REX to transition to ATRs, start domestic jet ops
The following users liked this post:
The subsidiaries have always turned over cash flow, but there is no doubt the core profits were made in the SAAB RPT network. None of the other entities on their own were making significant profits like the SAAB fleet. Which is why it's so hard to watch them trash what was a very successful business model. If I had a few million cash I would entertain the though of starting a competing SAAB operation in SE Australia and service the Rex ports that are being neglected. I know enough pilots and engineers that would jump ship very fast given the opportunity to work for someone who would look after them, Link is doing just that on a limited scale.
Its also key to remember that while the SAAB fleet was making a LOT of profit it was being funneled into various other ventures like setting up the flying school, buying out Pelair, paying down debts to almost zero, lots of property acquisition. So whilst Rex were announcing modest profits of $20-$30 millions behind the scenes a lot was done to bring that number down for tax purposes, it's just pity that more was not poured back into the SAABs themselves, considering they were key to the profits. So the actual profits made by the RPT network was much higher than what was announced to the ASX.
This is why I was always critical of VA, they never really showed any trend towards long term profitability, any profit that occurred was generally on paper only, and some form of accountants creation. VA just limped along with it's management constantly trying to befuddle the investors that something new was happening, so chuck some money at us so we can change things and in a few years it will all be gravy, but never was. Then towards the end it was obvious, they were converting assets into cash, raiding the piggy bank you could say, it was quite obvious that the operation was being propped up.
Rex in my opinion is still very much fixable, however massive change needs to happen right now, starting with much more engagement with it's front line staff, they are going to have to spend their way out of this hole. They also may need to make an example, maybe some significant change at the top level, like what is happening at QF. Unfortunately I'm not sure the spots on this leopard are changeable.
Its also key to remember that while the SAAB fleet was making a LOT of profit it was being funneled into various other ventures like setting up the flying school, buying out Pelair, paying down debts to almost zero, lots of property acquisition. So whilst Rex were announcing modest profits of $20-$30 millions behind the scenes a lot was done to bring that number down for tax purposes, it's just pity that more was not poured back into the SAABs themselves, considering they were key to the profits. So the actual profits made by the RPT network was much higher than what was announced to the ASX.
This is why I was always critical of VA, they never really showed any trend towards long term profitability, any profit that occurred was generally on paper only, and some form of accountants creation. VA just limped along with it's management constantly trying to befuddle the investors that something new was happening, so chuck some money at us so we can change things and in a few years it will all be gravy, but never was. Then towards the end it was obvious, they were converting assets into cash, raiding the piggy bank you could say, it was quite obvious that the operation was being propped up.
Rex in my opinion is still very much fixable, however massive change needs to happen right now, starting with much more engagement with it's front line staff, they are going to have to spend their way out of this hole. They also may need to make an example, maybe some significant change at the top level, like what is happening at QF. Unfortunately I'm not sure the spots on this leopard are changeable.
Last edited by 43Inches; 21st Oct 2023 at 02:53.
The following users liked this post:
Hey 43
Let’s not forget that the core 73 op at VA always made money. It was that part of the business that kept their head just above water. The mismanagement and pissing comps around that was what dragged the company down.
Let’s not forget that the core 73 op at VA always made money. It was that part of the business that kept their head just above water. The mismanagement and pissing comps around that was what dragged the company down.
Correct to a point, but not enough to keep the operation viable in the long run, that is, it was just enough to make marginal profits while the company was expanding. The big problem, very much similar to J* is when expansion stops everything is not quite *enough* to fund the future capital needs of what is a very capital heavy industry. On the other hand Rex was making significant profits on existing stable, ongoing routes that would only get better as populations increase in those areas. They only have themselves to blame if those routes become unprofitable, and I think the end result is more to do with Egos than market forces. The SAAB is a very different animal to a 737. It was built to last a very long time, in fact SAAB built its products so well they probably did them selves out of business. The 737 has a very finite lifespan before it really starts to cost a lot to keep airborne. 10-20 years and you need to renew it, otherwise the variable costs will sink you. With jets you have to keep the fleet young or just the fuel costs will destroy your budget in a competitive environment. Each new model of 737 is significantly more efficient than the last so if you competitor has the latest 737/A320 they will have a huge efficiency bonus let alone warranties and the rest, so even if Bonza is paying more in lease costs they are probably able to save a lot more in fuel and variable maintenance. Turboprops the technology has barely moved forward in economy and reliability so a new ATR is not that much cheaper to operate than an old one.
and NJE ran at a loss (-$3.9 millionbefore tax) for FY23
Where is this info?
Well as I said Mick, I am amazed as I know they were very profitable. Locked in FIFO routes and East coast freight.
I see the REX share price is stubbornly staying at twelve month lows. Although in fairness everything is down, its October after all.
I see the REX share price is stubbornly staying at twelve month lows. Although in fairness everything is down, its October after all.
Rex and an LKH-led Joint Venture jointly paid Cobham $48.18 million for NJE in September last year. Just three months later they re-valued NJE at $77.64 million, and six months after that it had purportedly nearly doubled again in value to $142.67 million. And it lost money. Something very odd going on there.
It would be interesting to get a look at the P&L for NJE and see exactly where the problem is.
Regards share price, once they fell through the $1 floor it only took a couple of days before they were testing 90 cents. They then had a week at 90 and subsequently fell through that. For now Rex is finding support at 85 cents.
By any objective assessment, they have managed to work themselves into quite a challenging position.
I'm hearing that saab cadets, 1-2 years checked to line are leaving for greenee pastures. They are paying huge amount of money to leave but long term they are better off for it. These are their future captains walking away. They are in big trouble.
People are going from a C208 up north to the RHS of a A320.
The days of using Rex as a 5-10 year stopover point after a GA stint is gone. Perhaps 1-2 years tops. Some rusted on Rex Management pilots might be the only people left to crew the LHS in the long run. If they offered new hires some form of 737 transition program, people might hang around.
The days of using Rex as a 5-10 year stopover point after a GA stint is gone. Perhaps 1-2 years tops. Some rusted on Rex Management pilots might be the only people left to crew the LHS in the long run. If they offered new hires some form of 737 transition program, people might hang around.
The following 2 users liked this post by PoppaJo:
Interesting your thoughts on LINK, 42".
Probably the only viable alternative/successor to the grass roots that have been abandoned by the incumbent.
It's crystal ball stuff as to whether anything moves in that area. For the time being at least.
Probably the only viable alternative/successor to the grass roots that have been abandoned by the incumbent.
It's crystal ball stuff as to whether anything moves in that area. For the time being at least.
They seem to be positioning the regional arm up for some form of government help. Pull the old, give us cash or we are cutting off these towns. Seen that before across many industries.
They seem to be positioning the regional arm up for some form of government help. Pull the old, give us cash or we are cutting off these towns. Seen that before across many industries.
The days of using Rex as a 5-10 year stopover point after a GA stint is gone. Perhaps 1-2 years tops. Some rusted on Rex Management pilots might be the only people left to crew the LHS in the long run. If they offered new hires some form of 737 transition program, people might hang around.
Australia and the USA are just catching up with the rest of the world where airlines will have to pay for pilots from scratch, train them and then provide incentives that they don't leave.
Last edited by 43Inches; 25th Oct 2023 at 10:10.
Shows how clever (ethical) they are,
They promised communities that helped them during the pandemic to be repaid ‘in spades’
Well, after being supported by the Kangaroo Island Council, they dumped the route, now Kangaroo Island has been voted by Lonely Planet the second best destination in the WORLD,
Some how it must be Qantas ( insert excuse here) fault.
Who is going to step up to service this gem ( hint not Rex, egg on face, plus no crew)
They promised communities that helped them during the pandemic to be repaid ‘in spades’
Well, after being supported by the Kangaroo Island Council, they dumped the route, now Kangaroo Island has been voted by Lonely Planet the second best destination in the WORLD,
Some how it must be Qantas ( insert excuse here) fault.
Who is going to step up to service this gem ( hint not Rex, egg on face, plus no crew)
Kangaroo Island has been voted by Lonely Planet the second best destination in the WORLD
The following users liked this post:
The following 3 users liked this post by MickG0105:
Rex have announced BNE CNS using NJS Dash operations, can’t see too many punters rushing to book a three hour prop jet option