and bad patches. Mid week not overly fantastic but but better as the week closes out. Melbourne to Gold Coast however is not pretty as you say. Sydney should be busy for all this week with Mardi Gras etc.

April should hopefully be a good month for everyone with demand surging and everyone back at full rosters!

[No Idea Either]

Took off from ML (RWY16) to SY the other day directly behind REX. We had 175 punters on board. They outclimbed us by 7000’ at ALBAK. I don’t think they had many on board……… unless they were going full rated at best rate:}

[43Inches]

This is a traditional low time for leisure travel in Australia, but possibly some uptick this year due to people travelling to catch up with family and get some face to face business done post covid. Queensland might stay a bit sedated with the weather pattern that's smashing them at the moment. I've noticed a few people doing silly things like going to the pacific islands during hurricane season just because of pent up travel bugs. Things you would normally avoid unless you really needed the cheaper fares. There's also not much or no cruising at the moment so that whole sector of leisure travel is still completely missing.

[Capn Rex Havoc]

43 - You really must be foreign. It is "Cyclone" season over here not "Hurricane".....
also this from you - "I've noticed a few people doing silly things like going to the pacific islands during hurricane season just because of pent up travel bugs. Things you would normally avoid unless you really needed the cheaper fares." It couln't possibly be that that timing suits families, work etc........

[Trevor the lover]

That said by someone who is not "here."

[Capn Rex Havoc]

Trevor - It is an Aussie forum that I was posting on, and 43 was referring to hurricanes in Aus.
I hope you are enjoying your retirement.

[43Inches]

Sorry for the late response, I spent the last few days rolling on the floor in laughter at how stupid some posters are on this forum and gave them some time to think about what they posted. Sorry I'm not Aboriginal, so that makes me a foreigner so I better not post anything negative about the Roo in future. As for where I live or come from that matters nowt, but it's definitely within the coastline of mainland Australia. Can we put a perma gag on anyone from QLD when they talk about people that are not 'one of them', it makes the rest of Australia look stupid.

[Trevor the lover]

Rex - retirement beats the **** out of being a pilot. Will be even happier when I get to my 12 acre retirement paradise on the new South coast.

[Lookleft]

Will be even happier when I get to my 12 acre retirement paradise on the new South coast.

Hope its got a boat shed.

[Capn Rex Havoc]

Sorry for the late response, I spent the last few days rolling on the floor in laughter at how stupid some posters are on this forum and gave them some time to think about what they posted. Sorry I'm not Aboriginal, so that makes me a foreigner so I better not post anything negative about the Roo in future. As for where I live or come from that matters nowt, but it's definitely within the coastline of mainland Australia. Can we put a perma gag on anyone from QLD when they talk about people that are not 'one of them', it makes the rest of Australia look stupid.

You appear to not from this planet let alone Australia. The point I was making, and it had 'nowt' to being from QLD or any state for that matter, but was to educate you that Australia gets cyclones - not hurricanes.

Trevor - I'm glad you are enjoying your retirement.

[43Inches]

Hurricane is just another name for a tropical storm or cyclone, yes it's used in the US more often for their weather patterns. Point is you called me a foreigner for using some weird lingo. In Sydney and Melbourne where most of the 'foreigners' live we have some that have been here 50 years plus that can barely speak English, as they escaped their various regimes with a group of others who speak the same language and never needed to learn the Queens speak. Some of them could barely call it a storm, let alone specifically a cyclone or hurricane. Some have been Australians before you were born.

In the street I live in my Neighbors are a Ukranian, 3 families of Brits, an Irish family, a South African family and a family from mainland China that all migrated here in the last 10 years and are now citizens. Then there are other families that have lived their whole life here.

When you bring the term 'foreigner' into an argument it looks as though you are trying to denigrate the individuals knowledge of local goings on. Otherwise it does matter nowt where I'm from.

[Capn Rex Havoc]

43 - Hurricane is just another name for a tropical storm or cyclone, yes it's used in the US more often for their weather patterns. ahhhh No it isn't.- The BOM never refers to a cyclone in the southern. hemisphere as a "hurricane". They never say "Tropical Hurricane Winifred" is bearing down on Innisfail.

In Sydney and Melbourne where most of the 'foreigners' live we have some that have been here 50 years plus that can barely speak English, as they escaped their various regimes with a group of others who speak the same language and never needed to learn the Queens speak. Some of them could barely call it a storm, let alone specifically a cyclone or hurricane. Some have been Australians before you were born.

What a load of rambling non sensical generalisations. Doesn't matter where some one is from, doesn't stop revolving tropical storms spinning in clockwise direction in the southern hemisphere, hence - Cyclone.

You are just ignorant.

[43Inches]

Haha, coming from the guy that called me a foreigner, I think you should stop posting, you are sounding really unintelligent now.

Actually, keep going I really want to know how low your IQ actually is. Its so far around Pauline Hanson level, maybe Trump, lets see if it can get to Clive Palmer level.

In anycase you are so far off topic now you might as well be a qanon shamen.

[dijical]

43 - ahhhh No it isn't.- The BOM never refers to a cyclone in the southern. hemisphere as a "hurricane". They never say "Tropical Hurricane Winifred" is bearing down on Innisfail.



What a load of rambling non sensical generalisations. Doesn't matter where some one is from, doesn't stop revolving tropical storms spinning in clockwise direction in the southern hemisphere, hence - Cyclone.

You are just ignorant.
I think the Fijians themselves refer to them as hurricanes (though technically they are cyclones, of course).

[SHVC]

But, they don't spell mum "mom"

[MickG0105]

I think the Fijians themselves refer to them as hurricanes (though technically they are cyclones, of course).
Don't think so. https://www.met.gov.fj/

https://cimg2.ibsrv.net/gimg/pprune.org-vbulletin/2000x1034/screenshot_20220303_110733_chrome_d782ab5e1e689cfeecbf894585 386e78d679ed36.jpg

[MickG0105]

Haha, coming from the guy that called me a foreigner, I think you should stop posting, you are sounding really unintelligent now.

Actually, keep going I really want to know how low your IQ actually is. Its so far around Pauline Hanson level, maybe Trump, lets see if it can get to Clive Palmer level.

In anycase you are so far off topic now you might as well be a qanon shamen.
Here ' ', there's a couple of apostrophes for you, see if you can figure out which contractions they should be placed in in your previous post.

And it's (there's a clue for you) shaman, not shamen. And no, shamen is not the plural.

[43Inches]

But, they don't spell mum "mom"

Now we're Fijian linguistics experts are we?

However there is this that throws a spanner in the works...

https://www.weather.gov/ppg/TropicalCycloneASvsWS

Oops seems to me American Samoa warnings are for a Hurricane and Western Samoa are Cyclones... hmm wonder why that is...

Hurricanes and typhoons are the same weather phenomenon: tropical cyclones (https://www.nhc.noaa.gov/climo/). A tropical cyclone is a generic term used by meteorologists to describe a rotating, organized system of clouds and thunderstorms that originates over tropical or subtropical waters and has closed, low-level circulation.

That quote is from NOAA.

Here ' ', there's a couple of apostrophes for you, see if you can figure out which contractions they should be placed in in your previous post.

And it's (there's a clue for you) shaman, not shamen. And no, shamen is not the plural.

Unfortunate errors from using the quick response on a phone while walking.

Not sure what any of this has to do with Rex now.

[tossbag]

Dude, the implication is, if you're not Australian you couldn't possibly know anything about aviation, you know, worlds best aviators, worlds best air traffic system, worlds best facilities, especially the airports, they're awesome. So, if you're not Australian, pull your head in and know your place.

[Chronic Snoozer]

Did someone mention “typhoons”?

[dijical]

Did someone mention “typhoons”?

I've lost track of this thread.... did I miss REX announcing a Fiji service? or what?

And lost amongst our discussion of weather systems in the South Pacific, we've completely missed REX's first anniversary of jet operations!

https://fb.watch/bv_PThFLT_/

[Bull_Shark]

With Rex advertising for direct entry Saab Captains today, we can see the same old cycle repeating.

Soon John Sharp will be bleating about pilots being poached and therefore Rex will need to source crew from overseas. This will also wedge nicely with the 737 operation as they’ll be frothing to get cheap foreign crew on the jet.

South Africa, Sweden, Estonia and the US…. which country will Rex put it’s heart into next in the search for foreign pilots?

[neville_nobody]

Soon John Sharp will be bleating about pilots being poached and therefore Rex will need to source crew from overseas. This will also wedge nicely with the 737 operation as they’ll be frothing to get cheap foreign crew on the jet.

Maybe this time around the Pilot Unions can get on the front foot and start telling the media that Pilots can't be poached as Rex doesn't own any pilots they are just not meeting market conditions so people are resigning. Maybe point to some of the deals being offered in the USA as to where the market is heading......

[Wizofoz]

Just did a SYD-BNE sector with these guys. There's certainly nothing wrong with the product. $109 one way inclusive of 23KG of checked luggage, on time, clean aircraft, nice crew- I'd estimate 60% full on a Sunday mid-afternoon.
Hope they stick around.

[PoppaJo]

6 months ago he said he was expanding from 6 to 14 aircraft. It does not appear they are even using all 6 at the moment. The loads looked pretty **** across half the network today so perhaps getting cold feet re fuel prices.

[minigundiplomat]

There needs to be a commission into how much taxpayer money was thrown at Rex during COVID, which seemed disproportionate and was followed by an announcement of a major expansion.

Obviously some airlines are more equal, especially if they have a disgraced politician at the helm.

[43Inches]

QF has received over $2billion in support over covid, what's your point regarding other airlines?

[C441]

QF has received over $2billion in support over covid, what's your point regarding other airlines?
Does that $2B include the fixed costs associated with operations in Australian airspace, among other things, that were waived as there were almost no operations in Australian airspace?

[TimmyTee]

QF has received over $2billion in support over covid, what's your point regarding other airlines?

Rex LAUNCHED mid pandemic. No way should have one dollar of tax payer cash been provided to them with regards to anything pandemic related

[43Inches]

Rex LAUNCHED mid pandemic. No way should have one dollar of tax payer cash been provided to them with regards to anything pandemic related

All airlines had equal access to all taxpayer initiatives the goverment provided. They all took their share, if you want validation its above board all you have to look at is the lack of noise from AJ or JH. They would be crying foul and demanding answers if there was even a hint of wrongdoing.

[Lead Balloon]

You mean like this (https://simpleflying.com/rex-continue-regional-services/):The Australian Government's Regional Airline Network Support (RANS) program supports airlines to maintain a basic level of connectivity across their network of regional routes throughout the travel downturn.

Running since the end of March 2020, RANS underwrites eligible services on a shortfall subsidy basis, with the cost offset by remaining commercial revenue from passengers and freight. RANS has proved lucrative for Rex. In the six months to December 31, Rex picked up almost US$46 million in government funding.

It is a lot of funding for a relatively small airline. In February, Qantas boss Alan Joyce said that Rex had received proportionally seven times the government funding Qantas got.

[crosscutter]

Yup disproportionate…when I ran coaster numbers a while back, Rex received annual government support which represented 20% of their pre covid revenue. That’s revenue!!! I’ve no idea how they did it, but it explains why they made a profit when others didn’t. Of course, reality has returned…so yesterdays news I guess.

[Ladloy]

It works out to be roughly $250000 per employee during covid, while said employees lived below the poverty line on Jobkeeper.

[43Inches]

It works out to be roughly $250000 per employee during covid, while said employees lived below the poverty line on Jobkeeper.

Not sure where you get that figure from, they have around 1100 employees, so that means you are saying the gov has thrown $270 odd million at them? Thats double what most sources are saying.

[minigundiplomat]

Not sure where you get that figure from, they have around 1100 employees, so that means you are saying the gov has thrown $270 odd million at them? Thats double what most sources are saying.

yeah, because 125k per staff member is completely acceptable

[43Inches]

yeah, because 125k per staff member is completely acceptable

QF is around $100k per employee and they have 20x the employees.

[Lead Balloon]

C'mon, 43. You know the number of employees is irrelevant. It's the amount per head.

And remind us: Who owns Rex.

[43Inches]

Not sure what the payment per head means anyway, the vast majority of funding was to provide minimum services to regional towns, nothing at all to do with staff, TBH I was interested how many totally fabricated numbers could be thrown around if I kept going. Might as well compare Hurricanes and Cyclones again, its just as relevant. Interesting to note QLink received similar amounts to Rex, just hidden in QFs spreadsheets. Who owns it? Who cares? Who owns Qantas, of the hundred or so investment funds with fingers in the pie, most with very foreign names who really knows. One thing for sure both companies are registered in Australia as Australian businesses and all income is taxed and handled the same way. Where the investors put their paid out dollars, who knows again, you might have to ask them. Do you buy petrol based on which company uses Australian refined fuel, or has majority shareholdings in Australian hands, I bet not, even though most on here would spend more at the pump than they ever would on airline tickets.

[Icarus2001]

One thing for sure both companies are registered in Australia as Australian businesses and all income is taxed and handled the same way. That’s funny since Qantas do not pay tax.

https://www.afr.com/policy/tax-and-super/thats-the-way-it-works-alan-joyce-on-why-qantas-pays-no-corporate-tax-20180215-h0w44g

[Lead Balloon]

Among many other large corporations. Tax paying is for patsies.

43: You said: All airlines had equal access to all taxpayer initiatives the goverment provided. They all took their share, if you want validation its above board all you have to look at is the lack of noise from AJ or JH. They would be crying foul and demanding answers if there was even a hint of wrongdoing.I then quoted “noise from AJ” to the contrary.

A Parliamentary Committee demanded answers from the Government officials administering the RANS program, about how much was given to Rex. I watched it.

If you say that the way in which governments hand out taxpayer money is never influenced by its political self-interests and those of its mates, I have cheap shares in the Harbour Bridge to sell you. That’s why the current one didn’t legislate for a Commonwealth level ICAC, despite having promised it would.

[43Inches]

Regarding noise from AJ, he has received in salary and bonus from Qantas more than the amount that Rex received in RANS subsidy. But on topic what I was pointing out is that it is nowhere near seven fold now. After VA went into Administration QF quickly took on whatever funding it could from any source and is approaching double the amount of $1.2 billion that VA had requested to remain afloat. Now the official total has just passed $2billion, however that does not include state waivers and subsidies and the recent rebates for cheap fares which QF apparently gained 70% of. So the total value of QF subsidies and waivers could be higher than $3billion. The Rex amount was blown out of proportion because for whatever reason the RANS payouts were directly listed for public transparency, and Rex stood out as a major beneficiary, even though other entities have been paid way more through other channels.

So far to December 2021 QF has received directly through RANS/DANS/IFAM/JK/SJS/AAFRP/NZARF/TANS/IAS and goodness knows what else $2,140,000,000. They cleverly hid it in ticket revenue and freight revenue totals, rather than listing it as subsidised income like Rex has. They also hid Job Keeper by taking it out of manpower and staff expenses. It had to be accounted for somewhere so towards the end of the financial results its listed in notes, which list them in paragraphs rather than compiled tables.

Rex has a line in tabled stated revenues stating exactly how much subsidy they have received in revenue, which includes Job Keeper, RANS and a few others.

So if you are looking for shifty behavior why focus on the one that has open admission of what they have taken vs the one that hides it out of sight and combines it with 'customer' revenue on tables.

[Lead Balloon]

So are you saying that QF is around about as bad as REX? If so, I agree.

[43Inches]

That's all I was alluding to, all this jumping up and down about Rex when QF has been milking the cash cow as well.

The only one that missed the train was VA, but that was mostly because AJ tore out some tracks in their path by claiming that QF would not need subsidies so why should they get it. Hence why now QF accounts government subsidies under 'customer revenue'.

[MickG0105]

That's all I was alluding to, all this jumping up and down about Rex when QF has been milking the cash cow as well.

The only one that missed the train was VA, but that was mostly because AJ tore out some tracks in their path by claiming that QF would not need subsidies so why should they get it. Hence why now QF accounts government subsidies under 'customer revenue'.
You wouldn't be making statements like that if you had actually looked at the numbers for the three airlines - Qantas, Virgin and Rex.

For the period 15 March 2020 - February 2022, exclusive of JobKeeper payments

Qantas
Grants .................... $ 785,717,581.59 (35 percent of total assistance)
Subsidies ............... $1,456,530,018.48 (65 percent)
Total assistance ... $2,242,247,600.07
Pre-pandemic
FY19 revenue ....... $17,966,000,000
Total assistance as a percentage of FY19 Revenue ... 12.48 percent

Virgin (aka "The only one that missed the train")
Grants .................... $ 238,745,905.29 (27.6 percent)
Subsidies ............... $ 626,970,954.33 (72.4 percent)
Total assistance ... $ 865,716,859.62
Pre-pandemic
FY19 revenue ....... $ 5,827,100,000
Total assistance as a percentage of FY19 Revenue ... 14.86 percent

Rex
Grants ................... $ 154,816,418.00 (99.2 percent)
Subsidies .................. $ 1,292,544.00 (0.8 percent)
Total assistance ... $ 156,108,962.00
Pre-pandemic
FY19 revenue ....... $ 317,649,000
Total assistance as a percentage of FY19 Revenue ... 49.15 percent

Far from missing the train, Virgin have actually received more than Qantas in terms of support as a percentage of pre-pandemic revenue. And as a proportion of pre-pandemic revenue, Rex has received more government assistance than both Qantas and Virgin combined! And note that essentially all of Rex's assistance came by way of grants (money for nothing) rather than subsidies (money for or to support operations).

So, let's not try to dress this up as everyone having the same go at milking the cash cow.

[43Inches]

And why are you comparing total revenue? QF revenue includes a lot of external to aviation sources not related to the airline, where rex revenue is almost entirely airline related. You are comparing cyclones, typhoons and oranges as rex got most of its subsidy from one source RANS. QLink received the same amount, why, because it was to fund regional connections.

Not sure where you get the grants section or Rex, the major funding question is purely the $80 million provided by RANS, please list the grants that added to $150mil?

Proportionally Rex received the same amount of funding for doing the same thing that the Qantas group did, ie the amount paid to QLink to service regional communities was the same amount. What you are saying is that both Rex and QF operated the same aircraft to say Wagga and both were charged $1000 for landing fees, Rex could jump up and down saying that relative to our net revenue we should be charged 20 times less. Well in this case QLink and Rex say that they both cost $3000 per flight to service Wagga, so they claim that from RANS. Qantas then compares that to net revenue and says thats not fair we should get 20 times more because of our total revenue??? The other claims are Job Keeper for Rex and Qlink, and everyone got that, which probably amounts to about half the per employee costs over two years.

BTW rex government funding includes Job Keeper, not excludes, RANS only amounted to about half that $150mil the rest is mostly Job Keeper. The same goes for VA, the vast majority being JK, how you come up with the other figures is unknown.

I'll also add RANS was a subsidy for operating a route, to break even, any passenger fares taken for the route removed the same amount of government funding until it was funded entirely by passenger/freight revenue. If RANS had not existed the routes would have been mothballed until the end of covid, meaning the 1-5 essential workers who used each flight, such as doctors, essential shift workers etc that traveled would have had to drive, or find alternative options which may have pushed them to not travel at all. DANS covered the minimum domestic network that QF domestic used, as those flights were able to attract more passengers they resulted in less overall subsidy.

[MickG0105]

And why are you comparing total revenue?
And why wouldn't you when you are trying to draw a reasonable comparison between the funding to the three airlines of varying sizes and complexities. The government grants and subsidies were, by and large, mechanisms to plug the airline revenues lost or foregone due to the pandemic and government restrictions. Using revenue is the most logical mechanism for pro-rating the value of the grants and subsidies such that you have a comparable base.

QF revenue includes a lot of external to aviation sources not related to the airline, where rex revenue is almost entirely airline related.
QF revenue attributable to non-aviation activities runs to about 7 percent; it's about 3 percent for Rex. They're not miles apart.

You are comparing cyclones, typhoons and oranges as rex got most of its subsidy from one source RANS.
Maybe if you want to think of Qantas, Virgin and Rex as a cyclone, a typhoon and an orange respectively. The mechanism that allows you to compare all three on an equitable basis is to pro-rate against a known factor such as revenue. Or you could use number of employees, number of pax/km flown, etc. It's how you do meaningful comparative analysis.

Not sure where you get the grants section or Rex, the major funding question is purely the $80 million provided by RANS, ...

Thankfully for informed analysis, I am very sure where I get the grants data for Rex from. From the government's public database of grants awarded. Where else would you be getting data on government grants from?!

... please list the grants that added to $150mil?
Gladly.
Regional Airline Network Support Program ........ $80,820,000.00
Regional Airline Funding Assistance Program .... $53,862,730.00
Retaining Domestic Airline Capability Program ... $17,078,688.00
Australian Airline Financial Relief Package .......... $ 3,055,000.00

BTW rex government funding includes Job Keeper, not excludes, ...

No, it does not. There are no JobKeeper monies in the figures that I have quoted.

... RANS only amounted to about half that $150mil the rest is mostly Job Keeper.
No, it is not. As detailed above, the next largest contributor to the value of grants awarded to Rex was the gift of nearly $54 million from the Regional Airline Funding Assistance Program. That program was designed to provide a 'last resort' financial support option to regional airlines with the provision that all other strategies to manage an airline’s finances had been undertaken.

The rest came from the Retaining Domestic Airline Capability Program ($17 million) and the Australian Airline Financial Relief Package ($3 million). No JobKeeper monies are included in the $154,816,418.00 I quoted.

The same goes for VA, the vast majority being JK, ...

No, it is not. As I stated above, and as anyone exercising due diligence would determine, JobKeeper is not included in the grants and subsidies data I quoted above.

... how you come up with the other figures is unknown.

It's not unknown. It's how anyone purporting to write cogently and coherently on the topic of grants and subsidies would go about data collection. You go to the relevant government databases, run the appropriate query, download the results.


​​​​​​​
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[43Inches]

You better tell rex and KPMG that their financial reports are in error then as the amounts you are listing are not included at all, as with your figures being out for QF.

And why wouldn't you when you are trying to draw a reasonable comparison between the funding to the three airlines of varying sizes and complexities. The government grants and subsidies were, by and large, mechanisms to plug the airline revenues lost or foregone due to the pandemic and government restrictions. Using revenue is the most logical mechanism for pro-rating the value of the grants and subsidies such that you have a comparable base.


Completely flawed reasoning, this is a political method to make one look better or worse than the other. The correct comparison would be between QLink, particularly Easterns/Sunstate payments vs Rex. Any other comparison does not take into account similar operating environment and why the subsidies exist, ie to service regional communities. You might as well compare TOLL to Transdev Sydney Ferries, they both transport stuff right?

RDAC is new havn't accounted for that yet, however I'd say that one will be spread around all airlines as the total amount available is $198mil, Barnaby already stated that QF and VA get $130 odd million of that, vs $17mil for Rex, which also includes the payments to employees for covid relief.

The breakdowns of received grants and subsidies are on page 54 of the Annual report, which includes JobKeeper. Now those figures have moved on by another $35million since, especially with RDAC.

QF revenue attributable to non-aviation activities runs to about 7 percent; it's about 3 percent for Rex. They're not miles apart.

You are kidding right? 4% of billions vs 3% of a few hundred million??? This is where your relative analysis falls apart completely. That 4% of QF revenue is more than Rex's total Revenue, some $700million. Are you including the FF program in that as well, because that not airline related its an advertising/marketing mechanism. QF loyalty revenue in 2019 was $1.7bil, thats 10% of operational revenue, on 23% margins for that matter. These are the figures you have to remove from the numbers when comparing the two 'airlines'. As subsidising the FF program would be just stupid.

BTW Fly corporate received $7.3 million in RAFA grant, are we going to argue that they generate 14% of Rex revenue with 3-5 SAABs, which was the case at the time of issue, so relative to QF revenue they must have been paid 10 fold and are now going ballistic with the VA routes....

PS, Did someone try to run a QF A330 APU on coal recently, looked like a steam pipe blowing off...and a few fire trucks arriving to take a look.

[gamma69]

Hey,
Just a question in regards to anyone that has recently applied for a direct entry command on the SAAB?. I have lots of previous command experience on type with training captain experience also, including 737 time.
Wondering if anyone has been contacted for a DEC ? I keep updating yet I receive zero response.

Cheers Everyone.

[MickG0105]

You better tell rex and KPMG that their financial reports are in error then as the amounts you are listing are not included at all, as with your figures being out for QF.

No need to tell Rex and KPMG any such thing. For starters, KPMG don't even figure in the picture, Rex's auditors are BDO. Here's a novel concept, both the Rex financial reports AND the numbers I've quoted are correct for the respective time periods covered.

Like it says on the cover (and repeatedly elsewhere throughout), Rex's annual report is for the 12 month period to 30 June last year. 10 months have elapsed since then. The figures I quoted are more recent and cover a longer period of time.

RDAC is new havn't accounted for that yet, ...
It's hardly new! It was announced at the end of September last year and funding concluded four months ago.

BTW Fly corporate received $7.3 million in RAFA grant, are we going to argue that they generate 14% of Rex revenue with 3-5 SAABs, which was the case at the time of issue, so relative to QF revenue they must have been paid 10 fold and are now going ballistic with the VA routes....
The issue with Rex's RAFA payment is that that fund was set up to provide a last resort option for airlines that has pursued all other business strategies to manage the airline’s financial position. Rex stuck their mit out for that and then turned around and raised $150 million for their jet expansion.

[PoppaJo]

Taxpayers should be not funding the 737 operation one bit. It is a operation that should never have been started. The traffic does not exist for what they are trying to do. The proof is in the numbers. I mean look at this morning. 3%, 5%, 4%. Oh one cracked 10%. Great work...managed a few at 30%. Sure a few others got 80%, however it is very few are far.

MEL-OOL/BNE with 5 bodies. And that’s the only flight for the day? I mean this is OzJet territory.

[KRUSTY 34]

Hey,
Just a question in regards to anyone that has recently applied for a direct entry command on the SAAB?. I have lots of previous command experience on type with training captain experience also, including 737 time.
Wondering if anyone has been contacted for a DEC ? I keep updating yet I receive zero response.

Cheers Everyone.

Try Link Airways (Corporate Air).

[gamma69]

Try Link Airways (Corporate Air).

Thanks Krusty, have a app in with them too. CMD experience on type doesn't seem to make a difference.

[dijical]

REX is not about to quit yet, by the look of it:

Delta Deal: Rex Signs Up A New US Airline Partner (https://simpleflying.com/rex-regional-express-delta-air-lines-interline-agreement/)

[Bull_Shark]

“By the end of the year Delta will be bringing up to 500 passengers a day into Sydney, a fifth of those might take a Rex flight.”

”We’ve been through what I would say is the worst,” Sharp said. Passenger volumes on the 737 flights are now “very strong,” he said, declining to give specific numbers.”

“The airline plans to expand its fleet of six 737s to as many as 30 by adding a plane every two to three months. Sharp said two more jets will arrive “fairly shortly,” and a full network connecting Australia’s major state capitals might be completed in 2023.”

Not exactly brimming with confidence?

[ANstar]

Given this is just an interline agreement which DL already have with VA and QF... I don't really see the big deal?

[PoppaJo]

“

”We’ve been through what I would say is the worst,” Sharp said. Passenger volumes on the 737 flights are now “very strong,” he said, declining to give specific numbers.”
?
Lies Lies and more lies...

All flights this morning so far 20 bodies
OOL single digits

Last Saturday they broke the record for the highest amount of single digit pax flights in a day.

Surely this is burning at least $1-$2m a week.

[Stationair8]

Last week flew Sydney -Melbourne 1730 departure with Virgin, with a few spare seats.

With the Rex jet departure at 1700 I counted less than 15 get on board, including the obligatory last minute passenger that couldn’t find is boarding pass.

[dr dre]

Surely this is burning at least $1-$2m a week.

It must be, but don’t worry, thanks to Sharpe’s lobbying they’ve got a few hundred million in taxpayer handouts sitting in the bank, so they can continue to fly 737s with single digit passenger loads indefinitely......

[Ladloy]

It must be, but don’t worry, thanks to Sharpe’s lobbying they’ve got a few hundred million in taxpayer handouts sitting in the bank, so they can continue to fly 737s with single digit passenger loads indefinitely......
It's easy to spend other people's money.

[Bull_Shark]

All flights this morning so far 20 bodies
OOL single digits

Last Saturday they broke the record for the highest amount of single digit pax flights in a day.

I find it really hard to believe that their passenger loads are so low?? (I know you’ve explained previously how you get the loads but how accurate is it?)

Has anyone flown on Rex or been at a boarding gate and seen passengers coming on or off to confirm this?

If they really are flying around empty they must be haemorrhaging cash and the company would be in crisis!

[SHVC]

Given back in June 2021 they aimed to have 8 737s in service by September 2021, I believe they got to 6 have sent one back so only 5 now. Also they were going to set up a frequent flyer program late 2021 to early 2022. As none of this has happened it could suggest they’re not doing so well. I have seen one disembark in OOL this week and I didn’t count above double digits.

[PoppaJo]

Bull the data is accurate. Not as accurate for Virgin and other foreign players due some data clashes around redemptions, however Rex is bang on.

Don’t get me wrong, some days they are full, Sunday’s and Friday’s are generally busy as they should be. They seem to have had some success with Canberra and Adelaide, the other 5 days are a disaster, you may note on some days they have no flights after 3pm.

They need to lower fares and dump the free checked bags and drinks. They have a low cost base to take advantage off, otherwise they will continue to be slaughtered by Jetstar. I wouldn’t even rate Virgin as a Rex competitor, complete different league, even though they think they are ‘taking it to Virgin’.

[Colonel_Klink]

I wouldn’t even rate Virgin as a Rex competitor, complete different league, even though they think they are ‘taking it to Virgin’.

Don’t Rex think that they sit above Virgin as they consider themselves a ‘full service’ airline?

I am genuinely surprised at how they are sustaining the loads that they are. Their aircraft are always parked in either SY or ML - and the Rex checkin at Melbourne is constantly deserted. Something has to give?

[LostWanderer]

Given this is just an interline agreement which DL already have with VA and QF... I don't really see the big deal?

It isn't a big deal and that is the problem. It won't do anything to change the position Rex is in right now. I guarantee you there are very very few Delta passengers who are likely to be wanting to connect on to Coober Pedy etc...and the 737 operation is so small its not likely to be much use for many connections there either unless they can expand significantly.

Its good for some word of mouth promotion I guess but thats all.

[Ladloy]

It isn't a big deal and that is the problem. It won't do anything to change the position Rex is in right now. I guarantee you there are very very few Delta passengers who are likely to be wanting to connect on to Coober Pedy etc...and the 737 operation is so small its not likely to be much use for many connections there either unless they can expand significantly.

Its good for some word of mouth promotion I guess but thats all.
Even then Coober Pedy is irrelevant. The pax loads on the turboprop are good, really good. It's the jets that ate the issue.

[1A_Please]

Don’t Rex think that they sit above Virgin as they consider themselves a ‘full service’ airline?

I am genuinely surprised at how they are sustaining the loads that they are. Their aircraft are always parked in either SY or ML - and the Rex checkin at Melbourne is constantly deserted. Something has to give?
They are able to keep going because their regional franchise is profitable so the cash isn't running out as fast as it would otherwise. At some point, some shareholders are going to start asking some questions as to why so much money is being pi$$ed up against the wall at which point a class action against directors is not out of the question.

[PoppaJo]

They are able to keep going because their regional franchise is profitable so the cash isn't running out as fast as it would otherwise. At some point, some shareholders are going to start asking some questions as to why so much money is being pi$$ed up against the wall at which point a class action against directors is not out of the question.
I think it’s burning more than you think. Rex during last decade only had earnings of around $15m after tax each year.

They don’t give a whole heap of detail around operating costs inside the 737 operation but you can get a rough estimate with the detail they have given, plus or minus won’t be a whole lot off. Say an average operating cost of $10k per flight assuming unhedged and based on today’s rising oil price. Assuming leasing costs have now doubled which was quoted somewhere. Average load seems to be about 30 bodies. $3k revenue/ flight, 120 flights a week, $1M loss per week.

Tiger also burnt about $50m year on startup however had the opposite issue with high equipment costs/full loads, we are dealing with low equipment costs, high oil prices and little revenue in this situation. Rex needs to slash airfares to save itself.

[markis10]

Given back in June 2021 they aimed to have 8 737s in service by September 2021, I believe they got to 6 have sent one back so only 5 now. Also they were going to set up a frequent flyer program late 2021 to early 2022. As none of this has happened it could suggest they’re not doing so well. I have seen one disembark in OOL this week and I didn’t count above double digits.

‘They currently have 6 flying, haven’t returned any, and in fact have more coming including the ex Samoa 737 followed by VH-VOS

[43Inches]

I think it’s burning more than you think. Rex during last decade only had earnings of around $15m after tax each year.

They've earned far more than that on average, but like a smart business should they have bought up tracts of land and plant and equipment and expanded owned assets to offset profit (reduce tax). As opposed to QF and VA that were selling the farm and outsourcing to prop up fake profits and cashflow. Rex has it's own uni campus and various real estate, including a huge chunk of mascot boundary land, they probably own more around Sydney airport than QF does (since QF sold $650mil wort of land assets to prop up cash flow). As far as the Jets go, I think the Delta connection is the tip of the iceberg this year. I personally think as rates rise further QF is going to start making some big announcements by years end regarding sustainability. As someone said on another thread that the Alliance mob seem to be good judge of when to bug out of aviation, if they now sell out of the QF shares they have swapped for it might be a bad omen...

[Lead Balloon]

When you say "own" real estate, do you mean own the fee simple to the land on which there happens to be infrastructure?

Or are you using "own" in the sense of having something like a lease - of whatever duration - granted by the actual owner of the land that happens to have runways or uni campus buildings on it?

[Ladloy]

One more 737 added to the list while the Saab EBA is "not feasible in these economic times". I hope the majors gut their crew in the next year or two.

[PoppaJo]

Expect whinging shortly. Jetstar finally launching Melbourne to Canberra (and Goldy)

[Low Pass]

I thought they said they getting 6 more? oh wait then it was 30? "Favorable lease conditions"....That's like first home buyers looking for a 300khouse in Bondi ...Dream world this leadership team

This operation is doing very poorly. Talking to the actual drivers they are getting BS updates like "Our load forecasts are looking great". In reality some days the ENTIRE network has less than 100 punters per flight.....
I would be very worried about this operation....set up under a separate AOC, very easy to walk away. Another family destroyer

[PoppaJo]

It’s bizarre that they are signing another lease when they are flying around, like this morning, a flight with a 0% load.

[SHVC]

But the forward bookings look strong.

[KRUSTY 34]

I think “Low Pass” that it’s not a separate AOC. Something about taking too long to start from scratch?

Happy to be corrected.

[aussieflyboy]

The QF folks are hoping they hang around. 10% more expensive then staff travel for a confirmed seat 👌

[Low Pass]

Separate company the crew work for. My bad

[markis10]

Rex making a bid for Cobham….

[Bull_Shark]

https://www.farmonline.com.au/story/7730992/qantas-swoops-on-alliance-to-get-more-fifo-and-regional-routes/?cs=5706


Meanwhile, Cobham's Australian operations, established in 1990 to provide jet FIFO services to oil and gas producer Santos's Moomba site, have been effectively on the market for the past three months.

The original Australian business, part of the big UK-based Cobham Aviation business since 2000, has been owned by US private equity group Advent International for the past two years.

It flies about 20 aircraft working VIP charter services and FIFO routes, particularly in Western Australia and South Australia.

It also support's Qantas Freight's domestic operation, moving overnight freight on more than 2500 flights a year.

Another division is contracted to the federal government for aerial border surveillance and search-and-rescue operations spanning Australia's economic zone.

Although no official confirmation has come from Regional Express, Rex is understood to be running a due diligence investigation on the charter and FIFO business.

[Traffic_Is_Er_Was]

Looking for something to sink all the excess profits from the Jet ops into?

[TimmyTee]

REX appear to have successfully conned the government into believing that there are no suitable pilots to fly their 737s, and therefore time for bringing in overseas pilots.

Utter garbage.

[Colonel_Klink]

REX appear to have successfully conned the government into believing that there are no suitable pilots to fly their 737s, and therefore time for bringing in overseas pilots.

Utter garbage.

Maybe the free kicks Rex keeps on getting would change with a change in Federal government?

[chookcooker]

REX appear to have successfully conned the government into believing that there are no suitable pilots to fly their 737s, and therefore time for bringing in overseas pilots.

Utter garbage.

Is this substantiated?

[43Inches]

Not sure whether it has anything to do with Rex but over on the QF/Alliance thread it seems Alliance are doing it, maybe somebody here is confusing the tails in a rage fit.

[Titan Slave]

Is this substantiated?

This is confirmed. They have been in HK mainly scouting local pilots with a promise of PR.

I am sure this will go down like a lead balloon with the crew. No surprises why most of them are are looking at the US and Middle East.

[chookcooker]

This is confirmed. They have been in HK mainly scouting local pilots with a promise of PR.

I am sure this will go down like a lead balloon with the crew. No surprises why most of them are are looking at the US and Middle East.

farken hell

[snakeslugger]

This is confirmed. They have been in HK mainly scouting local pilots with a promise of PR.

I am sure this will go down like a lead balloon with the crew. No surprises why most of them are are looking at the US and Middle East.

I’m pretty confident that was an April Fools prank that was going around…

[Titan Slave]

I’m pretty confident that was an April Fools prank that was going around…

Not according to some Cathay colleagues who have had locals asking them about Rex.

[BEACH KING]

Well apparently REX are definitely improving.
They have upgraded from using buses to transport their passengers that pay circa $500 for a one way airfare, to using Taxis!
Not just any taxi either. They now use the tried and proven Toyota Hiace Maxi Taxi to jam in 9 pax and their gear to complete the final 300km of your trip...you know the one with the rattling wheelchair access gear in the back and the wonderful ergonomic seats.
Great way to add another 5 hours to your trip.

[Ladloy]

Well apparently REX are definitely improving.
They have upgraded from using buses to transport their passengers that pay circa $500 for a one way airfare, to using Taxis!
Not just any taxi either. They now use the tried and proven Toyota Hiace Maxi Taxi to jam in 9 pax and their gear to complete the final 300km of your trip...you know the one with the rattling wheelchair access gear in the back and the wonderful ergonomic seats.
Great way to add another 5 hours to your trip.
Can you provide more info? The east coast weather wasn't great last week and many qlink services were cancelled, Rex picked up a fair few qlink pax. After delays and diversions they reached their destination. Some were doctors going straight to hospital and one qlink pax was trying to see their friend before they passed.

[morno]

I’m guessing that the recently acquired Charleville to Brisbane service that Rex said was going to be so much better than QLink, is what Beach King is referring to?

I guess anything new will always appear better than what you have, until it shows it’s true colours.

[43Inches]

So the comment is saying the flight was cancelled, however the company still paid to get the passengers to their destination with what was available on the day. Maxi at taxi rates would have been more expensive than a bus on fixed charter rates, so I'm assuming it was all that was available.

[transition_alt]

I fail to see why a company doing their absolute best to get passengers where they want to be is a bad thing.

They could’ve cancelled the service and wiped their hands clean, but didn’t.

[Traffic_Is_Er_Was]

Is that route one of the Govt. contracted ones? If so, are they not obligated to provide something (anything)?

[snakeslugger]

Not according to some Cathay colleagues who have had locals asking them about Rex.

As suspected REX have confirmed via the AFAP it was crap…

[smiling monkey]

Rex making a bid for Cobham….

Probably nothing.

https://www.ch-aviation.com/portal/news/115367-australias-rex-eyes-cobham-aviation-services-report

[Low Pass]

This would be the death of them. How about they focus on finding some passengers for these big shinny jet, 30 pax midweek is becoming all too common....

[Gunner747400]

Thought it was about time for JS to have another whinge - today he is going on about how Rex are pulling out of Melbourne to Albury because of QF's 'predatory behavior'.

[Bull_Shark]

The dummy has been spat.

Rex threatening to pull out of Albury now because big bad Qantas have moved in.

Will Rex carry through, or like with 90% of the other routes they’ve threatened to abandon it won’t actually happen?

[Going Nowhere]

Thought it was about time for JS to have another whinge - today he is going on about how Rex are pulling out of Melbourne to Albury because of QF's 'predatory behavior'.

yeah QLink’s 5 flights a week must have really killed them…

[Paragraph377]

yeah QLink’s 5 flights a week must have really killed them…
Sharp is one of biggest sooks to grace this earth. He even had the gall to question how Joyce can stand looking at himself in the mirror - pot….kettle….black. I would imagine that Joyce feels the same way - how can any grubby ex politicians ever look themselves in the mirror. Stick to filling up your 737’s John.

[Ladloy]

A decision purely made upon their network being stretched to the limits. Not enough aircraft, crew, engineers and spare parts but don't you worry, somehow it's Qantas' fault.

[Deano969]

With REX offering 408 seats per week
QF just dumped an extra 300 seats per week on the route
Noting also exactly the same departure time as the AM REX service
There is only one goal here....

QF continues to to use it's size and market share to bully any upstart that tries to get a foothold and once they have eliminated the competition, then it's back to the miserable service and high prices to the consumers
I for one do not subscribe to the Australia can't support more than 2 airlines theory, there are plenty of examples on all continents, of 3-5 airlines serving thinner routes than here in Oz

I really hope that one day someone with deep pockets can have a real go at QF and teach them a lesson

[Beer Baron]

I really hope that one day someone with deep pockets can have a real go at QF and teach them a lesson
Someone like the governments of Abu Dhabi, Singapore, New Zealand and a multi billion dollar Chinese conglomerate?
Qantas wouldn’t stand a chance. ;)

[Ladloy]

With REX offering 408 seats per week
QF just dumped an extra 300 seats per week on the route
Noting also exactly the same departure time as the AM REX service
There is only one goal here....

QF continues to to use it's size and market share to bully any upstart that tries to get a foothold and once they have eliminated the competition, then it's back to the miserable service and high prices to the consumers
I for one do not subscribe to the Australia can't support more than 2 airlines theory, there are plenty of examples on all continents, of 3-5 airlines serving thinner routes than here in Oz

I really hope that one day someone with deep pockets can have a real go at QF and teach them a lesson
Pax loads were good for rex. It was purely to use the airframe somewhere else in the network. QF is just an excuse.

[PoppaJo]

I for one do not subscribe to the Australia can't support more than 2 airlines theory, there are plenty of examples on all continents, of 3-5 airlines serving thinner routes than here in Oz

I really hope that one day someone with deep pockets can have a real go at QF and teach them a lesson
To make it work here with sustainable earnings you need scale. More so vs other countries to offset the higher fixed costs of operating here. The magic number is about 30 aircraft. Tiger had its 30 aircraft plans, Rex and Bonza also have the same number.

Tiger got to 18 and that was about all the market could handle. However it still didn’t make money. In fact it lost $1b in 13 years.

Poor execution is half the reason why nobody ‘can take it to QF’. We won’t talk about the pussycat, and Rex is carrying single digits in and out of the Gold Coast today so they must be doing something wrong.

[Chris2303]

Somebody very wise once said "all is fair in love, war and the airline industry".

There is nothing wrong with competition, at to the right wing anyway.

[Mail-man]

Rex used predatory tactics on smaller operators all over the place. Crying about it now is the height of hypocrisy

[Ladloy]

Rex used predatory tactics on smaller operators all over the place. Crying about it now is the height of hypocrisy
They said "Game On" or something similar in regards to Burnie to King Island but pull the pin in Albury.

It's pathetic to watch. I feel for the Albury pax

[cloudsurfng]

Rex used predatory tactics on smaller operators all over the place. Crying about it now is the height of hypocrisy

they did exactly the same thing to O’Connors.

[minigundiplomat]

Will be interesting to see how Rex fare if Albanese gets in

[PoppaJo]

Will be interesting to see how Rex fare if Albanese gets in
Don’t forget Federal labor was going to bail out Virgin Australia. I remember well, the shadow monsters on the pavement at T3 Melbourne in 2020 with carefully positioned crying employees in the rear shot, giving it to the Morrison government on why they won’t use taxpayer dollars to fund what would have been the Australian version of Alitalia. Thank christ that did not happen. Labor has a thing for funding red ink in this industry. Dan Andrews is using taxpayers cash to fund Jetstar’s losses at Avalon for 10 years.

Bailing out a 737 operation that carries no passengers? Well all they need to do is put all these magical pure fantasy forecasts in front of ministers. Cheque signed.

[megle2]

Seems Rex popularity on new Roma Charleville route dropping by the day as fares rise. To get discount now have to book 60 days before otherwise $520 to Roma recently. Some who live north of Roma starting to travel to Rocky to jet it instead to Brisbane

[transition_alt]

Seems Rex popularity on new Roma Charleville route dropping by the day as fares rise. To get discount now have to book 60 days before otherwise $520 to Roma recently. Some who live north of Roma starting to travel to Rocky to jet it instead to Brisbane

Mate, that means the popularity is rising. If community fares aren't available until 60 days out rather than the usual 30, that means they've been sold.

Likewise, $520 is much above the base promo fare...

[TimmyTee]

Orrrrr, it means they’re exploiting a legal monopoly route..

[Slugga]

With the incoming Labor government, I can't see anymore free handouts or favourable outcomes decisions to Sharp and Co. Let's see if they stand on their own feet in the next 6-12 months.

[MickG0105]

Seems Rex popularity on new Roma Charleville route dropping by the day as fares rise. To get discount now have to book 60 days before otherwise $520 to Roma recently. Some who live north of Roma starting to travel to Rocky to jet it instead to Brisbane
Brisbane–Roma–Charleville is a regulated route (Central 1). The maximum fare is set by the Queensland state government. You could fly Brisbane - Roma tomorrow for $160. Beyond that it will usually cost you up to the regulated price of around $345 one way.

[megle2]

From their website this Thursday late pm flight $476.49 flex fare only available Roma / Brisbane otherwise $346.09 on the rest. I’m no expert just hearing the locals not happy

[Captn Rex Havack]

Or......a whole one person north of Roma drove to Rocky, so that gives you poetic license to say lots of people are doing it.

[megle2]

Rex Hav, who said one, not me. Hope you double check your charts a bit more accurately

[Captn Rex Havack]

Ok Megs - I'll spell it out for you. I know you did not say ONE. Here's the explanation

Person 1. My mate from north of Roma drove all the way to Rocky to get a jet.
Person 2. I heard a guy from up north drove all the way to Rocky to get a jet.
Person 3. I heard people from up north are driving all the way to Rocky to get a jet.
Person 4. I heard everyone is just driving to Rocky nowadays to get the jet.

Hence my post ref your post - how many ACTUALLY is "some people are driving to Rocky"?

I hope you "interpret" your charts a bit more accurately.

I'm not trying to be a smart arse here Megs - I'm just saying, Ive been in growing outfits, including airlines, where every day
there is a new whirlwind of I heard, I heard, I heard. These I heards get louder and more embellished every day until
suddenly the airline is getting a bunch of SU30 Flankers for regional routes. So anything that states what a collective of
people are doing I treat with a grain of salt.

PS = poor choice of Username - Rex Havick does not work for Rex.

[megle2]

Crickey Rex Hav ease off it’s just a low key observation

[Ladloy]

Rex pulling out of Sydney to Canberra citing competition on this route.

[Ladloy]

Their days on that route were numbered as soon as VA announced they were restarting it.
The link product is far superior. Even the little things like a bus being present at shutdown, not present 40 minutes after the fact.

[PoppaJo]

SACL fired back. So essentially, Rex has no passengers, no revenue and cannot pay the bills. Gold Coast should be next then.

“Sydney Airport made a number of attempts to support Rex’s operations on the Sydney-Canberra route, and we were making good progress on coming to an agreement," says a Sydney Airport spokesperson. "Rex’s suggestion that Sydney Airport is partially responsible for them exiting the route is disappointing and inaccurate.”

[SHVC]

Dying around with less than 10 pax on a 73 everyday has to hurt the bottom line eventually. Will JS ever admit defeat and cut away the 73 operation? I did see an advertisement for 73 skippers (DEC) min 3000hrs on NB jet.

[Lead Balloon]

JS would have been hoping for another Scomo miracle. This change of government means fewer federal public servants travelling back and forward between Canberra and Sydney for busy-work.

After all, these ‘privileged assets’ - I mean airports - and the public service exists to make mates rich.

I anticipate Snowy will cry poor, too, eventually, if not enough public servants are circulating through YSCB on busy-work.

[Icarus2001]

Brisbane–Roma–Charleville is a regulated route (Central 1). The maximum fare is set by the Queensland state government. You could fly Brisbane - Roma tomorrow for $160. Beyond that it will usually cost you up to the regulated price of around $345 one way.

How is a state government regulating a route and price fixing even legal given only the Commonwealth controls aviation, WA pulls the same trick. I would love to see it challenged.

[Lead Balloon]

State governments can regulate intra-state flights for commercial viability and other non-safety regulatory reasons. The Commonwealth’s ‘patch’ is safety regulation.

Same reason for the ‘patchwork’ air carriers’ liability insurance legislation.

The State-based air operator route licensing regimes have survived legal challenge.

[MickG0105]

How is a state government regulating a route and price fixing even legal given only the Commonwealth controls aviation, WA pulls the same trick. I would love to see it challenged.
As Lead Balloon has pointed out, the Commonwealth's powers regarding aviation are limited.

Having been written pre-aeroplane, the Australian Constitution makes no mention of aviation, so there is no explicit Commonwealth power to regulate aviation per S.51. The 1937 referendum that sought to provide the Commonwealth with powers to legislate on air navigation and aircraft failed; it was carried in only two states.

Both prior and subsequent to that referendum, the powers exercised by the Commonwealth regarding aviation had typically been conferred upon it by the states. For instance, for the Commonwealth to form the Department of Civil Aviation in 1921 under the Air Navigation Act 1920 (Cth) the states typically enacted empowering legislation (eg The Commonwealth Powers (Air Navigation) Act 1921 (Qld), Commonwealth Powers (Air Navigation) Act 1920 (Vic) and similar state acts) to facilitate that.

Notably, New South Wales did not pass specific legislation regards the Air Navigation Act 1920 (Cth). So when the DCA suspended Mr Goya Henry for flying around, over and under the Sydney Harbour Bridge in 1934, the High Court upheld Henry's challenge that the suspension was unconstitutional. (R v Burgess; Ex parte Henry (1936) 55 Commonwealth Law Reports 608).

The 1937 referendum attempted to address the High Court's ruling and it failed. The war then saw the states generally fall into line over conferring additional powers to the Commonwealth (eg Commonwealth Powers Act 1942 (NSW), Commonwealth Powers Act 1943 (Qld) and similar)

Fast forward to 1965 and there was a shift in High Court opinion. In Airlines of NSW Pty Ltd v New South Wales the Court held that Commonwealth had power to license all air navigation on the basis of safety, regularity and efficiency of the operations, including purely intrastate operations. Part of their thinking was that with air travel, there is no real meaningful distinction between interstate and intrastate regards the capability of an aircraft or its operation. But the intrusion of the Commonwealth into intrastate aviation was limited, as determined by the High Court in 1976. In Attorney-General (WA); Ex rel Ansett Transport Industries (Operations) Pty Ltd v Australian National Airlines Commission (1976) the Court held that while the Commonwealth could regulate intrastate air operations in order to ensure physical safety, it could not do so for the purpose of ensuring the economic viability and commercial success of that operation.

Queensland's regulated routes are managed under the Transport Operations (Passenger Transport) Act 1994. The purpose of that Act is to achieve the provision of the best possible public passenger transport at reasonable cost to the community and government. Given the economic tilt of the Queensland legislation and the fact that it doesn't seek to intrude onto the Commonwealth's patch of safety regulations, it is doubtful that a challenge to its operation would be successful.

[TimmyTee]

Supposedly there was a SYD-MEL flight that boarded a whopping four people for the flight this morning (from someone who was seated next to the gate)

[megle2]

Thanks MickG interesting post

[43Inches]

It's no different to regulated bus routes. You can't compete with existing public transport services on the same routes in many states, which leads to some pretty stupid situations, especially in the bussing industry. It's the main reason Melbourne has effectively 2 bus operators that own everything. Aviation is probably the most competitive form of public transportation in Australia. Until UBER the taxi industry was the same, however not much is really changing in that space except taxi plates lost value, tariffs are pretty much the same. Freight is another thing altogether... Now that being said, the regulation of busses came about because unregulated bus operators crashed a lot and were constantly boom bust...

In anycase the point of regulated routes is to provide some stability of service at a consistent price. A subsidy will be offered if it needs that to keep price down.

[PoppaJo]

Supposedly there was a SYD-MEL flight that boarded a whopping four people for the flight this morning (from someone who was seated next to the gate)
50% more to what a BNE-SYD carried the other day so good result you could say.

[Icarus2001]

Thanks MickG and LB for the info. Saved me researching it. :bored:

[rodney rude]

Hey Papa joe. I caught the end of boarding for last nights 1700 Melbourne to Sydney flight. Ie Wednesday 25 may 1700. Numbers looked pretty bare. Do you know what the load was.

[Low Pass]

Loads are horrific. Never seen loads so bad on the 737 in my last 10 years. From people inside they mention weekend loads are acceptable...weekdays often the entire day the largest load is 50.
This needs to be a quick flash in the pan for guys that need to get current...then bail. This place is going to hurt and pilots families will pay the price. Disgusting that JS feeds the guys crap saying the 'forecast loads look positive'...utterly untrue.

[PoppaJo]

It would appear they have pulled back 737 capacity from next week significantly.

As the Roo told the market today, fuel has stabilized as such, however is on a up trend into the $120s which will be problematic for players running empty flights.

[Johnny_56]

May be a silly question but what happened to the ATR? Did that get kybosh’d officially or just gone quiet?

[KRUSTY 34]

May be a silly question but what happened to the ATR? Did that get kybosh’d officially or just gone quiet?

Excellent question.

[43Inches]

There was never any public deal for ATRs, just some agreement of understanding between companies. More than likely a push from ATR to be relevant in Australia after the VA saga with them. Considering ATR is the only western manufacturer of regional Turboprops left now, it would make sense to have some sort of working agreement with them. The Q400 program is all but dead, due to being overpriced and so on.

[Going Nowhere]

Even the ATR42 is a step up in capacity for Rex. Unless ATR are going to assist with the training costs, I can’t see Rex being in a position to introduce a new type in the short term. Even second hand ATR’s would be a cost Rex probably isn’t willing to bear right now.

If anything, they look to be contracting their network.

[DanV2]

With Labor set to "turn off the tap" or 'tighten' requirements of cash handouts to REX, it'll be interesting see how'll Sharp will manage with only REX's Singaporean Private Equity owners to rely on for cash.

Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.

[Ladloy]

With Labor set to "turn off the tap" or 'tighten' requirements of cash handouts to REX, it'll be interesting see how'll Sharp will manage with only REX's Singaporean Private Equity owners to rely on for cash.

Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.
has there been any word on it or is it just assumed that Labor will cut the funding?

[43Inches]

What funding are you talking about? everything we have discussed in this forum has already been handed out, there's no ongoing tap of funds. As far as the regulated routes or subsidised routes, that's state based agreements, nothing to do with federal politics.

[PoppaJo]

The Saab operation generally stands on its own feet and does not require government life support to continue operations anymore. The Jet adventure is drawing down on a loan. When that runs out, its either they stump up more funds or that part ceases to exist.

The only funding at the moment is NSW who has given a confidential, and ongoing access to funds as part of the Job Plus program, they also get other benefits like Payroll Tax relief, rebates, and other misc grants, ie new 737 sim. That grant was based on forecasts put in front of the government, no word on what happens if they fail to hit those targets. Adelaide Government went after Tiger when they took a multi million dollar grant after they also flashed big plans to ministers, then closed the base and kept the cash. They had to pay the taxpayer dollars back, and rightly so.

[Bull_Shark]

Great article detailing how much Rex whinge and how their ‘geriatric’ fleet is in desperate need of renewal.

Full article here;

Rex axes routes as competition heats up (https://thenewdaily.com.au/life/travel/2022/05/24/rex-qantas-airline-wars/)

Independent analysts have backed Qantas in a dispute with regional airline Rex over alleged “illegal predatory behaviour”.Rex pulled two routes after accusing Qantas of dumping tens of thousands of excess seats onto regional routes in an attempt to drive the smaller airline out of the market.

But Qantas has denied the allegations and been supported by independent analysts and by consumer watchdog the ACCC.

Last week, Rex announced it would cease flights between Melbourne and Albury and, on Tuesday, it announced it would also drop its Sydney-Canberra route, which it said had become unviable “after the entrance of an additional operator”.

The new airline on that route was Virgin Australia.

Rex’s deputy chairman and former National Party transport minister John Sharp said Qantas was waging “a war of attrition”.

“Rex has no choice but to look after itself,” he said after Rex pulled out of the Melbourne-Albury route.

But aviation consultant Neil Hansford, chairman of Strategic Aviation Solutions, said Qantas was simply offering a better product with larger economies of scale.

“Rex has always gone on the mandate of whingeing,” he told The New Daily.

“Whingeing is the first part of their hymn book. It’s always everybody else’s problem.”

Mr Hansford said Qantas entered new regional routes in order to funnel passengers onto its busier jet routes across the country.

Qantas has, first and foremost, a much more modern, reliable aircraft,” Mr Hansford said.

“Secondly, the Qantas frequent flyer program is a great enhancement. Thirdly, the Qantas regional services connect seamlessly to their international and their interstate services.”

Rex has recently tried to compete on this third point by inking a deal with Delta Air Lines (https://thenewdaily.com.au/life/travel/2022/05/02/qantas-rex-international-travel/) in the US.
Qantas hits backQantas has taken a similar line of defence after Mr Sharp accused the company of dumping tens of thousands of excess seats onto regional seats.

A spokesperson pointed out that while Qantas added 31,200 new seats per year on the Melbourne-Albury route, Rex currently has 44,928 seats on the same route, and operated even more than that pre-COVID-19.

“Rex’s standard approach whenever it withdraws from a route is to blame Qantas,” the spokesperson said in a statement to TND.

“Rex’s idea of competition is that it’s something that happens to others, because they believe they have an enshrined right to be the only carrier on some regional routes.”

Mr Hansford, who has more than 40 years of experience in advising airlines, said Rex has a “geriatric” fleet of planes that can’t compete with Qantas.

For its new routes between capital cities, Rex leases six Boeing 737 jets.

But the backbone of its regional network is a fleet of 67 Saab 340s.

The small turboprop planes seat between 33 and 36 passengers, and went out of production in 1999.

On the other hand, Qantas operates a Dash-8 on the Melbourne-Albury route that can seat up to 74 passengers.

“Now by putting a bigger aircraft on, you’ve still got the same number of pilots, you’re still using the same fuel, but you’re carrying potentially another 30 passengers,” Mr Hansford said.

He believes Rex will be uncompetitive if it does not upgrade its fleet with larger, more modern planes.

The regional airline did not respond to an inquiry about its future fleet plans.

—————————————————————————————————————————————————————-

The question is with so much invested into the 737 operation how are Rex going to replace the ageing ‘backbone’ Saab fleet?

[43Inches]

Isn't it a Dash 300 on the Albury - Melbourne route, max 50 seats and about the same age as the SAAB fleet? They are definitely slower than the SAAB.

“Now by putting a bigger aircraft on, you’ve still got the same number of pilots, you’re still using the same fuel, but you’re carrying potentially another 30 passengers,” Mr Hansford said.


From what I understand the -400 burns slightly more than double the SAAB does on a sector and requires an extra flight attendant, that and the pilots are paid about 20% more. Shows a lack of understanding of the economics going on. There's also the small difference in acquisition cost of $30million for 74 seats vs around $1million for 34 seats. My money for ROI would still be on the SAAB, there's also a bigger spares market due to retired airframes, mothballed fleets and parts commonalities with other types. The Q400 can be quite expensive to operate unless it does jet type schedules to take advantage of the extra sector per day, that's how it's economics were sold. It basically has too have very high utilisation to make it's economics work.

[MickG0105]

Isn't it a Dash 300 on the Albury - Melbourne route, max 50 seats and about the same age as the SAAB fleet? They are definitely slower than the SAAB.

Average age of the QF -300 fleet is about 3 years younger than Rex's Saabs. Unlike the Saab fleet, most of the QF -300s were built this century.

[43Inches]

I'm sure the machines noted that they passed an arbitrary human year marker. That being said 3 years is nothing, I also heard a rumor that the 300 fleet is not doing so well reliability wise either.

[1/2 bank]

Melbourne Airport showing 4 cancelled Qlink flights tonight, Mt Gambier, Launceston, Mildura and Devonport, all Q300's.
Assuming 3 of these are overnighting, not a great start to the week tomorrow for the punters.
Clearly they may not be aircraft related, but it certainly doesn't support Mr Hansfords claims of needing newer aircraft to remain competitive.

[Ladloy]

Ballina, Lismore, Kangaroo Island, Bathurst and Grafton all gone.

[KRUSTY 34]

Ballina, Lismore, Kangaroo Island, Bathurst and Grafton all gone.

What! Even Ballina?

[PoppaJo]

What! Even Ballina?
Why are taxpayers propping up this route? It’s not like Rex is serving some remote community that is in dire need of flights. Is 3/4 flights a day across all carriers with a 737/320. Pointless route for Rex to operate on and complete waste of our cash. The others are not whinging, they are not getting a cent for this route, while Rex is.

[43Inches]

Ballina - Sydney was a DANS and RANS route, which means the jet operators also got subsidised for at least 9 flights a week vs Rexs 2 per week. Again fir whatever reason the recipients of DANS did not have to listed as who gets paid for it. Not sure why it got so much assisstance relative other destinations.

[PammyAnderson]

How long can REX really survive? …. like this.
As reported today, now pulling out of more routes and the 737s flying around almost empty, how long can this can go on? you would only start pulling out of all these routes if you are really bleeding cash.

[KRUSTY 34]

REX’s strengths have alway been Low debt/equity ratio, a focus on a proven core business, and tight fiscal policy.

???

[tossbag]

So REX can't staff their ****ty old aircraft, the subsidies are being removed for some of their routes and they have ****** up royally on the jet ops,

So it's Qantas fault?

[Deano969]

When REX started
Port Maq, Coffs, Roma, Canberra-Syd
I was wondering how they could cover all these with no additional 340s
Now that numbers are coming back, I guess we have the answer
One can only assume they are getting fair numbers on their new routes, except Canberra to Sydney, to justify dropping a few that now have been whacked by QF

[Paragraph377]

How long can REX really survive? …. like this.
As reported today, now pulling out of more routes and the 737s flying around almost empty, how long can this can go on? you would only start pulling out of all these routes if you are really bleeding cash.
Too true. Does anybody know percentage of their fuel is hedged, and at what dollar value? That will be having a big impact on their bottom line. In years gone by, when the cost of oil passed $100 per barrel, many airlines would break even. Any price even further above that, they operate at a loss. Mick or 43 inches might have some better knowledge about this, not sure?

[MickG0105]

Too true. Does anybody know percentage of their fuel is hedged, and at what dollar value? That will be having a big impact on their bottom line. In years gone by, when the cost of oil passed $100 per barrel, many airlines would break even. Any price even further above that, they operate at a loss. Mick or 43 inches might have some better knowledge about this, not sure?
Bit hard to say what Rex's hedge book looks like. Their Fuel Price Risk Management guidance in their FY21 Annual Report suggests that they had locked in a swap price of 54c/l ($204/gal) for that year; not great, not terrible to borrow a line. Their H1-FY22 investor briefing from February this year was silent on hedging. That would be a bit worrisome particularly when compared to the guidance offered by Qantas in their Q3-FY22 Trading Update. QF explained their positioning, in part as follows,

MANAGING HIGHER FUEL PRICES

The Group’s hedging position has provided significant protection from the recent spike in oil prices, giving time to adjust its capacity, schedule and fares in response. Ninety per cent of the Group’s fuel needs are hedged for the second half of FY22 at levels below current prices.

My back-of-the-napkin numbers for Rex has them burning about 170,000 gallons of fuel a week on jet ops. Pick a number for what their swap price might be; anything in the $3.00 - $3.50/gal range would be a good number (but I doubt that their hedging is that good). If we run with that number though that would give them an average weekly fuel cost for jet ops of around $553,000. For SYD-MEL flights that means that at $100 a ticket (roughly the average ticket price on offer) they need to fill 27 seats on each and every flight just to pay for the fuel. However, I suspect that their hedging is not that good and their average seat price is not that high.

The other factor that has got to be hurting Rex is the appallingly poor asset utilisation. By my numbers they have a six jet fleet flying no more than about 230 flying hours a week. That's simply terrible. It pushes all of the fixed leasing and maintenance costs into fewer opportunities for recovery. If you are pitching the sort of low fares that Rex are then you need to flying the paint off your jets with as full a load as possible on every flight.

And add to that all of their leases will now be out of the initial first year sweetheart start-up price. At the barest of bare minima, Rex has to be now shelling out at least $660,000 a month in leasing costs for their jet fleet. Because of the terrible utilisation rate that translates to about $660 per hour to cover leasing. Or 6-7 seats on each and every SYD-MEL flight.

So we're now up to around 33 seats on every SYD-MEL flight needing to be sold just to cover fuel and leasing - and that's probably the bestest of best cases for Rex. Then add crew costs, landing charges and maintenance. I suspect that jet ops are bleeding Rex white. Any other publicly listed business would almost certainly have released updated profit guidance by now.

[Australopithecus]

I see how you did the math, but a SYD-MEL flight chews up 3,600 kgs, 1185 gallons. At $3.50 per, thats 41 passengers tickets for fuel. Even poorly paid crew would cost Rex another 9 passenger tickets.

The 1.4 hour block time SYD-MEL means about 10 tickets for leasing. Your quoted rate seems very low though.

We are in furious agreement about their cash bleed, but I am less optimistic.

[MickG0105]

I see how you did the math, but a SYD-MEL flight chews up 3,600 kgs, 1185 gallons. At $3.50 per, thats 41 passengers tickets for fuel. Even poorly paid crew would cost Rex another 9 passenger tickets.

The 1.4 hour block time SYD-MEL means about 10 tickets for leasing. Your quoted rate seems very low though.

We are in furious agreement about their cash bleed, but I am less optimistic.
Okey doke, thanks for that. I was using 2,275 kg for SYD-MEL; I can't recall where I got that figure. For future reference, what would you use for an average fuel burn per hour for an -800.

And yes, I have used an absolute bare bones number for leasing. I can recall Sharpie spruiking something like $100K a month at some point early in proceedings so I just padded that marginally.

[Australopithecus]

737-800 fuel burn is around 46 kg per minute plus 200ish for taxi and another 300 for the approach. Medium weighs; maybe a couple kg/minute more at heavy weights.

[MickG0105]

737-800 fuel burn is around 46 kg per minute plus 200ish for taxi and another 300 for the approach. Medium weighs; maybe a couple kg/minute more at heavy weights.
Excellent! Thank you for that.

[Paragraph377]

Some good fuel burn figures and financial calculations posted above, thanks gents. I would imagine that unless Sharpie has made sure their fuel is hedged at a lower rate, every time oil rises by a dollar his sphincter tightens by a notch.

[Goat Whisperer]

737-800 fuel burn is around 46 kg per minute plus 200ish for taxi and another 300 for the approach. Medium weighs; maybe a couple kg/minute more at heavy weights.


That's 2760kg per hour, a lot more than a 737-800 burns. 2200-2400 in the cruise. 5.5kg/air nautical mile.

Looking a SYD-MEL flight today, close to full, burn is 3120 kg, plus 250 APU and taxi. MEL-SYD is a little less with tailwind. 2810 plus 220 taxi/APU.

[PoppaJo]

Numbers today are pretty grim. Two options really. Either slash airfares to fill and grow revenue, or park the machines.

You could say they need to slash fares to save themselves. The best run they had was when they had fares at the bottom end. They went to the market last month citing the need to raise fares. However, passenger numbers have actually gone backwards.

[Ladloy]

Numbers today are pretty grim. Two options really. Either slash airfares to fill and grow revenue, or park the machines.

You could say they need to slash fares to save themselves. The best run they had was when they had fares at the bottom end. They went to the market last month citing the need to raise fares. However, passenger numbers have actually gone backwards.
got actual numbers? Single digits warm my heart. I was pretty neutral about the jets but seeing how they're treating the turboprop network I wish only failure for the jets.

[Low Pass]

mid week....47.32,15,55,56,17.....
Start throwing your CVs to places lads...this place a family destroyer

[Australopithecus]

That's 2760kg per hour, a lot more than a 737-800 burns. 2200-2400 (tel:2200-2400) in the cruise. 5.5kg/air nautical mile.

Looking a SYD-MEL flight today, close to full, burn is 3120 kg, plus 250 APU and taxi. MEL-SYD is a little less with tailwind. 2810 plus 220 taxi/APU.

My numbers aren’t per minute in cruise burn, they are the average total stage time burn for the sectors we are discussing.
Longer flights are slightly more efficient since the climb burn is offset somewhat. I just did a 5:20 flight and the burn was 44.6 kg/minute. Plus approach of 300 and taxi of 189

The 737 burns 1800 from the gate to top of climb, +/-. 1800 kg for the last hour. And about 2,400/hr in cruise. Conveniently, the burn at 68 tonnes is related to the indicated speed thus: 250 kts = 2,500 kg/hr. Same relationship at all speeds below the Mach drag effects. Take the indicated, add a zero, and that’s ~ how many kg/hr you burn. What you do with that indicated airspeed v. True airspeed is up to you.

[Australopithecus]

More on airline costs…

Long ago (1980’s) legacy airlines had a break-even load factor of around 74%. Fuel was always about 33% of the operating costs. Fuel was cheap, but sales overheads were expensive. That included commissions, advertising, ground staff etc. Ownership costs (or lease expenses) were high due to eye-watering interest rates. The industry standard was just around 100 employees per narrow body. (160 per widebody)

What has changed? The LCC model reduced direct wages, employment contracts got diluted, employee numbers per aeroplane were reduced. Wages fell. Costs of sales plummeted due to reducing company sales staff, the internet and general bastardry. Executive remuneration soared. Fuel went crazy, on average over the last 10 years. Aeroplanes are more expensive but money is cheaper. Airport fees run just above inflation. frequent flyer schemes actually make money now due to wholesale stupidity.

Sales costs used to run about 16% of revenue. Today what would it be? 2 or 3%?
Fuel used to be 30% +/-. Today? Unhedged I imagine its over 40% for legacy carriers, more for LCCs.
Wages have only gone backwards.
ICAO figures suggest that advertising used to be about 2% of revenue. Today advertising budgets are replaced by headline grabbing low fares. Which aren’t cheap when you do the math.
Leasing costs today are based on very low interest rates, but still have minimum use clauses. I expect that most leases charge for 6+/ day, use or not. The 737 leases that I signed* in 1988 did.

All distilled, with a lot of scientific wild-assed guesses, I imagine that at $100 fares, the break-even is circa 68%. It might be less right now until the lease costs catch up with them. I am not seeing cheaper jet fuel for a long time, btw. Fossil energy production was already lagging demand before the invasion of the Ukraine. The EU has finalised an embargo on Russian feedstocks. Unless India and China buy the surplus oil is going up. If they do, its still staying the same.

*signing leases: if you don’t know who the patsy in the room is, it’s you.

[Ladloy]

Lim Kim Hai has said that if the saab pilot group do not accept his EBA offer he will shut down the south east state's networks, stating a no is "spitting in his face".

[Paragraph377]

Lim Kim Hai has said that if the saab pilot group do not accept his EBA offer he will shut down the south east state's networks, stating a no is "spitting in his face".
That’s an interesting way to promote a ‘just culture’ amongst his pilot group. Of course CASA’s safety and human factors experts wouldn’t be concerned about that.

[PoppaJo]

Good. Spit in his face. Who cares.

[transition_alt]

Interesting that the Saab operation has high pax loads and good recovery on all routes (including against QLink), yet he says the cash reserves are significantly depleted and it’s the regional arms fault.

[gamma69]

Lim Kim Hai has said that if the saab pilot group do not accept his EBA offer he will shut down the south east state's networks, stating a no is "spitting in his face".

I hope the share holders get wind of such a comment. It will send it too a penny stock within a day. That would be better than spitting in his face !

[TimmyTee]

That’s an interesting way to promote a ‘just culture’ amongst his pilot group. Of course CASA’s safety and human factors experts wouldn’t be concerned about that.

100% agree - a true safety regulator would see this, and instantly require him to withdraw his threat, or otherwise ground the operation. Ridiculous pressure on guys and girls trying to go about their daily safety critical jobs..

[SHVC]

Lim Kim Hai has said that if the saab pilot group do not accept his EBA offer he will shut down the south east state's networks, stating a no is "spitting in his face".


Can you substantiate this? I can’t find any such comments made by such person you mention.

[Ladloy]

Can you substantiate this? I can’t find any such comments made by such person you mention.
Unions sent an email to the pilot group last night.

[unobtanium]

Lim Kim Hai has said that if the saab pilot group do not accept his EBA offer he will shut down the south east state's networks, stating a no is "spitting in his face".

but its ok for him to **** on his employee's

[brokenagain]

He might have no choice with the impending mass exodus of crew.