REX to buy National Jet Express (NJE)

[Icarus2001]

REX announcement...


https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02542419-2A1385574?access_token=83ff96335c2d45a094df02a206a39ff4

For those who seem confused, yes this is the Bae 146 operation including freighters, the Q400 and Ejet FIFO.
Not the Cobham SAR or Coastwatch business units.

[Icarus2001]

https://www.businessnewsaustralia.com/articles/rex-set-to-land-national-jet-express-for--48m-as-it-eyes-expansion-into-nt-and-qld.html



Australian carrier Rex to buy Cobham Aviation's mining charter service unit
Reuters (https://www.reuters.com/authors/reuters/)July 15 (Reuters) - Australian carrier Regional Express (REX.AX) (https://www.reuters.com/companies/REX.AX) said on Friday its unit would buy aviation operator Cobham's fly-in fly-out (FIFO) business National Jet Express (NJE) for A$48 million ($32.41 million), marking its entry into the charter servicing sector.

The deal comes at a time when regional heavyweight Qantas Ltd (QAN.AX) (https://www.reuters.com/companies/QAN.AX) is looking to expand its footprint in the charter business, with the proposed acquisition of Alliance Aviation Services (AQZ.AX) (https://www.reuters.com/companies/AQZ.AX) in an A$610.8 million deal. read more (https://www.reuters.com/business/aerospace-defense/qantas-buy-remaining-80-stake-alliance-aviation-443-mln-2022-05-04/)
Report an adRex's bigger peers Qantas, Virgin Australia and Alliance Aviation are the dominant players in the Australian FIFO sector, where service providers ferry workers and miners to remote mining sites instead of total relocation.

The acquisition of NJE, which provides freight services from Sydney to other neighbouring states, as well as air charter services in Papua New Guinea, gives Rex additional eight Bombardier Q400 turboprops and six Embraer E190 jets, it said
Report an adNJE generated a revenue of A$142 million in 2021, Rex added.

The carrier will fund about 50% of the deal through its joint venture partners who agreed to convert debt funding into newly issued shares in NJE to ease the carrier's "debt burden".

"The joint venture will invest in modern aircraft and technology to enable NJE to expand from its traditional bases of WA (Western Australia) and SA (South Australia) and bring our unique brand of FIFO services also to Queensland and Northern Territory," Rex Executive Chairman Lim Kim Hai said.

Cobham Aviation counts diversified natural resource company Glencore Plc (GLEN.L) (https://www.reuters.com/companies/GLEN.L) and nickel-lithium miner IGO Ltd among its customers.

Rex's shares were up 4.1% at A$1.27 as of 0011 GMT. The stock, however, has lost nearly 12% in value so far this year.

(This story corrects to South Australia and not South Africa in paragraph 7)

($1 = 1.4808 Australian dollars)


Given that the NJE fleet is mostly leased...

[CaptainInsaneO]

Quick! Buy it before Qantas buys everything!!

[Icarus2001]

Like a game of Monopoly.

[twentyelevens]

Like a game of Monopoly.

A Game of Gnomes.

[Icarus2001]

Rex To Buy National Jet Express In $48M DealBYANDREW CURRAN (https://simpleflying.com/author/andrew/)
PUBLISHED 21 HOURS AGOAustralia's Regional Express (Rex) is buying National Jet Express, the fly-in-fly-out and freight arm of Adelaide-based Cobham Aviation Services Australia. The deal, valued at around AU$48 million (US$32.4 million), will provide Rex with an entry card to the lucrative fly-in-fly-out (FIFO) resource sector work and help diversify its revenue streams.Rex will acquire Q400s and Embraer E190 jetsRex is best known as a regional airline flying turboprop Saab 340s to link country towns to capital cities. Recently, Rex (https://simpleflying.com/tag/rex/) has started flying Boeing 737-800s between a handful of Australia's capitals. However, it is having a tough time competing against big players like Qantas and Virgin Australia on these routes.

The deal will see the eight Bombardier Q400 turboprops (https://simpleflying.com/tag/q400/) and six Embraer E190 jets belonging to National Jet Express (NJE) join Rex's fleet of 60 Saab 340s and six Boeing 737-800s (https://simpleflying.com/tag/737-800/). The Q400s have an average age of 8.1 years, and the Embraers are aged between 9.3 years and 15.2 years. Compared to Rex's Saab 340s, which have an average of 28.2 years, the new additions are positively youthful and will bring down the average age of Rex's overall fleet.Rex buys a 20% stake in Australia's FIFO marketRex's buy gives it a 20% share in Australia's revenue-rich FIFO operations that transport workers to remote mine and resource sites. Glencore's Minara Resources, Ansteel's Karara Mining, and IGO Limited are among the blue-chip FIFO customers Rex will inherit from the deal. In addition to the FIFO flights, NJE operates freight services from Sydney (SYD) (https://simpleflying.com/tag/sydney-airport/) to Adelaide (ADL), Brisbane (BNE), Melbourne (MEL), and Gold Coast/Coolangatta (OOL), as well as air charter services in Papua New Guinea.

In a stock exchange filing on Friday, Rex said National Jet Systems' calendar 2021 revenue was AU$142 million. Rex is stumping up half of the $48 million to buy NJE. Rex is accessing $15 million from a credit line with a longstanding investor and the $9 million from cash reserves. A further $24 million is coming from private funds held by joint venture partners, including Rex Chairman Lim Kim Hai.

With this acquisition, Rex will have a FIFO arm that is simply unparalleled in Australia," said Rex's Chairman on Friday. "I believe that NJE's modern aircraft fleet and its long-term customer relationships overlayed with Rex's proven record of safety, reliability, and cost efficiencies would propel NJS to be the premier FIFO operator in Australia.

"The Company will invest in modern aircraft and technology to enable NJE to expand from its traditional bases of WA and SA and bring our unique brand of FIFO services also to Queensland and Northern Territory."

Rex will join rivals Qantas, Alliance Airlines, and Virgin Australia Regional Airlines (VARA) in the FIFO market. VARA's Western Australia-based operations are relatively modest, accounting for about 5% of the market. The two big players are Qantas and Brisbane-based Alliance Airlines (https://simpleflying.com/tag/alliance-airlines/). Qantas already owns 20% of Alliance and is making a play to buy the entire airline. That deal remains subject to regulatory approval, but if it proceeds, it will snag Qantas a 70% share of the FIFO market


Interesting that the Chairman is putting money in to this deal.

[SHVC]

Would that be so they don’t need share holder approval? Using money from PAG 73 cash injection so they much have a lot of that left over.

[MickG0105]

Interesting that the Chairman is putting money in to this deal.
Probably the only way the deal was going to happen. It would almost certainly have been beyond Rex to fund the whole acquisition off their own bat.

[The Banjo]

A perfect match. One sxxt show adopting another.

[SHVC]

It could be an opportunity to exit stage left with the failing 73 east coast op ”to focus on west Australian ops” and save face. let’s face it they’re only full at the moment because of school holidays. This time next week be less than 50 punters again.

[Australopithecus]

It could be an opportunity to exit stage left with the failing 73 east coast op ”to focus on west Australian ops” and save face. let’s face it they’re only full at the moment because of school holidays. This time next week be less than 50 punters again.

Who cares about face? I think that if Rex can manage to actually give customer service to the people they are flying right now they may be able to keep them as return customers. Nobody counted on Qantas and Virgin being so hopeless to the point of gifting legions of passengers to Rex. But they have.

Everybody's loads will be down post holidays, but I bet that Rex won’t be as dire as they were before.

[Ollie Onion]

It was either Willie Walsh or Michael O’Leary about 15 years ago that said by mid century ALL airline would be owned by 3-5 large entities. Maybe they are right, everyone is getting bought by someone.

[SHVC]

I don’t think they pinched too many, customers would of been looking for a ML BN or OOL flight every other carrier was booked out. QF and VA have not done as much damage to their brand as ppl think, if you’re going to go by that logic ML, SY and BN airports will be struggling for punters as they were woeful in handling passengers, moving them through security and Sydney food court…crikey you can tell it’s privately owned now over half coffee shops are closed for first flights line ups for coffe at each of the only 3 open wind all the way around the food court. Spring holidays will creep up on everyone again and we will see the same again.

[PoppaJo]

I think that if Rex can manage to actually give customer service to the people they are flying right now they may be able to keep them as return customers.

Everybody's loads will be down post holidays, but I bet that Rex won’t be as dire as they were before.

Return customers are tied to two things. Price and FF Programs. Rex doesn't do much in either of those, which is why they will continue to flounder.

All those passengers on the news in recent weeks....never flying Jetstar ever again EVER!....Virgin has ruined my life....Qantas CEO gets paid too much not getting my money blah blah blah........next month they magically make a re appearance on said carriers again and again. Just throw them a few thousand FF points, watch their eyes light up, problem solved and the love affair continues on..

Which is why these monopolised carriers don't give two ****s. The Pax will be back. Revenue keeps coming. Until that tap is turned off, and the regulators start fining the living daylights out of the airlines, the bull**** experience continues. VA and QF have the market and pax by the balls. Rex will never have a chance.

[neville_nobody]

Which is why these monopolised carriers don't give two ****s. The Pax will be back. Revenue keeps coming. Until that tap is turned off, and the regulators start fining the living daylights out of the airlines, the bull**** experience continues. VA and QF have the market and pax by the balls. Rex will never have a chance.

This and monopoly airports. Depending on how things play out in the next 6-12 months I can see a passenger bill of rights coming in if things don't improve across the board.

[SHVC]

I doubt that, I bet no one here, and ordinary pax have ever read the T&C when buying a ticket in its entirety when paying with their CC! Pax can bring a bill of rights or anything but there is no case as it’s all there in the fine print that no one reads. Hell, how many go to bunnings, who has ever read the fine print on the entrance not me but, they are using facial recognition in some stores not illegal as they told you as a condition of entry. Don’t like it don’t enter.

[Australopithecus]

They are referring to legislation in Europe that requires carriers to pay monetary penalties to passengers for avoidable delays.

If we had such laws carriers could not afford (literally) to behave the way they do,

[Paragraph377]

They are referring to legislation in Europe that requires carriers to pay monetary penalties to passengers for avoidable delays.

If we had such laws carriers could not afford (literally) to behave the way they do,

If that were to occur, our gutless and incompetent Government would screw up the wording of the new legislation anyway. Useless fools. And the airlines would circumvent any ‘avoidable delay’ clause - aircraft delayed due to weather (act of God). Aircraft delayed due to crew member sickness (act of nature). Refueller late to refuel the aircraft due to having to take a **** (WHS). There would be a new set of delay codes neatly worded to make sure every delay was unavoidable.

[Lead Balloon]

The solution is simple: Prohibit airlines from charging anything before the service is provided.

I’ve always said that any business which requires payment before the service is provided is a Ponzi Scheme.

[Deano969]

What do we think REX will do with Cobham, leave it as a separate entity of rebrand the frames and mix the fleet into the REX fleet
One would think that a couple of SAABs heading west to swap out a couple of Q400s for the east coast could be on the cards
REX just added another SAAB this month from Silver Airways, but those Q400s they inherited from Cobham could be added to for greater fleet flexibility on busier east coast legs
I can also see part of the next batch of 737s being used to launch transcontinental, linking FIFO workers to the east coast
A few more 190s added to the east coast to help launch new routes could also be on the cards, they are very popular with passengers....

Good fleet mix if it comes to fruition
34 seat SAAB
76 seat Q400
110 seat E190
176 seat 737
Opens up a world of possibilities........

[neville_nobody]

The solution is simple: Prohibit airlines from charging anything before the service is provided.

I’ve always said that any business which requires payment before the service is provided is a Ponzi Scheme.

How would you then solve the problem of no-shows? People would block seats months out then not turn up on the day. Who pays then and how do you value to lost revenue from someone else who would have taken the seat?

[Taggert]

What do we think REX will do with Cobham, leave it as a separate entity of rebrand the frames and mix the fleet into the REX fleet
One would think that a couple of SAABs heading west to swap out a couple of Q400s for the east coast could be on the cards
REX just added another SAAB this month from Silver Airways, but those Q400s they inherited from Cobham could be added to for greater fleet flexibility on busier east coast legs
I can also see part of the next batch of 737s being used to launch transcontinental, linking FIFO workers to the east coast
A few more 190s added to the east coast to help launch new routes could also be on the cards, they are very popular with passengers....

Good fleet mix if it comes to fruition
34 seat SAAB
76 seat Q400
110 seat E190
176 seat 737
Opens up a world of possibilities........
For it to be offloaded...

[Chronic Snoozer]

I can see the miners being none too pleased should they be forced off the Q400/E190 onto older tech. I believe some of the WA runways were modified at great expense to accommodate the Q400, why move them east? A weekend Perth-Bali service on the E190 perhaps.

[Kiwiconehead]

I can see the miners being none too pleased should they be forced off the Q400/E190 onto older tech. I believe some of the WA runways were modified at great expense to accommodate the Q400, why move them east? A weekend Perth-Bali service on the E190 perhaps.

Good luck doing Perth - Truscott with 70 bums in the Saab!!

That and they will need to pay for 2 Saabs to carry the bums of one Q400 - would be a quick way to exit the FIFO market.

[Traffic_Is_Er_Was]

crikey you can tell it’s privately owned now over half coffee shops are closed for first flights line ups for coffe at each of the only 3 open wind all the way around the food court.
You do realise the Airport does not staff the tenancies, or prevent the tenancies from being open?

[Hollywood1]

How would you then solve the problem of no-shows? People would block seats months out then not turn up on the day. Who pays then and how do you value to lost revenue from someone else who would have taken the seat?
Easily fixed. Pay 50% upfront for the ticket and the remainder by afterpay at the completion of the flight.

[SHVC]

You do realise the Airport does not staff the tenancies, or prevent the tenancies from being open?

Not entirely correct, they’re contracted to be open as part of the lease.

[Australopithecus]

Getting to work at an airport, far out of town, to work split shifts for minimum wage just doesn’t have the jet-setting glamour that it once did.

Hence what will be chronic staff shortages at airports, and airport food and retail.

[itchy_feet]

What do we think REX will do with Cobham, leave it as a separate entity of rebrand the frames and mix the fleet into the REX fleet
One would think that a couple of SAABs heading west to swap out a couple of Q400s for the east coast could be on the cards
REX just added another SAAB this month from Silver Airways, but those Q400s they inherited from Cobham could be added to for greater fleet flexibility on busier east coast legs
I can also see part of the next batch of 737s being used to launch transcontinental, linking FIFO workers to the east coast
A few more 190s added to the east coast to help launch new routes could also be on the cards, they are very popular with passengers....

Good fleet mix if it comes to fruition
34 seat SAAB
76 seat Q400
110 seat E190
176 seat 737
Opens up a world of possibilities........

Those Q400's and E190's are all linked to contracts in WA/SA. There will be no "swapping out" for Saabs as the clients will more than likely tear up those contracts!

REX have supposedly said they will expand FIFO ops into QLD and NT. Cobham had already committed to 11 x Q400's and 7 E190's by end of the year for existing and future contracts, prior to the REX announcement.

Any further expansion is going to require REX to source new airframes and employ new crews as the ones in WA/SA won't move, will we see RPT from the Q400/E190......maybe but QF has a strangle hold on WA so breaking that will be difficult given REX's reputation.

Safe to say the troops at NJE are not happy about the take over as well!

Its only a matter of time before REX introduce and East Coast to Perth flight and this could allow them some feed from the FIFO routes to help prop up the bottom line on those flights and also boost the appeal with mining companies

[itchy_feet]

Good luck doing Perth - Truscott with 70 bums in the Saab!!

That and they will need to pay for 2 Saabs to carry the bums of one Q400 - would be a quick way to exit the FIFO market.

Its only 30 pax to Truscott but can a SAAB even fly that far and still hold KNX or BME as an alternate?

[Icarus2001]

Safe to say the troops at NJE are not happy about the take over as well! Why are they not happy?

[wishiwasupthere]

Not sure about the ins and outs of NJE, but Rex certainly doesn’t have the reputation of a good employer.

[Icarus2001]

What has NJS, owned by Qantas got to do with Rex buying NJE?

[itchy_feet]

Why are they not happy?

Not happy is not the right word sorry.

There’s a strong sense of unease about the take over and a lot of questions from NJE staff about what the future holds……e.g. Expired Pilot EBA and how the takeover will affect the negotiations for that, are Rex management going to try and re-invent the wheel with FIFO and possibly screw it all up, I mean NJE isn’t the greatest and has areas for improvement but they seem to be on a roll with gaining new long and renewing existing clients with long term contracts and would be a shame for that to all come undone.

Nonetheless, interesting next 6-12 months.

[itchy_feet]

Not sure about the ins and outs of NJE, but Rex certainly doesn’t have the reputation of a good employer.

For the most part, not too bad considering but like others NJE does have its issues. Pretty busy at the moment and quite a few duty changes due crew sickness/COVID and expansion but extra $$$ for the inconvenience most of the time. A pretty good EBA compared to most FIFO operators, although it is currently expired and the folks on the line are a good bunch! The C&T culture at least on the fleet I’m on is big T and little C and quite positive.

[Icarus2001]

An expired EBA continues until replaced by a new one, so no real issue there.