REX AIRLINES Trading Halt
Joined: Jan 2013
Posts: 116
Likes: 96
From: Around
Joined: Sep 2020
Posts: 14
Likes: 2
From: mildura
Lucky QF have 14 mid-life Q400s due soon … I’d dare say that we will see the 200s and 300s sticking around for some time to fill the REX void … I’m not sure what the realistic plan is for their regional network … sub in NJE Q400s? NJE are busy doing their own thing, and for the most part, they do it well … I’m certain that if QF hadn’t been busy with (and knocked back on) the shelved Alliance deal, they would have jumped at the NJE opportunity.
REX are 20 years behind QF on DBO, WGA, MQL etc … all of the mini majors … reliability is down the drain … these routes should be their cash cows … but instead, they’re running ancient SAABs and bussing PAX into SYD and MEL terminals outside of security … get with the program! PAX want the QF offering minus the ‘welcome to Country’.
Realistically, their best option is to leverage the 737 fleet and go in hard - they’ve got the planes, the people and the opportunity - but there is zero marketing nous.
REX are 20 years behind QF on DBO, WGA, MQL etc … all of the mini majors … reliability is down the drain … these routes should be their cash cows … but instead, they’re running ancient SAABs and bussing PAX into SYD and MEL terminals outside of security … get with the program! PAX want the QF offering minus the ‘welcome to Country’.
Realistically, their best option is to leverage the 737 fleet and go in hard - they’ve got the planes, the people and the opportunity - but there is zero marketing nous.
Joined: Dec 2023
Posts: 1,150
Likes: 889
From: Oz
Whatever hope Deloitte has at a restructuring here will all be out the window if he gets reinstated.
They need to keep him at bay.
Joined: May 2016
Aviation Qualifications: PPL
Posts: 1,537
Likes: 695
From: Sunshine Coast
Given that deliberate role separation between oversight and execution, one very important, fundamental principle for board structuring is that the Board should be demonstrably independent of, and separate from executive management, and vice versa regards executive management. Accordingly, the ASX sets out a number of recommendations to support this, specifically:
V
- Recommendation 2.1: A majority of the board should be independent directors.
- Recommendation 2.2: The chair should be an independent director.
- Recommendation 2.3: The roles of chair and chief executive officer should not be exercised by the same individual.
Until the recent palace coup, Rex had never conformed to any of those recommendations. Only three of the directors are independent. And, until recently, LKH, who is not independent, was both Chair and CEO. It was a model of dysfunction that was tolerated, probably due to force of personality, and the fact that until 2020 the business had made modest profits. The old normalisation of deviance process to a certain extent, in my opinion given quite the leg-up by cowardice and general lack of character in some of the players.
Any old how, it is where it is. Finally, a few Board members have summoned the courage to have the captain escorted from the flight deck. I agree with general sentiment that keeping that fellow out of the LHS is going to be essential if there's any chance of saving the show.
Unless something very untoward has happened in the past six months, there should be about $50 million in cash in Rex's bank account. That will give Deloitte some cushioning around deploying changes. Not a lot but it is certainly a markedly different circumstance to that facing most administrations where the business has no cash at all when the call is finally made.
Back to the Zen Master, "We'll see."
Joined: Sep 2003
Posts: 26
Likes: 8
From: in a house
Very simple in my opinion, even with LKH at the reigns it was making money every year before the jet op came in.
Simple thing is to get out of the jet op while you still can and save the rest of the business (saab) op that is making money.
The saab op has been funding all jet infrastructure and extra staff, no wonder it’s down on the books as not making money.
Rex’s mindset has been
1-jet op
2-Nje & Pelair
3-saab rpt op
Saab rpt flights last minute are being delayed and or cancelled so that the aircraft can be used on charter flights.
Due to being tight arses, they are down to around 35 operational Saabs out of a fleet of 52, due mainly to trying to cut costs on engines.
Over the years rex has had plenty of opportunities to update the fleet, choosing not because it costs money, well you can’t work an old fleet forever.
They can’t keep staff now because people are sick of being treated like **** and can see the writing on the wall, this includes long serving Captains to engineers, cadets in the current climate are out at first opportunity before their contract is up, it’s a train wreck and management are reaping what they’ve sowed.
Look at the salaries of management in the company, huge $$$.
Jet op 9 aircraft 120 pilots, saab op 52 aircraft around 35 operational and only 230ish pilots down from 300 + and AAPA was meant to stop Rex’s pilot shortages, millions invested in this place and it hasn’t elevated any crew shortages ever!!
The board had no option but to vote out LKH due to the asx investigation/questioning, I also believe he’s being investigated for similar in another country.
Simple thing is to get out of the jet op while you still can and save the rest of the business (saab) op that is making money.
The saab op has been funding all jet infrastructure and extra staff, no wonder it’s down on the books as not making money.
Rex’s mindset has been
1-jet op
2-Nje & Pelair
3-saab rpt op
Saab rpt flights last minute are being delayed and or cancelled so that the aircraft can be used on charter flights.
Due to being tight arses, they are down to around 35 operational Saabs out of a fleet of 52, due mainly to trying to cut costs on engines.
Over the years rex has had plenty of opportunities to update the fleet, choosing not because it costs money, well you can’t work an old fleet forever.
They can’t keep staff now because people are sick of being treated like **** and can see the writing on the wall, this includes long serving Captains to engineers, cadets in the current climate are out at first opportunity before their contract is up, it’s a train wreck and management are reaping what they’ve sowed.
Look at the salaries of management in the company, huge $$$.
Jet op 9 aircraft 120 pilots, saab op 52 aircraft around 35 operational and only 230ish pilots down from 300 + and AAPA was meant to stop Rex’s pilot shortages, millions invested in this place and it hasn’t elevated any crew shortages ever!!
The board had no option but to vote out LKH due to the asx investigation/questioning, I also believe he’s being investigated for similar in another country.
Joined: Jan 2006
Posts: 2,535
Likes: 224
From: Sydney Australia
One could argue quite rationally that the time to exit the Jet operation would have been in the 3 months between Bain announcing its intention to save VA, and the deadline to sign on the dotted line with PAG?
On course that would have been the rational thing to do.
On course that would have been the rational thing to do.
Joined: May 2016
Aviation Qualifications: PPL
Posts: 1,537
Likes: 695
From: Sunshine Coast
However, LKH, as someone who holds 5 percent or more of the shares of the business, has exercised his right under S.249D of the Corporations Act 2001 to call for a general meeting of shareholders to vote on removing all the independent directors plus non-executive director Lee Thian Soo, and have two of his mates installed as directors. The board has to convene that meeting, but not until as late as 12 September. So, at that point, the shareholders will have the final say on whether LKH runs the show or not.
On the basis that the business would likely be in administration when that shareholder meeting is finally held, I expect that LKH will seek some form of injunctive relief to prevent the now standing board from appointing an administrator prior to the outcome of the shareholder meeting.
Again, back to the Zen Master, "We'll see."
Joined: Dec 2001
Aviation Qualifications: ATPL
Posts: 4,419
Likes: 853
From: Brisvegas
As I mentioned earlier, once Joe Public gets a whiff of all this they will cease to book anymore than a few days in advance. The public have Bonza in their recent memory. When that happens cashflow reduces massively.
Joined: Dec 2023
Posts: 1,150
Likes: 889
From: Oz
I just fail to see what LKH does here to improve anything. He hasn’t taken any action re the declining performance in last few years, I can’t see him returning and magically turning the place around. One cannot stress the importance of keeping someone like him, well away for the time being. Nobody cares about his personal financial ties and associated risks he has to this business, the employees is where the focus needs to be in any restructuring.
You just hope they haven’t yet signed the dotted line for the next batch of NGs they had been talking about.
Joined: Jan 2019
Posts: 337
Likes: 82
From: Australia
Joined: Jul 2024
Posts: 1
Likes: 1
From: Melbourne
Random idea, but could VA/Bain step in?
Could wait for the price to drop to rock bottom, buy Rex out of administration, absorb the jets into their network and rebrand them, and restructure the regional network back to what used to work.
They come out with more jets, more pilots, and a filler regional network to compete with QF and add to the existing small numbers of Link SAABs bashing around.
Depends if they have the cash to do so and/or see the value in it, idk just spitballing.
Could wait for the price to drop to rock bottom, buy Rex out of administration, absorb the jets into their network and rebrand them, and restructure the regional network back to what used to work.
They come out with more jets, more pilots, and a filler regional network to compete with QF and add to the existing small numbers of Link SAABs bashing around.
Depends if they have the cash to do so and/or see the value in it, idk just spitballing.
Joined: May 2016
Aviation Qualifications: PPL
Posts: 1,537
Likes: 695
From: Sunshine Coast
Probably a very good outcome for all parties. How would Rex have been able to make the lease payments? and what routes would they have put them on? The last thing that Rex needs at the moment is more fixed costs.
Joined: Apr 2010
Posts: 375
Likes: 65
From: Brisbane
Rex has different issues, their formerly profitable operation is a ticking time bomb re the lack of suitable fleet upgrades and staff, dipping their toes into Jets was an opportunistic gamble were they were “David” not counting on a Goliath to come into the arena. Alliance took the place of Cobham with NJE as far as QF was concerned and Rex got to pick the carcass once again. Since the demise of Ansett Rex have come across as the opportunistic Crows/Ravens of the local scene, now they are looking a bit like bin chickens, with the staff and shareholders paying the price for management ineptitude. Their current market cap is close to their expected cash holdings, circa $50m, potential lessors do read AFR I suspect, which is why fleet growth is in the negative.
Joined: Dec 2023
Posts: 1,150
Likes: 889
From: Oz
Joined: Jan 2013
Posts: 116
Likes: 96
From: Around
It is actually executive management's role to establish things like route structures, flight schedules and yield management/pricing structures, and adapt those to changing circumstances. The Board's role is to appoint the executive manager (CEO), review/endorse strategies developed by the executive, and monitor performance against the strategic objectives.
If they weren’t so busy being fickle and attempting to bully employees maybe they would have more time to ‘monitor performance against the strategic objectives’ and the share price wouldn’t be so tanked!
Joined: Mar 2004
Posts: 808
Likes: 31
From: Home
Lucky QF have 14 mid-life Q400s due soon … I’d dare say that we will see the 200s and 300s sticking around for some time to fill the REX void … I’m not sure what the realistic plan is for their regional network … sub in NJE Q400s? NJE are busy doing their own thing, and for the most part, they do it well … I’m certain that if QF hadn’t been busy with (and knocked back on) the shelved Alliance deal, they would have jumped at the NJE opportunity.
REX are 20 years behind QF on DBO, WGA, MQL etc … all of the mini majors … reliability is down the drain … these routes should be their cash cows … but instead, they’re running ancient SAABs and bussing PAX into SYD and MEL terminals outside of security … get with the program! PAX want the QF offering minus the ‘welcome to Country’.
Realistically, their best option is to leverage the 737 fleet and go in hard - they’ve got the planes, the people and the opportunity - but there is zero marketing nous.
REX are 20 years behind QF on DBO, WGA, MQL etc … all of the mini majors … reliability is down the drain … these routes should be their cash cows … but instead, they’re running ancient SAABs and bussing PAX into SYD and MEL terminals outside of security … get with the program! PAX want the QF offering minus the ‘welcome to Country’.
Realistically, their best option is to leverage the 737 fleet and go in hard - they’ve got the planes, the people and the opportunity - but there is zero marketing nous.
I dare say there would be sufficient excess capacity in the Q400/ejet fleet (by swapping Dash/ejet routes for instance) to absorb any potential loss of Rex in the market.
The QLD Govt runs in QLD would be harder to manage but would probably be managed in accordance with a “failure to deliver” clause or similar in the contract.