REX AIRLINES Trading Halt
Joined: Sep 2006
Posts: 261
Likes: 83
From: Australia
The role of government is not to go into business. So the taxpayer now has to buy the airline, then fund an entire fleet renewal, then tender against real commercial operators for intrastate government regulated routes or compete with QLink on other routes? What happens on routes where they compete with Jetstar and VA? Will they fly routes at a loss forever just to prop up a few country votes? Where does it end?
Joined: Dec 2023
Posts: 1,150
Likes: 889
From: Oz
Going off what was reported to market for the period ending Dec 31, Rex should still have cash available. The comments from the administrator that funds are tight, another injection from PAG was required to keep the lights on post administration, indicate otherwise. I assume they have held over numerous invoices for H2 which has just eroded a large chunk, combined with a declining passenger base, has simply wiped the joint. It’s a crazy amount of cash to simply burn in H2.
Something is definitely amiss with the financials here when looking at the last report. Lease bills appear to have skyrocketed.
Joined: Aug 2008
Posts: 145
Likes: 1
From: skullzone
From the ABC news site
a week before Rex announced a trading halt, it issued a statement to the ASX with a new set of conditions entitling Mr Howell to 12 months' notice for his termination period.
Perhaps more importantly, the new provisions allowed that in the event there was a "significant change to his duties or responsibilities, or a change which substantially diminishes his position, the company will immediately terminate his employment and make payment in lieu of 12 months notice".
a week before Rex announced a trading halt, it issued a statement to the ASX with a new set of conditions entitling Mr Howell to 12 months' notice for his termination period.
Perhaps more importantly, the new provisions allowed that in the event there was a "significant change to his duties or responsibilities, or a change which substantially diminishes his position, the company will immediately terminate his employment and make payment in lieu of 12 months notice".
Rex has a Howeller – what’s the scam?
by Michael West | Aug 1, 2024 | What's the scam?
What’s the scam with Rex suddenly tarting up the employment contract of its chief executive Neville Howell a few days before he bit the dust? How fortuitous is that!
This week, Regional Express Holdings (Rex Airlines) was placed into voluntary administration. Rex’s fleet of Boeing 737 aircraft are stranded. Rex’s 600 plus employees await their fate. Rex’s shareholders know a haircut is coming but they can’t be sure yet whether it will be clipper number 2, clipper number 1 or a razor and a full shave.
Voluntary administration is the Australian euphemism for a bankruptcy procedure or a corporate collapse. The term voluntary administration has pleasing phonics. It’s voluntary and its administration, what could possibly be bad about that? Voluntary administration might not sound as bad as ‘bankruptcy’ for unwitting shareholders and employees, but it almost invariably is.
Various of them have or are about to, sick Rex. It’s feeding time, and Rex Airlines is the main dish. Maybe it will take a decade to digest Rex, just like Ansett Airlines beforehand, or maybe it will take less time. The clock is ticking. Voluntary administration means a gaggle of suits and ties with timesheets appear at the scene of the corporate crash to offer their opinions on what to do with the wreckage. There will be lots of handwringing, meetings and reports and, of course, the toing and froing with interested parties, including the Federal Government.
External accountants take over the management of the company. Their timesheets fill up quickly as do those of the lawyers and the bills for consultants and other experts that are deemed indispensable to the stage management of a voluntary administration. There will be so much correspondence; so many emails and they all need to be read by everybody with a timesheet.
In practical terms, the first order of business in a voluntary administration is usually managing the team. The CEO needs to be taken care of, so to speak, in order that they will co-operate with the external accountants and show them where the skeletons are hidden and, of course, not rock the boat.
And so it was that on 25 July 2024, six days before the bankruptcy procedure began, the Board of Rex notified the ASX that it had upgraded the CEO’s employment agreement. Previously, the CEO Neville Howell was entitled to 5 weeks’ notice. The Board changed 5 weeks; notice to 12 months’ notice. They also added that the CEO would be immediately terminated and receive a payment in lieu of 12 months’ notice if something significant happened to degrade the CEO’s position, for example, entering voluntary administration in six days’ time.
What a charade. Line up the deck chairs for the impending bankruptcy procedure as if it is business as usual and then, and only then, the Board can turn its mind to whether the company is insolvent and make an announcement to the ASX.
The pilots of the grounded Boeing 737s, and perhaps other employees of Rex must wonder why can’t be immediately terminated and receive a “kiss off” payment of 12 months’ salary just like the CEO.
Perhaps ASIC is watching. After all, ASIC is responsible for corporate insolvency laws in Australia, and they are good at watching but not acting. The Australian Senate recently found that ASIC had “comprehensively failed to fulfil its regulatory remit.” They could have added “no more so than in voluntary administrations.”
What nobody wants is an Ansett, whose voluntary administration turned into a liquidation which took some 17 years and hundreds of millions billions in costs to unwind.
Joined: May 2016
Aviation Qualifications: PPL
Posts: 1,537
Likes: 695
From: Sunshine Coast
Not 100% sure it will work but I think you need to remove accusations and the use of names… something like this (excuse the plagiarism);
It is probably high time for someone to focus on the management and board dysfunction at Rex that led to this corporate disaster. They came up with the highly risky idea of launching jet operations, that was then poorly planned, and executed.
Warning bells have been ringing for a year or more. Anyone who took the time to look at the details in Rex's financial reporting and do just a modicum of digging, could see a bad situation getting progressively worse.
Many of us remember that back in 2020, within just a few weeks of Virgin having entered administration, Rex management was quite happy to provide the media with it’s views on how poorly managed Virgin had been, and what a bad job administrators were doing. Any words of introspection or contrition now?
Remember the pronouncement, “There has never been a better time to launch a domestic airline.” Many of us do!
And doubtless, as Qantas plays its part in getting stranded Rex passengers to their destinations, there would be a few Qantas executives who remember Rex repeatedly and generally baselessly criticizing of Qantas; their June 2021 claim that "On face value Qantas is technically insolvent ... Its unencumbered cash is insufficient to refund the tickets that are eligible for a refund" certainly must be invoking thoughts of shoes and feet, of geese and ganders.
When are Rex management, and the rest of the Rex board, going to be held to account?
It is probably high time for someone to focus on the management and board dysfunction at Rex that led to this corporate disaster. They came up with the highly risky idea of launching jet operations, that was then poorly planned, and executed.
Warning bells have been ringing for a year or more. Anyone who took the time to look at the details in Rex's financial reporting and do just a modicum of digging, could see a bad situation getting progressively worse.
Many of us remember that back in 2020, within just a few weeks of Virgin having entered administration, Rex management was quite happy to provide the media with it’s views on how poorly managed Virgin had been, and what a bad job administrators were doing. Any words of introspection or contrition now?
Remember the pronouncement, “There has never been a better time to launch a domestic airline.” Many of us do!
And doubtless, as Qantas plays its part in getting stranded Rex passengers to their destinations, there would be a few Qantas executives who remember Rex repeatedly and generally baselessly criticizing of Qantas; their June 2021 claim that "On face value Qantas is technically insolvent ... Its unencumbered cash is insufficient to refund the tickets that are eligible for a refund" certainly must be invoking thoughts of shoes and feet, of geese and ganders.
When are Rex management, and the rest of the Rex board, going to be held to account?
Joined: Jun 2024
Posts: 11
Likes: 5
From: Australia
I really hope if there is a viable party to fund a fleet replacement that they seriously consider the D328eco. Yeah the SAF cr*p is all lahdeedah but the point is it's an almost like-for-like replacement option, desperate for a major order that can pump out 43 new aircraft a year in a factory that's nearing construction completion right now. It's a proven airplane with 25% lower operating costs than the SAAB, it's a proven design, benefits of been a high wing and would have the benefit of access to previous experienced staffing right here in Australia. It's a no brainer for REX imo.
Joined: Nov 1998
Posts: 709
Likes: 146
From: Planet Earth
What’s the scam with Rex suddenly tarting up the employment contract of its chief executive Neville Howell a few days before he bit the dust? How fortuitous is that!
And the Albanese circus is seriously thinking of taking up equity in this ****show????? It says it all, really.
Joined: Jun 2001
Posts: 786
Likes: 52
From: .
It seems that people in the know in the industry knew this was coming weeks ago(surely that has to include the CEO!) - well within the time frame the change was mad. Surely ASIC will be very interested in this one !
Joined: Apr 2005
Posts: 728
Likes: 28
From: Perth WA
I can see it....the future. Qatar offers to buy out Rex Regional under the Virgin Australia banner while securing a hold of VA . They provide Regional with ATR 72s or equivalent and tell the government not to worry...all important regional services are maintained and serviced with newish aeroplanes. All they ask, more flights out of Australia and of course the provision of widebodies for their friends at VA. The result....happy days!! ,😋🤭
Man Bilong Balus long PNG
Joined: Apr 2002
Aviation Qualifications: ATPL
Posts: 3,065
Likes: 222
From: Back home again after another fantastic time in Japan; once again back to the 'real world' and continuing the seemingly never ending search for a bad bottle of Red.
I can see it....the future. Qatar offers to buy out Rex Regional under the Virgin Australia banner while securing a hold of VA . They provide Regional with ATR 72s or equivalent and tell the government not to worry...all important regional services are maintained and serviced with newish aeroplanes. All they ask, more flights out of Australia and of course the provision of widebodies for their friends at VA. The result....happy days!! ,😋🤭
Cynical...Me????
Joined: May 2010
Posts: 60
Likes: 4
From: nth of tas
ASIC have already been sniffing around and I don’t think that will be the end of it.
Going off what was reported to market for the period ending Dec 31, Rex should still have cash available. The comments from the administrator that funds are tight, another injection from PAG was required to keep the lights on post administration, indicate otherwise. I assume they have held over numerous invoices for H2 which has just eroded a large chunk, combined with a declining passenger base, has simply wiped the joint. It’s a crazy amount of cash to simply burn in H2.
Something is definitely amiss with the financials here when looking at the last report. Lease bills appear to have skyrocketed.
Going off what was reported to market for the period ending Dec 31, Rex should still have cash available. The comments from the administrator that funds are tight, another injection from PAG was required to keep the lights on post administration, indicate otherwise. I assume they have held over numerous invoices for H2 which has just eroded a large chunk, combined with a declining passenger base, has simply wiped the joint. It’s a crazy amount of cash to simply burn in H2.
Something is definitely amiss with the financials here when looking at the last report. Lease bills appear to have skyrocketed.
Joined: May 2016
Aviation Qualifications: PPL
Posts: 1,537
Likes: 695
From: Sunshine Coast
Interesting development unveiled in The Australian here (behind a paywall).
EY’s corporate undertakers received a knock at the door from the regulator on Thursday with some light questions over its appointment as administrator of downed airline Regional *Express.
“We are engaging with EY to understand the terms of their engagement,” a spokesman for the Australian Securities & Investments Commission told Margin Call.
ASIC’s finest cardigans are apparently trying to figure out if there’s any conflict with EY’s appointment, given they were brought in by Rex to conduct an independent review of the business as early as May. For that they were paid $520,000, and currently there’s no suggestion anything’s amiss. Inquiries, as they say, are continuing.
ASIC’s probing might end up being routine but the rules are the rules and the facts are the facts: external administrators are supposed to be independent of the company and the directors they’re assisting.
With that in mind, consider that EY’s restructuring lead Adam Nikitins, now the administrator, was in the tent with Rex and its investors three months ago and attended basically every meeting up until late July. In that time, discussions shifted from a mere appraisal of the business and a couple of management calls to an escalation with Rex directors around the matter of voluntary administration and “contingency planning”.
EY’s counterargument to any conflict, filed in paperwork to ASIC on Thursday, is one that goes out of its way to assure the regulator that the advice was limited enough to maintain its independence. By its own admission the firm planned for the “possible appointment of an administrator” and held meetings with directors. “Our work was undertaken for the companies only. We did not provide any advice to the directors.”
Hard to be sure, especially when Nikitins was in the room when it happened.
Late on Thursday, EY said their engagement with ASIC was entirely expected for an administration “of this size and this level of community interest”.
...
EY's behaviors as Administrators have been "interesting", their stressing the importance of punters continuing to book on Rex Regional for instance. Another oddly bizarre twist in a series of oddly bizarre twists
ASIC knocks on EY’s door over Rex relations; ...
By Yoni BashanEY’s corporate undertakers received a knock at the door from the regulator on Thursday with some light questions over its appointment as administrator of downed airline Regional *Express.
“We are engaging with EY to understand the terms of their engagement,” a spokesman for the Australian Securities & Investments Commission told Margin Call.
ASIC’s finest cardigans are apparently trying to figure out if there’s any conflict with EY’s appointment, given they were brought in by Rex to conduct an independent review of the business as early as May. For that they were paid $520,000, and currently there’s no suggestion anything’s amiss. Inquiries, as they say, are continuing.
ASIC’s probing might end up being routine but the rules are the rules and the facts are the facts: external administrators are supposed to be independent of the company and the directors they’re assisting.
With that in mind, consider that EY’s restructuring lead Adam Nikitins, now the administrator, was in the tent with Rex and its investors three months ago and attended basically every meeting up until late July. In that time, discussions shifted from a mere appraisal of the business and a couple of management calls to an escalation with Rex directors around the matter of voluntary administration and “contingency planning”.
EY’s counterargument to any conflict, filed in paperwork to ASIC on Thursday, is one that goes out of its way to assure the regulator that the advice was limited enough to maintain its independence. By its own admission the firm planned for the “possible appointment of an administrator” and held meetings with directors. “Our work was undertaken for the companies only. We did not provide any advice to the directors.”
Hard to be sure, especially when Nikitins was in the room when it happened.
Late on Thursday, EY said their engagement with ASIC was entirely expected for an administration “of this size and this level of community interest”.
...
Joined: Apr 2007
Posts: 263
Likes: 23
From: AU
EY were engaged to review in May and VAdmin discussions occurred thereafter. Meanwhile they’re telling the troops all is fine. Crooked bunch of incompetent twats.
Surely CEO can’t be paid out, can someone confirm? How could he in good conscience take that money while others get nothing.
Joined: May 2005
Posts: 3,862
Likes: 444
From: QLD - where drivers are yet to realise that the left lane goes to their destination too.
The Sydney cardiologist heads to places like Dubbo and Port Macquarie once a month
More symptomatic of the desertion of regional Australia by professionals chasing the money and lifestyle of the cities. Nice place to visit, but you wouldn't want to live there.
Joined: Dec 2000
Posts: 1,018
Likes: 180
From: Australia
‘Surely CEO can’t be paid out, can someone confirm? How could he in good conscience take that money while others get nothing.’
Question has already been answered. Yes he can and the fact the company did answers the second part of you question. I get the feeling however First Officer Karma is knocking on a few doors now and we haven’t heard the last of how the executives behaved and who may have given them direction as Rome burned.
Question has already been answered. Yes he can and the fact the company did answers the second part of you question. I get the feeling however First Officer Karma is knocking on a few doors now and we haven’t heard the last of how the executives behaved and who may have given them direction as Rome burned.
Joined: Dec 2001
Aviation Qualifications: ATPL
Posts: 4,419
Likes: 853
From: Brisvegas
Sure, it is possible that a white night Middle East carrier decides to swoop in and save the company to get a foothold in the Australian market.
Why though?
We have 26 million people on a huge island, the big two carriers have the market sewn up nicely and make money in fits and starts. Why would you want to buy in to that?
From all I have read so far they are in the death throes. What is the legal position of a company continuing to trade when they cannot pay their bills, ie payouts for the staff made redundant by the closure of the jet network? If they cannot pay people then they are insolvent? Even with the multiple corporate entities that are involved. I understand the different business units and why that may help but I think the fat lady is warming up. All this talk from EY about possible buyers, sounds like Bonza all over again. Simply not worth it. The brand is tarnished.
Good luck to all the staff, thankfully the market is strong at present for all sorts of aviation roles.
Why though?
We have 26 million people on a huge island, the big two carriers have the market sewn up nicely and make money in fits and starts. Why would you want to buy in to that?
From all I have read so far they are in the death throes. What is the legal position of a company continuing to trade when they cannot pay their bills, ie payouts for the staff made redundant by the closure of the jet network? If they cannot pay people then they are insolvent? Even with the multiple corporate entities that are involved. I understand the different business units and why that may help but I think the fat lady is warming up. All this talk from EY about possible buyers, sounds like Bonza all over again. Simply not worth it. The brand is tarnished.
Good luck to all the staff, thankfully the market is strong at present for all sorts of aviation roles.
Joined: Jul 2003
Posts: 3,381
Likes: 532
From: Somewhere
Government enterprise service organisation to provide an air carrier service for Regional Australia which has been proven is not possible without government subsidies. The organisation may even pay dividends back to government. The name is already out there, "Airservices Australia", good for the taxpayer and great for regional Australia.