REX AIRLINES Trading Halt

[BEVLY9]

Originally Posted by Mr Google Head

On how many of the routes and how many times per day vs Saab?

At times, almost identical (more so when the q300 was in operation)

[43Inches]

Originally Posted by Icarus2001

What do you replace a Saab 340 with anyway, realistically?

If the fleet had been well managed over the last 15 years they would still be viable. Well managed being upgraded regularly with modern avionics, interiors and other real weight saving advantages. Instead cheap cosmetic changes were made to make passengers feel like the aircraft were cleaner and nothing under the skin was done. 15 years ago there was plans for refit 3 or 5 screen EFIS, with dual GPS/FMS, low weight seats and fittings, and so on, all of which would have paid itself off by now in operational efficiencies. Things like ability to carry more fuel before offloads, less need for alternates, greater reliability, would have all saved millions over the years. SAAB was very keen to work with operators to extend the life of it's aircraft, at a price of course, so new props or engine options would also be something a large operator could ask SAAB to look into as a retrofit engineering project, notice the Metros getting around with new quieter, more efficient props these days, same thing. Rex was more interested in squeezing profit now, rather than later to pay fully franked dividends, which is how management were really paid.

As for a replacement, Metro, no way, where will you get even 20 of them in reasonable condition. When Rex was on song they could operate a SAAB for only slightly more than a B1900 or Metro, but they could sell another 10-15 seats and have a toilet and flight attendant, hence why the 1900s and Metros were retired. The 20 seat market is dead space. Rex achieved profit by having scale and frequency, which the 30-36 seat SAAB was able to tap into in the Australian market.

Again if the SAAB fleet was well managed it would still have about 10 years in it of profitable service. That would have allowed Rex to vie for launch customer status on the Dornier 328 Eco, 40 seats, 300 kts, much greater fuel economy, as well as higher frequency again due to its better sector performance. The fact Rex were not involved in the Dornier program is probably the most telling sign that the company had no direction. If they were keeping it a quiet project, just as stupid, being in line for the Dornier would give customers something to look forward to and add to prestige for an airline.

As it is now, the SAAB fleet is too far gone, and stuck with fit-outs from early 2000, nothing new except some iPads. The effects of scale and frequency have been lost, as well as most of the competent staff in all areas, not just pilots, but engineers and the rest. The network is spread thin over the whole of Australia because they were chasing subsidies and rubbish pie in the sky charters that come and go, adding a lot of un-necessary cost in positioning and maintenance of multiple hub bases and resulting reduced utilization of assets sitting around as spares. The company was in decline when they forgot their mission statement that their "heart is in the country". The country referred to being country NSW, Victoria, SA and Tasmania, where they once had a fantastic network and frequency.

[Icarus2001]

Originally Posted by Mr Google Head

Why not Metro’s? Regions need a reliable air service. It appears it’s not sustainable in a 34 seater? Maybe it is in a 19 seater.

A reliable service is needed; a 34+ seater is not necessarily needed…?

Who has said that 34 seat aircraft is unsustainable? Not me. Rex were doing okay before their Jet gamble. Passengers in 2025 want and expect a flight attendant, some water and a coffee at the very least. Which aircraft provides that? Good luck finding Q400 airframes. Also too big on some routes. Brasilia?

[Mr Google Head]

Originally Posted by BEVLY9

At times, almost identical (more so when the q300 was in operation)

Where do Qlink operate an almost identical schedule to Rex (aside from Port Lincoln?)

[Mr Google Head]

Originally Posted by Icarus2001

Who has said that 34 seat aircraft is unsustainable? Not me. Rex were doing okay before their Jet gamble. Passengers in 2025 want and expect a flight attendant, some water and a coffee at the very least. Which aircraft provides that? Good luck finding Q400 airframes. Also too big on some routes. Brasilia?

Perhaps I’ve read the room wrong but to me it seems the only consideration is Saab or bigger. Doesn’t seem that if this was to work this situation would still exist. Passengers can want and expect all they like; but if the system doesn’t work then it doesn’t work. Regions NEED a reliable and regular service. They don’t NEED a flight attendant or an aircraft SAAB or bigger. You can put a toilet on a metro.

[Icarus2001]

They don’t NEED a flight attendant or an aircraft SAAB or bigger.

Clearly you have not seen some of the “specials” on regional flights. People in wheelchairs or with walking frames who NEED to go to the city for a medical appointment. Ground staff work with cabin crew to make this work.
A Saab 340 is the smallest suitable in most cases.

​​​​​​​Thanks 43 inches for the summary. Do you think the fleet is now beyond an upgrade? Something to give them ten more years?

[Mr Google Head]

Originally Posted by Icarus2001

Clearly you have not seen some of the “specials” on regional flights. People in wheelchairs or with walking frames who NEED to go to the city for a medical appointment. Ground staff work with cabin crew to make this work.
A Saab 340 is the smallest suitable in most cases.

Point taken - although I’m not convinced that if you can board a Saab you can’t board a metro. Don’t have Saab experience but thought the only way onto a Saab was via the stairs?

Fair enough that no one wants to consider a smaller plane than a Saab cause it’s not desirable for one reason or another. I’m not convinced that a smaller and cheaper plane such as a metro can’t adequately fill the void.

[BEVLY9]

Originally Posted by Mr Google Head

Where do Qlink operate an almost identical schedule to Rex (aside from Port Lincoln?)

broken hill, Burnie, Devonport, Albury, Wagga, Merimbula, essentially the entire Sydney network, or what’s left of it. QLD and WA is it’s own unique situation.

Keep in mind it takes 3 Saab services to equal 1 q400 service

The fact is that the Saab was and has been sustainable. It just needed to be managed. It’s a 40 year old airframe that’s not going to last forever.

[Mr Google Head]

Originally Posted by BEVLY9

Keep in mind it takes 3 Saab services to equal 1 q400 service

In total seat numbers yes; but in support of a regional community I would disagree…people need to go out and back in a day for example; one middle of the day return flight on a larger aircraft is not the same as morning and evening returns on a smaller aircraft

[KRUSTY 34]

Originally Posted by Mr Google Head

Where do Qlink operate an almost identical schedule to Rex (aside from Port Lincoln?)

Wagga, Albury, Dubbo, Mildura since forever.

Griffith, Orange, Merimbula, Broken Hill since 2021 when REX decided to push forward with their little Jet adventure. Make no mistake, Qlinks total competition on the once REX monopoly’s was in direct response to REX’s Domestic operation.

Somewhat of a last nail IMHO.

[Mr Google Head]

Without delving into all ports mentioned; I had a very brief look at Sydney to Merimbula and Broken Hill Tuesday next week (random choices out of those listed as possibly more remote / difficult to drive as alternative to flying). Merimbula has 3 flights with Rex, zero with QF. Broken Hill has 2 flights Tuesday with rex, zero with QF. Haven’t looked much further than this, but operating “to the same port” is hardly the same as operating “near identical schedule” as suggested a few posts above

[BEVLY9]

Without drifting too far off the thread, Rex and qlink are direct competitors, they compete for the same passengers at the same time that said passengers want to travel. It is in the same realm of comparing QF and VA 737 schedules

It is a very common occurrence to have a Saab and a q400 parked at some regional airport that have both come from the same place and returning to that place. The only caveat to this is that Rex tend to do more triangular services which ad a stop on the way back to the capital city (broken hill-dubbo-sydney).

[MickG0105]

Originally Posted by Mr Google Head

Without delving into all ports mentioned; I had a very brief look at Sydney to Merimbula and Broken Hill Tuesday next week (random choices out of those listed as possibly more remote / difficult to drive as alternative to flying). Merimbula has 3 flights with Rex, zero with QF. Broken Hill has 2 flights Tuesday with rex, zero with QF. Haven’t looked much further than this, but operating “to the same port” is hardly the same as operating “near identical schedule” as suggested a few posts above

QF have a SYD - BHQ service five days a week (M, W-F, Su); MIM gets four SYD flights a week (M, W, F, Su).

[MickG0105]

Originally Posted by BEVLY9

...

Keep in mind it takes 3 Saab services to equal 1 q400 service

...

Definitely worth keeping in mind that load factors for the SAABs sat in the mid-50 to mid-60 range.

[maxter]

Originally Posted by BEVLY9

The competitor operates a 78 seater and makes it sustainable. Says a lot about how the Saab operation has been managed.

For very selective routes only. Servicing larger centers, not the extended smaller rural towns. 80 seats needs a large population to get a good load.

[43Inches]

There's a lot that is not pure economics in the Australian regional market. When Rex began QLink as it was came to an agreement shortly afterwards where Rex would take certain under performing routes and leave others to the Q. This was very evident in Tasmania where Rex stuck to Wynyard and QLink took Devonport and Launy. This extended later to QLink pulling completely out of South Australia and leaving the state as a cash cow for Rex. NSW was a similar arrangement where QLink serviced the larger lucrative markets and left Rex to whatever else only suited one or two competitors. At that point Sunstate held the monopoly on Queensland with no real competition, especially when Macair left the scene. In the vacuum of real competition Rex put pressure on any local operators on major port routes and drove them out of business. When Rex announced it was going into Queensland is when QLink started to move back into Rexs territory, or at least increase services to ports like Wagga and Albury as a warning to watch your manners. The timing of the Jets couldn't have been worse for the Regional arm as QLink was just about to retire it's 300s. All of a sudden the 300s were retained, not only that, the PropStar venture in NZ collapsed with all those airframes returning to Australia. So QLink swung about and put all the aircraft to use in Australia, specifically on East coast routes held by Rex, South Australia was added, services to Wynyard, Merrimbula, Broken Hill. That was when Rex needed to step up and fight the war they had started, nope, lets use east coast crew to prop up WA and QLD, on routes that could change hands at a moments notice if the tender was changed.

I've worked against the Q400 and Q product and seen how it leeches passengers. It offers a much quieter and more important faster option to the smaller turbo-props, something the ATR does not compete well with. Mildura was a good example, the Q400 was sent there early on to compete with VAs E-Jet. Rex at the time had just had it's first major pilot shortage and had some small reliability issues. Q pretty much took over half of Rexs passengers, Rex had to drop schedule frequency to maintain some semblance of load. When Rex returned to reliable service, even with cheaper fares, the passengers did not come back, they had tasted the Q400 services and now knew the SAAB was old and noisy. Rex was saved by dumb QLink luck, that is, when VA got rid of the EJet service and had to reduce schedule, QLink decided to re task the Q400 to other ports and return the Q300 to Mildura. Suddenly it was slow again, delays into Melbourne, etc, ect. Passengers jumped ship back to Rex on cheaper fares as they could see that the 300 and SAAB were not much different. On larger ports in NSW its not as evident, as the QLink flights can book out and get so expensive that there is still profitable leftovers for Rex, although not when they get bigger or more frequent flights.

What QLink was able to do when Rex decided to go domestic is pull on the profit they made using the Q400 and bomb into Rexs routes, for subsidized competition. Rex being used to just bullying and complaining for what it wants had forgotten how to actually attract and keep customers by then, let alone having any marketing and sales ability. They also had become fixated on WA and QLD, which were both only profitable at the whim of the tenders, leaving their guts in the South East regional network exposed and ripe for exploitation. QLink on the other hand knew exactly what to do and where the money is.

Rex was always on borrowed time when it decided to shift its main focus away from its 'heart' lands. The airline was on a slow but steady decline from around 2010, the profits were made by strict cost control, rather than generating new revenue. The old squeeze blood from a stone (SAAB), by conducting minimal maintenance, having very little to no marketing, shelving upgrade programs and minimizing workforce. That's why so much overtime was available to Rex crew, cheaper to pay a captain $200k working their ass off, than two captains $300k, remembering there are significant other costs for a single employee behind the scenes on top of what they get paid.

[Icarus2001]

Consulting firm Alvarez & Marsal is understood to be advising Air T. A signed deal is expected to be announced as early as Monday, the sources said.

Well Monday has come and gone with no news.

​​​​​​​The Australian is running a story today with an update about the looming December end of administration.

[CaptnCrunch]

Rex sale talks struggle to take off

Robyn Ironside

A deal to buy Rex Airlines is being complicated by dual negotiations with administrator EY and the federal government, which appear set to take the drawn-out process down to the wire.

It’s understood a potential buyer is seeking an undertaking of support from the government, which has already pitched in $160m to keep Rex in the air during the 14-month-old administration.

The Albanese government has previously indicated any financial support to a successful bidder would be “conditional on commitments to provide an ongoing reasonable level of service to remote and regional communities, and good value for money to taxpayers”.

In an effort to secure the sale, EY is also trying to lock down new enterprise agreements with staff including pilots and cabin crew, and return more of Rex’s ageing fleet of Saab 340s to the sky. Currently 30 of the 56 turboprops are in operation.

Federal government data for August showed Rex fared the worst of any airline in terms of punctuality and reliability, with more than 30 per cent of flights arriving late.

The latest extension gives the administrators until December 5 to secure a sale of the early negotiations failed.

While Sydney-based Anchorage Capital Partners and West Australian regional airline Nexus have pulled out of the race, it’s believed US holding company Air T remains interested.

As the business struggled with mounting debts, board tensions erupted and executive chairman Lim Kim Hai was ousted by his fellow directors with deputy John Sharp installed in his place.

The Australian Securities and Investments Commission (ASIC) brought charges against Rex and Lim Kim Hai of deceptive and misleading misconduct.

John Sharp and directors Lincoln Pan and Siddarth Shrotri are also accused of breaching the Corporations Act by allegedly failing to discharge their duties.

All four men have denied the allegations.

The matter is due to return to the New South Wales Supreme Court next month.

[Lead Balloon]

"It’s understood a potential buyer is seeking an undertaking of support from the government...". Gimme a break.

[KRUSTY 34]

Is Robin Ironside’s article the first confirmation of Anchorage having pulled out of the bidding? Because up until now I’ve heard squat about it. I had assumed, but that’s about it.

When I spoke to a current REX employee about a month ago, they said that when asked about the status of the bidding process, they were told that no information could be given as management had all signed NDA’s. Are we talking about Anchorage, are we talking about Air T, are we tailing about Bozo’s flying circus?

Are EY playing with a straight bat?