Go Back  PPRuNe Forums > PPRuNe Worldwide > Australia, New Zealand & the Pacific
Reload this Page >

REX to transition to ATRs, start domestic jet ops

Australia, New Zealand & the Pacific Airline and RPT Rumours & News in Australia, enZed and the Pacific

REX to transition to ATRs, start domestic jet ops

Old 20th Oct 2023, 06:47
  #2601 (permalink)  
 
Join Date: Jan 2019
Location: Australia
Posts: 265
Received 34 Likes on 17 Posts
Originally Posted by Deano969
As I said earlier they appear to be consolidating their routes so no real need to keep 57 SAABs flying
If they were not reworking their network, then fair point

REX are changing in more ways than just adding mainline
Moving forward mainline will be their core operation along with with regional feed
They needed to move away from the Kendell / Hazelton merger days as there are no 30 seat planes being made to replace their SAABs
They will part out some frames to maintain service until Q400s start to replace them and mid life Q400s will become readily available shortly due to the economic downturn
Twice daily regionals will drop to daily whilst others will be and have been cut
REX has dropped some routes over the last couple of years that don't fit the new model, but importantly added routes like Coffs and Port Macquarie that do fit the new model, ie. feeding into mainline and higher frequency
It’s not a strategic decision to consolidate their network like you’re suggesting (because a decision like that would probably need to be forthcoming to the ASX - although we know what Rex and full disclosure are like). Otherwise they wouldn’t have been complaining about QF coming in on their routes 12 months ago, nor applying for the government regulated routes in WA.

It’s a decision they have had to make because they have treated their staff like crap - and those employees (particularly pilots) are now leaving in their droves.
Colonel_Klink is online now  
Old 20th Oct 2023, 06:48
  #2602 (permalink)  
 
Join Date: Nov 2016
Location: Sunny Coast
Posts: 381
Received 14 Likes on 12 Posts
Originally Posted by morno
They’re not reducing the size of their fleet to do it though. Rex are literally pulling pieces off aircraft that were otherwise perfectly good, until they had no pilots to fly them and no spares. Alliance have gone into E190’s.

Bad comparison buddy
So how many 190s are doing FIFO work ?
They are flying for Link and Airnorth
Some of the Fokkers are flying for VA
They still have 32 Fokkers flying around with the last delivered in May 2019, many in this batch were bought just for spare parts
The first 190 arrived 18 months later and were bought to lease to Link

Apples with apples morono
Deano969 is online now  
Old 20th Oct 2023, 06:49
  #2603 (permalink)  
 
Join Date: Dec 2001
Location: Brisvegas
Posts: 3,825
Likes: 0
Received 183 Likes on 86 Posts
They will part out some frames to maintain service until Q400s start to replace them and mid life Q400s will become readily available shortly due to the economic downturn
So a down turn is coming and you think this will make Q400 aircraft readily available?

Well I believe you are wrong. Even with a slight slowing of the economy that MAY occur, aviation is still on the up swing.

As I said earlier they appear to be consolidating their routes so no real need to keep 57 SAABs flying
My understanding is that you have that back to front. They cannot keep the aircraft flying due to crew shortage and so are "consolidating their routes".

A company does not shrink their way in to profitability. The share market agrees.



So how many 190s are doing FIFO work ?
They are flying for Link and Airnorth
What about NJE? What is that six? Alliance use E190 aircraft in Darwin and Brisbane for FIFO. Say three frames.

​​​​​​​
Icarus2001 is online now  
Old 20th Oct 2023, 07:28
  #2604 (permalink)  
 
Join Date: Feb 2012
Location: BBN
Posts: 971
Received 88 Likes on 40 Posts
There is no downturn in the economy, COVID savings would be long gone and the public are just adjusting, like the rest of us. As pilots we can all see the amount of traffic going through the major airports and at my company you struggle to get a staff travel seat.
SHVC is offline  
Old 20th Oct 2023, 07:52
  #2605 (permalink)  
 
Join Date: Apr 2010
Location: Brisbane
Age: 58
Posts: 248
Received 29 Likes on 24 Posts
Originally Posted by Deano969
So how many 190s are doing FIFO work ?
They are flying for Link and Airnorth
Some of the Fokkers are flying for VA
They still have 32 Fokkers flying around with the last delivered in May 2019, many in this batch were bought just for spare parts
The first 190 arrived 18 months later and were bought to lease to Link

Apples with apples morono
You research skills seem to be non existent and on par with the average keyboard warrior, your questions are answered in the financial results, latest:

33 E190s, 18 to QFlink, 3 to Air North via dry lease and 9 for FIFO with the remaining three in maint.

As of Jan this year.
Source Results press 10th Aug
markis10 is online now  
Old 20th Oct 2023, 08:53
  #2606 (permalink)  
 
Join Date: Dec 2001
Location: Brisvegas
Posts: 3,825
Likes: 0
Received 183 Likes on 86 Posts
A few more than 18 to Qantas link...

https://cdn-api.markitdigital.com/ap...df02a206a39ff4


Icarus2001 is online now  
Old 20th Oct 2023, 10:32
  #2607 (permalink)  
 
Join Date: Apr 2010
Location: Brisbane
Age: 58
Posts: 248
Received 29 Likes on 24 Posts
Originally Posted by Icarus2001
A few more than 18 to Qantas link...

https://cdn-api.markitdigital.com/ap...df02a206a39ff4
Figures quoted were actual fleet numbers at balance date - ie June 30, not futures, the bump up from 18 was announced in May
markis10 is online now  
Old 20th Oct 2023, 11:44
  #2608 (permalink)  
 
Join Date: Dec 2001
Location: Brisvegas
Posts: 3,825
Likes: 0
Received 183 Likes on 86 Posts
Didn't you say Jan?
Icarus2001 is online now  
Old 20th Oct 2023, 19:20
  #2609 (permalink)  
 
Join Date: Apr 2010
Location: Brisbane
Age: 58
Posts: 248
Received 29 Likes on 24 Posts
Originally Posted by Icarus2001
Didn't you say Jan?
Jan-Jun = same number, the two arrivals were spares over that time
markis10 is online now  
Old 20th Oct 2023, 20:50
  #2610 (permalink)  
 
Join Date: Nov 2016
Location: Sunny Coast
Posts: 381
Received 14 Likes on 12 Posts
Originally Posted by markis10
You research skills seem to be non existent and on par with the average keyboard warrior, your questions are answered in the financial results, latest:

33 E190s, 18 to QFlink, 3 to Air North via dry lease and 9 for FIFO with the remaining three in maint.

As of Jan this year.
Source Results press 10th Aug
Irrespective, QQ are doing with their Fokkers exactly what ZL are doing with their SAABs
I have no doubt that QQ will start replacing their Fokkers with the next batch of 190s
QQ are just further down the track in this regard than ZL as they have 190s on order already where as ZL have no SAAB replacements on order as yet

REX would seem to be taking logical steps
1) Mainline can only go 1 of 2 ways, expand or abandon, obviously they are going to grow this
2) Regional
Pilot shortage and staff costs have wiped some cost advantages they had over QLink, combined with suitable SAAB replacement forces them to revaluate their operations
Larger Q400s is the logical way forward as they already have a small fleet over at NJE with the latest just delivered this month
The future Q400 ops will need to see a reduction on some routes whilst others will simply be dropped
They have already cut some frequencies and as a result have increased load factors on the remaining services, whilst other unprofitable routes have been dropped all together
REX, as a business, no longer want to serve every little town like Grafton and Lismore just for the sake of keeping their birds in the air
Sharp, Pelican, Nexus etc can play in that market
Dubbo, Wagga, Albury, Coffs, Port etc are right type for Q400s and they will concentrate on these type of routes along with subsidised routes

REX spent their first 20 years on regional with loads around 50% making marginal profits, what is the point of a continuation of this model when
1) Their fleet is now reaching the end of its useful life and there is no replacement out there
2) To staff this fleet is now much more expensive for the revenue generated
3) A Q400 can generate twice the income for roughly the same staff costs as a SAAB

IMO REX are adapting their business model in a sensible way for the long term
Deano969 is online now  
Old 20th Oct 2023, 20:53
  #2611 (permalink)  
 
Join Date: Jul 2018
Location: Sydney
Posts: 631
Received 109 Likes on 40 Posts
Originally Posted by Deano969
Irrespective, QQ are doing with their Fokkers exactly what ZL are doing with their SAABs
I have no doubt that QQ will start replacing their Fokkers with the next batch of 190s
QQ are just further down the track in this regard than ZL as they have 190s on order already where as ZL have no SAAB replacements on order as yet

REX would seem to be taking logical steps
1) Mainline can only go 1 of 2 ways, expand or abandon, obviously they are going to grow this
2) Regional
Pilot shortage and staff costs have wiped some cost advantages they had over QLink, combined with suitable SAAB replacement forces them to revaluate their operations
Larger Q400s is the logical way forward as they already have a small fleet over at NJE with the latest just delivered this month
The future Q400 ops will need to see a reduction on some routes whilst others will simply be dropped
They have already cut some frequencies and as a result have increased load factors on the remaining services, whilst other unprofitable routes have been dropped all together
REX, as a business, no longer want to serve every little town like Grafton and Lismore just for the sake of keeping their birds in the air
Sharp, Pelican, Nexus etc can play in that market
Dubbo, Wagga, Albury, Coffs, Port etc are right type for Q400s and they will concentrate on these type of routes along with subsidised routes

REX spent their first 20 years on regional with loads around 50% making marginal profits, what is the point of a continuation of this model when
1) Their fleet is now reaching the end of its useful life and there is no replacement out there
2) To staff this fleet is now much more expensive for the revenue generated
3) A Q400 can generate twice the income for roughly the same staff costs as a SAAB

IMO REX are adapting their business model in a sensible way for the long term
whos paying for it?
Ladloy is offline  
Old 20th Oct 2023, 22:04
  #2612 (permalink)  
 
Join Date: Feb 2011
Location: Oz
Age: 68
Posts: 1,913
Received 293 Likes on 123 Posts
Alliance are in the position to borrow significant amounts of cash, to the tune of a few hundred million to fund the E190 project. They are also highly profitable. They are having no issues getting cash, with a further $100m a few months ago. They are continuously beating guidance given to the market. Lenders are quite comfortable with QQ, with highly profitable work and contracts lined up for these new aircraft.

Now Rex……Rex has no ability to fund anything and are highly unprofitable. Why would anyone borrow money to them, you have no idea what you are going to get, they have no accurate guidance, and have never been highly profitable.
PoppaJo is offline  
The following users liked this post:
Old 20th Oct 2023, 22:31
  #2613 (permalink)  
 
Join Date: Nov 2016
Location: Sunny Coast
Posts: 381
Received 14 Likes on 12 Posts
There is no need to borrow to lease aircraft
The PAG money was not to buy 737s it is/was for associated costs
Even start ups and loss making airlines can lease aircraft point in case VA
Deano969 is online now  
Old 20th Oct 2023, 22:50
  #2614 (permalink)  
 
Join Date: Jul 2018
Location: Sydney
Posts: 631
Received 109 Likes on 40 Posts
Originally Posted by Deano969
There is no need to borrow to lease aircraft
The PAG money was not to buy 737s it is/was for associated costs
Even start ups and loss making airlines can lease aircraft point in case VA
Ladloy is offline  
The following users liked this post:
Old 21st Oct 2023, 00:20
  #2615 (permalink)  
 
Join Date: Oct 2007
Location: Aus
Posts: 2,728
Received 379 Likes on 209 Posts
REX spent their first 20 years on regional with loads around 50% making marginal profits, what is the point of a continuation of this model when
1) Their fleet is now reaching the end of its useful life and there is no replacement out there
2) To staff this fleet is now much more expensive for the revenue generated
3) A Q400 can generate twice the income for roughly the same staff costs as a SAAB
The profits on the SAAB fleet have never been marginal. Pre Covid they were making great returns on a predictable and stable route structure, being sole operator on most of it's network. The SAAB airframes could go on indefinitely if Rex had spent small amounts over the last 10 years to modernize the fleet, but they didn't, even though they had the funds to do so. The test bed SAAB used for fatigue measurement made it well past the 100,000 cycle mark so the airfames are basically going with an 'on-condition' limitation, that is no hard life limit, it will just be adjusted as in service aircraft reach that limit with no problems. The problem with the SAAB fleet is entirely management created, lack of upgrades where it counts and lack of pilots and engineers. No new type will fix the last two problems.

The Q400 on the other hand was born with structural problems, has had ongoing in service maintenance issues, requires high work rates to be profitable, burns a lot more fuel in the region of double the SAAB per sector, and will cost more than 3 times the SAAB to operate in real terms whilst only carrying twice the passengers. To start with pilots will be 20-30% more expensive, there's an extra flight attendant as well as having to pay one as a CM. Considering as you said they fly around with 50% load factors at times that would mean load factors on the Q400 of 25%. So what routes will sustain this Q400, possibly West Australian runs, but most of the East Coast current runs require frequency to be profitable, and there's no point having Q400s that run AM/PM only RPT and are empty in the middle of the day. You only have to look at QLinks route structure, most of the Rex routes they compete with 300s, why hasn't QLink bought more Q400s you have to ask? Especially if as you say there's a fleet out there ready for purchase.
43Inches is offline  
The following users liked this post:
Old 21st Oct 2023, 00:38
  #2616 (permalink)  
 
Join Date: Jun 2006
Location: 3rd rock from the sun
Posts: 2,445
Received 266 Likes on 105 Posts
Essentially Deano has very little clue what he’s talking about and uses bull**** to try and get his ill informed opinions across, trying to justify Rex’s bad business practices.
morno is online now  
The following 2 users liked this post by morno:
Old 21st Oct 2023, 00:41
  #2617 (permalink)  
 
Join Date: May 2016
Location: Sunshine Coast
Posts: 1,099
Received 130 Likes on 73 Posts
Unless you are looking to actively test the efficacy of your blood pressure medication, best to avoid arguing with idiots.
MickG0105 is online now  
The following 2 users liked this post by MickG0105:
Old 21st Oct 2023, 01:23
  #2618 (permalink)  
 
Join Date: Oct 2007
Location: Aus
Posts: 2,728
Received 379 Likes on 209 Posts
Personally I would not want to be anywhere near management level in Rex at the moment, if the company folds that is. ASIC will have some serious questions for all levels of management and it will be extremely stressful for those that can not leave the country, this is not the Ansett administration where some foreign interest can be blamed and the Kendall/Hazos factions slide out the bottom. Remembering that lack of action on problems is just as bad as creating problems. I think sometimes they may forget its a share listed public company. From what I hear there still has been no engagement with the workforce to fix crewing issues. How the SAAB fleet got to the position its in without engines or whatever is something that's worthy of an investigation in itself. There's a whole can of worms to answer "The SAABs were very profitable and then suddenly they were not?", considering there's no major AD, or airframe limitation affecting the fleet there is only limited imagination as to why it's got to where it is. Link seems to be going ok, Sharps is kicking along with Metros, why is Rex failing?
43Inches is offline  
Old 21st Oct 2023, 01:29
  #2619 (permalink)  
 
Join Date: Dec 2001
Location: Melbourne
Posts: 418
Likes: 0
Received 19 Likes on 12 Posts
REX has never been especially profitable in competitive operations. Much of its money was made on the back of subsidised monopoly routes. Strategically, it has made numerous missteps probably the biggest of which was moving away from VA when logic suggested it should get closer. Sharp etc then stumbled into a jet operation on the basis that VA would collapse over COVID. It quickly became obvious that this was a false assumption and COVID actually gave VA time to restructure without significant inconvenience to customers. The smart play at that point would have been to get close to the new VA but REX chose to believe it could somehow do something unique which it patently can't.

As it currently stands, it is hard to see how it now sets itself up for the future. It has a marginal jet operation that lacks scale and is without anything unique to drive new customers towards it. BONZA has lots of issues but, at least, it is trying to be different.

The market will be loathe to extend finance to any REX restructure. Lease companies may agree to lease them planes but there will be a significant risk premium built into those lease rates. The initial 737s were leased on cheap pandemic rates. These leases are now rolling over and it is likely the unit costs on these ancient 738s will increase by up to 60%.

Comparisons with Alliance are fallacious. Alliance is either replacing its existing ageing F100 fleet or adding new capacity on the back of locked in long-term wet-leases with QLink. They are financially sound and are able to buy outright the secondhand E190s at bargain prices. Had REX got closer to VA rather than walking away and allowing Link in, they could've acquired new fleet on the same basis. Alas, they didn't.


1A_Please is offline  
Old 21st Oct 2023, 02:01
  #2620 (permalink)  
 
Join Date: Oct 2007
Location: Aus
Posts: 2,728
Received 379 Likes on 209 Posts
Much of its money was made on the back of subsidised monopoly routes.
Completely wrong there, most of the profit was on single operator routes, but they were not subsidized. Port Lincoln, Burnie, Griffith, and a lot of other routes had all day frequency, that is multiple flights a day with high loads, sometimes 6 returns. Mildura, Dubbo, Orange, Wagga, Albury, have all been very profitable despite having several competitors over the years, I hear they are doing well on Port Macquarie and Coffs, when they have the planes and crew. It's been managements neglect of these markets and chasing easy money in the subsidized routes that has caused the problem. The Subsidized routes are tendered for a reason, nobody wants to do them otherwise, yes you make guaranteed profit, but not on the scale you need to support a network, it ties up a plane/crew for a whole day and has next to no on carriage. In any case only the Queensland outback routes are subsidized. In WA Rex only has sole operator rights, they are not paid for seats outside of passenger bookings. I don't understand why Albany and Esperence are tendered routes anyway, they have more than enough patronage to support two smaller operators. One of the big factors that many are overlooking is that hubs like Sydney/Melbourne and even Adelaide need a certain mass flow of flights to support the required staff/slots and equipment needed at these ports. The reduced schedules may offer some operation cost reductions, however there is very little you can do to reduce the operational hub costs with these major ports.

There is one reality, that is management has failed to ensure sufficient crew and engineers to operate the SAABs. Other than that the SAAB operation would be very profitable right now, as it is most East coast operations are on very reduced schedule and facing service disruptions regularly, which no doubt will result is less patronage as passengers opt to drive/train/bus instead for reliability.

Had REX got closer to VA rather than walking away and allowing Link in, they could've acquired new fleet on the same basis. Alas, they didn't.
Link is operating SAABs, just better fitted SAABs. However completely agree with the point that Rex should have officially partnered with VA a long time ago. Most of the intercompany angst was to do with BG vs LKH personalities, they should have moved in when BG left.
43Inches is offline  

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.