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REX to transition to ATRs, start domestic jet ops

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REX to transition to ATRs, start domestic jet ops

Old 8th Aug 2023, 01:08
  #2321 (permalink)  
 
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Originally Posted by PoppaJo
Loads are terrible mid week on the 737 apparently. Great for the cash burn. Terrible is 20-50 ish. Perhaps they need a decent frequent flyer program. Triangle 5pm you shouldn’t have a spare seat available during the week.
Originally Posted by fire wall
Flights are at 80 percent LF.Your intel is BS.
Originally Posted by MickG0105
Mmm, I don't know about that. I'm seeing similar numbers to what Poppa is quoting. Noting all the issues that routinely plague small data sets, yesterday and so far today Rex are looking at load factors in the 40s for Sydney-Melbourne and Sydney-Brisbane; ~41.5 percent for SYD-MEL, and ~44.2 percent for SYD-BNE. Seven Eight months ago, when Rex were firing off the "We're in the money" announcements to the market, the load factors for those city pairs for Tuesdays and Wednesdays were in the high 80s; ~86.5 percent for SYD-MEL, and ~88.2 percent for SYD-BNE. Something may have changed, and changed in a very significant way. Or maybe it hasn't, and yesterday and today are aberrations. Let's see what a week or so of data turns up.
Having looked at two week's worth of data now, Rex might just be in a spot of bother; it appears that not enough punters are flying with them. ​​​​​​

For the week 25-31 July, Rex's domestic jet operations moved something in the order of 29,250 passengers on the 255-odd flights that they operated over that period. Their numbers on the Brisbane - Sydney - Melbourne triangle were alarmingly ordinary; a shade over 20,000 over some 180-odd flights.

Coming into August, despite seeing an extra jet being brought into the fleet (an increase of about 14 percent), Rex cut their schedule by some 14 flights (around 5.5 percent). They do have plans to add 14 flights a week back into the schedule when MEL-HBA starts next week but it seemed to be an odd decision to just mark time on their flight schedule despite the additional fleet capacity. Perhaps one of the existing jets has a major service due this month.

Any old how, if the last week of July wasn't ordinary enough (and July is routinely a very good month for domestic), the first week of August has been worse. For the week 1-7 August Rex's jet ops saw some 26,900 pax (down 8 percent) over just shy of 240 flights. The overwhelming majority of that loss in pax numbers occurred in the triangle where numbers fell from 20,000 to 17,200.

And yes, only 14 days worth of data, and just one week-to-week comparison; apply all the usual caveats that apply to small data sets.

And yes, we don't know what Rex's yield was but we do know two things; passenger numbers are an important input to yield (and to load factor), and probably more saliently, Rex haven't been saying boo about the profitability of their domestic jet ops for quite some time now. I don't think that it is a huge logical leap to conclude that Rex might be struggling to make a quid off the back of these passenger numbers.

Here it is probably worth noting that, by their own reporting, Rex's domestic operations initially swung into profit in September last year. Their domestic network load factors for September 2022 were in the low-80s.

And yes, we know that back in the day Rex previously routinely made a small profit off of the back of sixty-x percent load factors. Comparing an operation using a wholly owned fleet of turboprops flying between regional airports, with one using a leased fleet of jets flying between major airports is riddled with obvious issues. And, see the point about the lack of "We're in the money!" announcements.

​​​​​​​Rex's full year results will be out in a couple of weeks. Their H2 revenue will be a number to look at.

Last edited by MickG0105; 8th Aug 2023 at 02:30. Reason: Formatting
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Old 8th Aug 2023, 02:14
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Mick they may have cut 14 flights but added 14 SYD-ADL
So Triangle lost 14 explaining the drop there
You may also find REXs fares are up and are closer to VA than JQ now, further explaining the lower seat numbers but a slightly higher yield per seat
L/F still around 60-70% which is much higher than many on here predicted predicted
More birds on the way
FFPs not far off
More mainline destinations coming and extra through traffic
And solid sustained loads

Mick I think you are just nit picking
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Old 8th Aug 2023, 02:34
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How is their core business going, you know the SAABs? Something like 17 odd parked up doesn’t scream things are going great. Rex as a whole could be in a spot of bother.
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Old 8th Aug 2023, 03:07
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They did mention a corporate drop off in the last results, and a strange comment about higher international fares, which then flowed over to its own network resulting in less spend, and hence, less bums on seats. That would explain the quietness on the triangle, but I wasnít aware that Rex was carrying large amounts of corporate traffic on these routes.

Rex, like Tiger, and probably Bonza, are certainly more vulnerable in any downturn. Even more so if one has no corporate revenue streams, loyalty programs. Generally the first to fall apart when fuel jumps.
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Old 8th Aug 2023, 03:34
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Originally Posted by SHVC
How is their core business going, you know the SAABs? ...
The core business that back in February they said had been "a drag on the Group's performance"?

I haven't been tracking their regional flights so can't offer a view. Back in February at the half-year results announcement they did say that they expected regional to "return to monthly profitability in Q3FY23."

I would add (and just have) that if regional had returned to profitability in Q3FY23, given Rex's track record on market announcements, I suspect that we would have heard something to that effect in May.

Last edited by MickG0105; 8th Aug 2023 at 04:29. Reason: Added note re lack of an announcement on regional profitability
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Old 8th Aug 2023, 08:35
  #2326 (permalink)  
 
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And solid sustained loads
​​​​​​​Have you looked up "sustained" in the dictionary?
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Old 8th Aug 2023, 12:49
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Solid sustained losses
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Old 9th Aug 2023, 03:01
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they expected regional to "return to monthly profitability in Q3FY23."
REX getting another blasting in the media today concerning delayed and cancelled regional flights. People in the country are fed up and it seems the Saab operation is on life support and probably now terminal.

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Old 9th Aug 2023, 04:09
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Originally Posted by Bull_Shark
REX getting another blasting in the media today concerning delayed and cancelled regional flights. People in the country are fed up and it seems the Saab operation is on life support and probably now terminal.
Makes you wonder what happened to that joint project with ATR that Rex announced back in June 2020. According to the MOU they were meant to be studying "optimised solutions" for the replacement and modernisation of the Saab fleet by a fleet of "state-of-the-art ATR 42 and ATR 72 aircraft".

As for anyone claiming that Rex have managed "sustained loads", that is just sheer nonsense. It is looking very much as though Rex have somewhat spectacularly failed to sustain the sort of loads that got their domestic jet operation into the black in September, and through to December, last year.

It is worth noting that according to Rex, the first time that their domestic jet operation reached "slight profitability" was September last year. Coincidentally or not, September was the first time that they cleared the 80 percent load factor hurdle for the month; 134,350-odd pax carried on just shy of 910 flights. For October 2022 Rex announced an unaudited Profit Before Tax for jet ops of "about $2m". Again, coincidentally or not, their load factor for October was solidly mid-80s; around 139,000 pax on some 925 flights.

Monthly profitability announcements (the "We're in the money" series) continued for another two months ... and then they stopped. I don't think some newly found sense of modesty drove that change. A couple of weeks before EOFY we got what is likely to be the first in the "We're in the ****ter" series of announcements.

On an admittedly thin set of data, Rex's numbers are now sitting squarely in the 60s. Coincidentally or not, no profitability announcements.

And you can't band-aid that sort of decline in load factor with yield. RASK is simply LF by Yield, so just to maintain the same RASK with that 20 percentage point drop in LF, you need a 30 percent uplift in Yield. That would be a stretch with a largely inelastic product, it is essentially impossible with air travel in a competitive market.

Rex has gone from moving some 31,000 pax a week on 210 flights, to roughly 28,000 pax on 246 weekly flights. By any objective assessment, it appears that something fairly significant has happened to their customer base. It may have something to do with their pricing - they are now being undercut by Jetstar and matched (or bettered) by Virgin - or it may not.

One way or another, something is amiss for those guys. I really can't see how you can dress that up.

Last edited by MickG0105; 9th Aug 2023 at 04:30.
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Old 9th Aug 2023, 06:33
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Donít forget they picked up some significant traffic last year on the 737s while all the others operationally were a disaster, they gained some good PR and picked up many new customers. Essentially they had become the go to airline.

Now the others, while still very average in some areas performance wise, are not as bad as once was.

The customers all returned to the others. Perhaps thatís the issue. The emotion around never flying Virgin, Jetstar or Qantas is short lived. The experience is a bit more polished over the fence, and they chuck some points and status credits at you, Australians love points and flashy loyalty cards. Rex needs a management and board renewal, to be able to effectively complete with the duopoly, and take it into the next Rex era.
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Old 9th Aug 2023, 07:25
  #2331 (permalink)  
 
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I flew BNE-MEL-BNE recently. I was choosing on price basis. With Rex, not much choice, and because of that, I could choose a (much) cheaper flight with any of the other 3 at a less popular time.
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Old 9th Aug 2023, 08:03
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Originally Posted by Traffic_Is_Er_Was
I flew BNE-MEL-BNE recently. I was choosing on price basis. With Rex, not much choice, and because of that, I could choose a (much) cheaper flight with any of the other 3 at a less popular time.
Interestingly, BNE-MEL is one of their better performing city pairs; consistently mid-70s - mid-80s LF. But they only operate two return flights a day.
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Old 9th Aug 2023, 18:14
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Moving from a fare of say $80 to $110 sees an extra $30 per seat, however, this is not the full story
Deducting a whole bunch of fees and costs sees the actual net per seat go up significantly more

For example
$80 fare may just be break even, a small loss at 80% L/F
$110 fare at 80% L/F could be around $4000 higher
Even at 60% L/F their net would still be better off than $80 at 80% L/F


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Old 10th Aug 2023, 03:17
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Losing customers to competitors who are undercutting you on price? Worried about your revenue line?

Try our "Jack Up Your Prices" strategy!

Use code URNIDIOT for 10 percent cash back on insolvency advice.
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Old 10th Aug 2023, 08:00
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REX would have revenue of an extra $400 on 60% @ $110 verses 80% @ $80
They would also save plenty on screening, airport passenger charges, meals, fuel

Plenty on here bagging them when they were getting good loads with cheap fares saying that it's not about bums on seats, it's about revenue
REX has been doing regional for decades with low L/Fs

BTW a quick look at QF shows a mixed bag on the triangle of reasonable loads, then full loads preceded by empty flights, obviously cancelling flights, then filling up the next one or 2
VA on the other hand just have mediocre loads outside the peak

Has the bubble burst on pent up demand ?
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Old 10th Aug 2023, 09:02
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REX would have revenue of an extra $400 on 60% @ $110 verses 80% @ $80
They would also save plenty on screening, airport passenger charges, meals, fuel
Wow, what a strategy!! Think how much they'd make if they didn't carry anyone!

REX has been doing regional for decades with low L/Fs
In QLD at least those routes have been subsidised by the Govt. They get paid even if there's no one on it............Wait, maybe that's the plan for the jets??
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Old 10th Aug 2023, 12:31
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Originally Posted by Traffic_Is_Er_Was
REX would have revenue of an extra $400 on 60% @ $110 verses 80% @ $80They would also save plenty on screening, airport passenger charges, meals, fuel
Wow, what a strategy!! Think how much they'd make if they didn't carry anyone!

REX has been doing regional for decades with low L/Fs
In QLD at least those routes have been subsidised by the Govt. They get paid even if there's no one on it............Wait, maybe that's the plan for the jets??
Unless you are engaged in a trial that is actively testing the efficacy of blood pressure medication, arguing with idiots is entirely pointless.

People can speculate about the hypothetical possibilities of a theoretical pricing structure for as long as they want. Back in the real world, Rex are losing money. All we need to know is that Rex were reporting profitability for domestic jet ops when load factors were in the mid- to high-80s, and when they fell below that, no more profitability proclamations. Draw your own conclusions.

​​​​​​

Last edited by MickG0105; 10th Aug 2023 at 14:09.
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Old 10th Aug 2023, 12:46
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Given the weekly ASX updates have stopped, speaks for itself.
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Old 12th Aug 2023, 10:43
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Rex latest job advertisement for Saab captain recruitment $30k sign on bonus, Cairns, Townsville, Perth positions. Advertised on seek. Things must be getting desperate!
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Old 12th Aug 2023, 11:28
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Originally Posted by assasin
Rex latest job advertisement for Saab captain recruitment $30k sign on bonus, Cairns, Townsville, Perth positions. Advertised on seek. Things must be getting desperate!
Maybe if they had added $30k to the base salary at the last EBA there might have been less leave! If there's no one to attract I'm not sure what offering a one off payment is going to do to poach back pilots from other operators who are paid more anyway. Now each day that goes by the figure to retain pilots is increasing, probably up past $50k added to the base, can't afford it ? Well, its that or no one to fly the planes....
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