REX AIRLINES Trading Halt

[Mr Proach]

Originally Posted by MickG0105

https://asic.gov.au/regulatory-resou...ers/#voluntary

https://www.asx.com.au/asxpdf/201511...zf9r5kmfcn.pdf

Thanks, this is a good summary. Note: "or a secured creditor", who called it for Rex?

[chickoroll]

Regardless, it’s about time the heads of these companies be held to account. Remember Bonza and TJ his name never mentioned just blaming others.

Ironside needs to be inundated by email because even she is failing report the truth here.
JS and NH need to be named in the media as part of the failure here so far nothing is mentioned. Journalist are a joke.

[KRUSTY 34]

Originally Posted by Icarus2001

I am not a fan of the place but I will defend this decision. When Virgin went under, it was entirely possible that was the end for them. Rex saw a huge opportunity and took it. They were hoping to pull off what Virgin did when Ansett collapsed. Small operator suddenly becomes the second airline. Huge risk and looking at their lack of organisation probably they would have made a hash of it. However I think I would have taken the same risk with a caveat being that I would want a solid plan b. This is where they have not done so well.
It appears they took their eyes off the money making Saab operation.

Yes, but when Bain rode in and saved VA, REX still had several months to pull out of the deal with PAG. In fact the very reason for the whole expansion into domestic Jet Operations (as you have correctly observed) was predicated on the demise of Virgin Australia. When that didn't come to pass, what did REX do?

[KRUSTY 34]

Originally Posted by Gate_15L

So.....
The business plan, of their own admission is based upon:
-A major competitor going under.
-Exploiting staff of said competitor
-The hope that fire sale lease rates of aircraft would continue.

Then a major plank of your business plan doesn't eventuate....
And you continue to double down on your business plan, taking on more leases and routes.
Then let your bread and butter operator deteriorate meanwhile splashing the cash to acquire other options.
Then you bleed $1 million a week....

Who's fault is that?

Apparently not the Board or management of said operation....

​​​​​​​Nailed it!

[MickG0105]

Originally Posted by KRUSTY 34

Yes, but when Bain rode in and saved VA, REX still had several months to pull out of the deal with PAG. ...

Rex hadn't even signed with PAG at that point. The relevant chronology runs as follows:
Ww

• 26 June 2020. Bain Capital enters into a sale and implementation deed with administrator Deloitte to acquire Virgin Australia.

• 29 June 2020. Rex Board approved plans for Domestic Operations.

• 22 September 2020. Rex signs with PAG, contingent on shareholder approval.
  

[Cleared Visual]

Originally Posted by KRviator

Maybe not, but if a commercial entity can't make a go of things, and the Government already provides a transport solution to those regional centres, why should taxpayers foot the bill to double-up just because someone wants a faster trip to the big smoke? There's very few medical reasons where speed is of the essence, it's personal preference to get to and from the appointment as quickly as possible.

Hell, it might even prompt the Government to invest more in the regional rail & coach network for the benefit of everyone along the route, not just at the end. Dreamin' I know...That being said, I've always thought Rex could make money out of their regional services. Captive market. Fully depreciated fleet. Minimal competition and so on.

I also get the feeling you have never lived or done any kind of business in regional Australia. It's not just the locals who need to travel for medical appointments. What if your mum who lives in city is dying and there is no train til next Thursday? And a 3 day a week, 14 hour each way train trip is hardly conducive to doing any kind of business or encouraging investment in regional towns. Not all medical appointments are in the city - A bus isn't really an appropriare solution when a medical specialist needs to close their books for 3 or 4 days to travel to a country town. Most likely, they would just not go and have those patients to travel to them instead transferring the cost of travel to the patient. And how much less efficient is the justice system if magistrate needs an extra 3- 4 days to hear cases in a local court... What happens to those local hotels who rely on business travellers for regular income if those travellers decide the extra days out of the office isn't worth making the trip to see a few high value clients they've had for years? A lot of old, wealthy farmers wont be too happy if their insurance agent decides to conduct all their business via Skype (if there is a reliable broadband connection to support it in the first place!). Besides, the majority of people in these towns already do drive themselves or take a bus or train when they need to go to the city for discretionary travel. Just not all travel is discretionary and not all travel is outbound.

[KRUSTY 34]

Originally Posted by MickG0105

Rex hadn't even signed with PAG at that point. The relevant chronology runs as follows:
Wwww

• 26 June 2020. Bain Capital enters into a sale and implementation deed with administrator Deloitte to acquire Virgin Australia.

• 29 June 2020. Rex Board approved plans for Domestic Operations.

• 22 September 2020. Rex signs with PAG, contingent on shareholder approval.
  

Agree Mick. I probably could have couched the term "Pull out of the deal" a little differently.

[lucille]

Originally Posted by KRviator

Maybe not, but if a commercial entity can't make a go of things, and the Government already provides a transport solution to those regional centres, why should taxpayers foot the bill to double-up just because someone wants a faster trip to the big smoke? There's very few medical reasons where speed is of the essence, it's personal preference to get to and from the appointment as quickly as possible.

Hell, it might even prompt the Government to invest more in the regional rail & coach network for the benefit of everyone along the route, not just at the end. Dreamin' I know...That being said, I've always thought Rex could make money out of their regional services. Captive market. Fully depreciated fleet. Minimal competition and so on.

Spoken like a proud train driver. Can’t count the number of times that you’ve told us how really well you have done by getting out of flying as a career and got into driving trains. Good for you. Toot toot.. all aboard the government or mining monopoly gravy train.

Being smug isn't a good look.

[De_flieger]

Originally Posted by Cleared Visual

I also get the feeling you have never lived or done any kind of business in regional Australia. It's not just the locals who need to travel for medical appointments. What if your mum who lives in city is dying and there is no train til next Thursday? And a 3 day a week, 14 hour each way train trip is hardly conducive to doing any kind of business or encouraging investment in regional towns. Not all medical appointments are in the city - A bus isn't really an appropriare solution when a medical specialist needs to close their books for 3 or 4 days to travel to a country town. Most likely, they would just not go and have those patients to travel to them instead transferring the cost of travel to the patient. And how much less efficient is the justice system if magistrate needs an extra 3- 4 days to hear cases in a local court...

Spot on. KRviator obviously hasn’t tried to get a bus to Mornington Island lately, or a train to Northern Peninsula. Two and a bit hours by plane, vs a couple of days by car if the roads are open to the Cape or a lot longer if they’re closed. The teachers arent going to spend days driving in and out, and the kids going to boarding school in Cairns can’t either. The doctors that fly in for a week or two at a time to provide the only GP service in the more remote towns wont be adding an extra two days onto their commute - or in the event they have to, the costs will be passed on to either the locals or the taxpayer.

[De_flieger]

Originally Posted by KRviator

Maybe not, but if a commercial entity can't make a go of things, and the Government already provides a transport solution to those regional centres, why should taxpayers foot the bill to double-up just because someone wants a faster trip to the big smoke? There's very few medical reasons where speed is of the essence, it's personal preference to get to and from the appointment as quickly as possible.

A commercial entity can and was making a go of things, profitably too, up until a few years ago. Rex even paid dividends on their shares a few years back well before the whole 737 malarkey and a few other decisions.

It’s pretty patronising to say “oh yeah people just want to get to appointments a bit quicker”, if something is very time critical they’ll go via the RFDS anyway - they wont wait 36 hours to then spend another 14 on a bus or overnight train, if there even is a train. A lot of places Rex flies dont have train or bus services at all, which is why Queensland has the government subsidised regulated air routes.

[middleman]

Originally Posted by Spudly

FR24 shows it hasn’t moved since June 10th

It was in C Check from June 10th. Initially due back into service 31 July.

[joe_bloggs]

From Crikey

Rex is Labor’s chance to terrify Qantas and curtail its gouging, lying and rorting

A bailout of Rex Airlines is the perfect vehicle for the government to re-enter aviation and subject Qantas to real competition.

BERNARD KEANE

JUL 31, 2024

The government is committed to helping Rex Airlines, now in administration after its gamble to take on Qantas and Virgin on major routes came a cropper. Infrastructure Minister Catherine King this morning said “We would be reluctant to just throw money at the problem”, but otherwise left the way open to various forms of assistance.

Rex, which is majority-Singapore owned, got plenty of taxpayer assistance during the pandemic — in a way that King was critical of at the time — and has been accused of acting anti-competitively by smaller regional airlines. It continues to operate its regional services, while it looks like its push into major city routes is now over.

Economic purists would say them’s the breaks and no government response is necessary. If there is evidence that regional routes can’t be operated commercially but that it’s desirable they continue to be, a subsidy can be offered to the market, not to any one provider — regional competitors of Rex might be able to operate services for a lower subsidy than the larger airline.

The only persistent aspect of competition in Australian aviation, however, is the effort of Qantas to destroy it. There are allegations from politicians as well as Rex itself that Qantas aggressively moved into some Rex regional routes at below-cost levels as punishment for Rex challenging Qantas and Virgin on major city routes. We know from Geoff Culbert, now president of the Business Council, that Qantas blocks competition by slot hoarding and then cancelling flights. The Australian Competition and Consumer Commission extracted a $100 million fine and compensation from Qantas — which initially confected high dudgeon at the mere suggestion of misconduct — for lying to customers and selling tickets to flights it never planned to operate.

Rex is the government’s chance to terrify Qantas and curtail its gouging, lying and rorting. Labor should avoid the Morrison government’s mistake of giving taxpayer money to an airline without using it to acquire an equity stake — the $2.7 billion that taxpayers gifted Qantas during the pandemic would have purchased up to one-third of the airline’s capitalisation, depending on when it was taken in the early stages of the pandemic. Its bailout of Rex should involve taking a substantial equity stake, with the aim of the airline continuing to operate major city services as well as its regional network.

That would outrage Qantas, but continue to put competitive pressure on it to stop its gouging and anticompetitive conduct, with the threat that the government could increase its investment in Rex and expand its capital city operations in the future.

The government’s re-entry into aviation after an absence of more than 30 years isn’t a particularly desirable option, but it’s the least worst one on offer to deal with Qantas’ persistent anticompetitive behaviour. Regulation has demonstrably failed. Coupled with the uncertain economics of aviation in Australia outside the Melbourne-Sydney corridor and a lack of effective competition laws, it has allowed Qantas to abuse its customers and workers over an extended period.

There’s a stronger case for this kind of government intervention than anything in the billions of dollars already committed under Labor’s Future Made In Australia boondoggle, advertised as worth $22.7 billion. For a tenth of that, the government could provide years of competitive tension on major aviation routes via a stake in Rex — a key market crucial to the Australian economy and community.

Labor’s investments in manufacturing (which include handouts to foreign companies; the Singaporean ownership of Rex thus shouldn’t be a problem) will have no competition benefits — indeed, in the case of solar panels, the government is spending $1 billion to encourage the local manufacture of a product for which there is currently a worldwide glut courtesy of Chinese government subsidies.

Why would Labor spend billions in markets where there are no competition problems, while making a virtue of not intervening, for far less, in a crucial market characterised by a lack of competition? It’s time to put the fear of competition, if not God, into Qantas.

[neville_nobody]

Governments can't keep socialising financial loss. REX management took a gamble on inter city flying it didn't work out. That's business. If they go broke they go broke. Governments cannot keep propping up poor management decisions and keep rewarding them for taking high risk gambles that don't work.

Bernard Keane obviously learnt nothing from the GFC.

[chickoroll]

It is not the taxpayer responsibility to bail out company’s that can’t be managed well. JS and Co took a gamble the messed it up big time and now, have ruined what was once a great regional.

Does the gov even know their SAAB fleet is mostly grounded? Does the gov know Rex have pi$$ed off GE and won’t get engine support.

[mikewil]

Originally Posted by chickoroll

It is not the taxpayer responsibility to bail out company’s that can’t be managed well. JS and Co took a gamble the messed it up big time and now, have ruined what was once a great regional.

Does the gov even know their SAAB fleet is mostly grounded? Does the gov know Rex have pi$$ed off GE and won’t get engine support.

Does the government even question the idea that Rex spent their COVID survival grant on setting up the 737 operation rather than just surviving? I am going to suggest that no politician bothers to cast their mind back because they don't care. Most politicians are self serving grubs, in it for themselves who don't genuinely care about the outcomes of government programs or decisions.

I would like to see a journalist ask the question to JS though. Considering all the dirt journos like to dig up and smear, this one is basically a free kick but I am guessing that journalists in general are again too short sighted to cast their mind back.

[transition_alt]

Originally Posted by chickoroll

Does the gov even know their SAAB fleet is mostly grounded? Does the gov know Rex have pi$$ed off GE and won’t get engine support.

All will come out in due course.

[MickG0105]

Originally Posted by mikewil

...
I would like to see a journalist ask the question to JS though. Considering all the dirt journos like to dig up and smear, this one is basically a free kick but I am guessing that journalists in general are again too short sighted to cast their mind back.

I've heard that Sharpie, previously never backward in coming forward for a breakfast television spot to spruik for Rex, is very hard to get a hold off just of late. Same same with LKH apparently.

[Mr Proach]

Originally Posted by transition_alt

All will come out in due course.

The comments suggest Rex Regional was a sound business that ventured into a hostile territory which became the achilles heel of the organisation. The government is politically sensitive to supporting regional Australia. The solution is, don't bail Rex out with taxpayers' money, buy them out. The taxpayer will get the benefit from the acquisition of a established operation at a bargain price and services to regional Australia will be protected into the foreseeable future.
If anyone from the Departments of Industry and Finance is interested, please PM me for further details. I have a broadsheet business plan ready for assessment.

[marreeman]

Can’t believe the amount of of Australian public calling out for the government to save Rex on other social media.
How about the government forward the saving rex fund to the likes of Sharps or Link to actually expand and grow, instead of again propping up a company that’s wasted tax payers money in the COVID hand out and wrecked a great regional airline.
I’m all for the front line workers being saved but surely a rex 2.0 cannot have the same board members and managers to do the same again.
very convenient that nifty secured a larger payout figure just over a week ago. Board must go, gmfo must go as well as manager of network strategy and operations.
Casa also need to investigate how a company can still be safe while operating with no cash and or under the uncertainty that’s still around for all the current employees.

[d_concord]

Originally Posted by MickG0105

I've heard that Sharpie, previously never backward in coming forward for a breakfast television spot to spruik for Rex, is very hard to get a hold off just of late. Same same with LKH apparently.

I'd be surprised if JS did speak. The administration has essentially set the directors aside.