REX to transition to ATRs, start domestic jet ops
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If the shareholders are looking for someone to hang it should be the REX Board and CEO. They own this mess. COVID was always going to leave the cupboards bare, but starting a 737 operation on the premise that VA was gone forever has contributed massively to the REX losses. They have had Government handouts, have many subsidised routes, but have still come up short. Tsk tsk tsk.
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It's Bain who are losing the $100M per month, VA is just the asset/subsidiary/pipeline that is causing Bain to lose $100M/month.
For a corporate entity that is so money/profit voracious this must be giving them sleepless nights....as no end is in sight.
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it is an $18.4m loss after tax so inline with what they predicted a few weeks ago.
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The more complete reports and accounts are on the ASX website as well.
I still haven't had time to go through them but the cursory look I did have, I couldn't see where they broke out the losses across the two segments of their RPT ops being the commuter operation and the B737 operation. They say nothing in the narrative so can't call it much of an Investor Briefing. In fact you could say it is misleading in the omission.
Charter and training held up well.
To give REX their due, given the times not a bad result irrespective of how they got there. You would have to worry once that government tap is turned off though and that can't be too far into the future.
It seems they've actually done quite okay, but not great.
Comparing the half year results, only an extra $28 mill of government subsidies have been received. This makes sense as job keeper is gone and certain subsidies were not available.
Pax revenue increased from $42m half year to $125m full year. The Saab operation never went back to full capacity (except QLD. Even WA isn't full schedule) during this second half period before the next round of lockdowns, so a decent amount of that can be attributed to the 737. Rex have been saying it's making money, so I guess they have to be trusted on that.
Comparing the half year results, only an extra $28 mill of government subsidies have been received. This makes sense as job keeper is gone and certain subsidies were not available.
Pax revenue increased from $42m half year to $125m full year. The Saab operation never went back to full capacity (except QLD. Even WA isn't full schedule) during this second half period before the next round of lockdowns, so a decent amount of that can be attributed to the 737. Rex have been saying it's making money, so I guess they have to be trusted on that.
It seems they've actually done quite okay, but not great.
Comparing the half year results, only an extra $28 mill of government subsidies have been received. This makes sense as job keeper is gone and certain subsidies were not available.
Pax revenue increased from $42m half year to $125m full year. The Saab operation never went back to full capacity (except QLD. Even WA isn't full schedule) during this second half period before the next round of lockdowns, so a decent amount of that can be attributed to the 737. Rex have been saying it's making money, so I guess they have to be trusted on that.
Comparing the half year results, only an extra $28 mill of government subsidies have been received. This makes sense as job keeper is gone and certain subsidies were not available.
Pax revenue increased from $42m half year to $125m full year. The Saab operation never went back to full capacity (except QLD. Even WA isn't full schedule) during this second half period before the next round of lockdowns, so a decent amount of that can be attributed to the 737. Rex have been saying it's making money, so I guess they have to be trusted on that.
I’d imagine the investor would like to see them have a solid crack at the market for 12-24 months before making any calls on it. They really have only had a month or two without any lockdowns.
Whilst 2022 will be ‘getting back on track’ 2023 will be the year to see where this is going. That’s also the timeframe when Virgin and Jetstar starting taking Max’s and Neo’s, so not sure if Rex will ever find any stability in its ‘niche’, with the competition adding capacity every month.
Jayne seems pretty firm on her 33% which will be another problem.
Whilst 2022 will be ‘getting back on track’ 2023 will be the year to see where this is going. That’s also the timeframe when Virgin and Jetstar starting taking Max’s and Neo’s, so not sure if Rex will ever find any stability in its ‘niche’, with the competition adding capacity every month.
Jayne seems pretty firm on her 33% which will be another problem.
Regarding Miss Jayne and her 'target 33%' of the domestic market. She obviously has a 'better polished' crystal ball than most others in the Industry. I guess the only benefit for VA is the 9 additional 737's are being leased on an 'hourly, dry flight rate' - similar to those 737's that have already returned to the fleet on lease. A win-win for both the lessor and VA.
It's going to be turbulent few months ahead.
- Max
$100m sounds excessive. They have cut all the fat off, staff are on government handouts.
The Roo is burning what $40m a week? That’s including its share in Asian based low cost carriers also.
Virgin only has 70 machines. Seems a tad high.
The Roo is burning what $40m a week? That’s including its share in Asian based low cost carriers also.
Virgin only has 70 machines. Seems a tad high.
Surely Bain must be looking to cut their losses at some point? $100M loss per month even for an Investment Firm must be raising questions from within?
Regarding Miss Jayne and her 'target 33%' of the domestic market. She obviously has a 'better polished' crystal ball than most others in the Industry. I guess the only benefit for VA is the 9 additional 737's are being leased on an 'hourly, dry flight rate' - similar to those 737's that have already returned to the fleet on lease. A win-win for both the lessor and VA.
It's going to be turbulent few months ahead.
- Max
Regarding Miss Jayne and her 'target 33%' of the domestic market. She obviously has a 'better polished' crystal ball than most others in the Industry. I guess the only benefit for VA is the 9 additional 737's are being leased on an 'hourly, dry flight rate' - similar to those 737's that have already returned to the fleet on lease. A win-win for both the lessor and VA.
It's going to be turbulent few months ahead.
- Max
The two ex-VA Mk 1 planes are likely to get the "per hour" lease rate as they share the same lessors as the last batch.
That leaves $35 million in jet ops revenue over four months, with the last of those months being largely impacted by Sydney restrictions/lockdowns and other border closures.
In terms of profit, the non-jet ops (Saabs, freight, charter and other) had returned $14.2 million before tax for H1 but that was likely inflated by the government subsidies, JobKeeper and the like. Previously before tax profit had run at about 6 percent of revenue so if we were to apply that to the $48 million H2 revenue estimate for regional plus the additional $20.6 million in H2 freight, charter and other there should have been a further $4.1 million in profits. That gives you over $18 million in non-jet profits for the year.
That should put the $18.4 million operating loss in better context; it's actually somewhere between a $32-36 million loss that is almost certainly largely attributable to just four months of jet operations.
Separately, for those who remember John Sharp's misguided spray back in April that "Qantas is now technically insolvent since its limited unencumbered cash would not be sufficient to meet all of its liabilities that have fallen due, especially the refundable tickets worth billions", well, Rex's position is now such that the value of their payables and unearned revenue (ie refundable tickets) exceeds their cash and receivables balance. They are, of course, not "technically insolvent" but it is at least note worthy that they could be tarred with the same brush.
- Max
Hard to see the lessors of the ex Silk-Air frames not following suite with the "per flying hour" rate. Afterall, if the aircraft weren't leased to a new operator they would more than likely become 'desert dwellers' in ASP where other Silk-Air machines have been stored previously.
- Max
- Max
