Virgin plays down Rex speculation
 

Virgin plays down Rex speculation

Sydney Morning Herald
Matt O'Sullivan
February 16, 2009

VIRGIN BLUE's boss, Brett Godfrey, doubts the Singaporean investors behind the domestic airline Regional Express will add to their stake in Australia's second-largest carrier in the short term.

The emergence of Rex's chairman, Kim Hai Lim, and a non-executive director, Thian Soo Lee, on Virgin's register with a 3 per cent stake late last year triggered speculation about links between the two carriers, ranging from closer operational ties to a full-blown merger.

Virgin has been silent on the investment for months but Mr Godfrey told the Herald that the Singaporeans had spoken to the airline before they bought the small stake.

"We have a relationship, but that's probably as far as it will go for now, I guess," he said.

"I don't think they'd pick it up at 30c a share, the whole 1 billion shares outstanding [in Virgin], but I think they have bought so far about $10 million to $15 million worth. It would be an interesting takeover though, wouldn't it?"

Virgin Blue has an interline agreement with Rex, which links the two carriers' networks for travellers to and from smaller regional centres.

Asked about the likelihood of a closer relationship, Mr Godfrey said: "We do a lot of talking and meetings because we are complimentary in a lot of things we do. We talk to them a fair bit - I am not saying for anything other than code-sharing."

The Singaporean investors swooped on Rex in 2002 to buy a 30 per cent holding, which has since been increased to a controlling stake of more than 55 per cent. Mr Lim, whose own stake in Rex amounts to 21 per cent, and Mr Lee (7 per cent) also share interests in a Singaporean biomedical company.

Although Virgin's market value is just $273 million, foreign ownership restrictions are a hurdle to the Singaporeans building a big stake in the airline.

Under Australian laws, the airline can be fully owned by foreigners and operate domestically but would have difficulty flying international routes. If Virgin were more than 50 per cent foreign-owned, it would have to spin off its long-haul carrier, V Australia. It is already 25 per cent foreign-owned due to the British billionaire Sir Richard Branson's stake.

Virgin Blue will unveil its first-half earnings later this month when Mr Godfrey will also detail capital management plans. It will not follow Qantas's lead in raising capital to cushion itself against a decline in passenger demand, partly because Sir Richard is unwilling to have his stake diluted.

Virgin's share price has fallen almost 88 per cent since the start of last year. The stock closed up 1c at 26c on Friday.

23rd February for announcement of profits/losses for VB. Not nearly as revealling as third/fourth quarter.

Merger, take over, couldn't think of anything worse. One companies terms/conditions/morale has improved out of sight and the other is in the dark ages.

Glad to see they can afford to risk 10-15 million on the market but unable to improve the t & c's of alot of ppl that help make them the money.:hmm:

LKH needs a visit from the ghosts of christmas past me thinks, worked for scrooge anyway:ok:

I'm sorry JetA OK, did you just refer to rex as an airline!

You are kidding right!

You could purchase the entire rex fleet for what it costs real airlines to purchase one plane. Their a profitable GA company, that's about it.

Carefull Monster'. Something similar was said about Ansett back in the fifties!

History sometimes has a habit of repeating.

You could also operate all those SAAB for the cost of one 'real' airliner which is why the company is profitable and flexible. There's no point paying tens of millions of dollars for equipment which will not provide much better service vs cost than what is available and leave you with serious debt repayments.

43Inches are you describing the DJ E-Jet fleet?

But wait there's more...
 

Virgin Blue vulnerable to takeover: Rex

February 18, 2009 - 1:41PM

Regional Express Holdings says Virgin Blue is extremely vulnerable to a takeover, as the domestic airline reports a slight rise in first-half profit despite lower passenger numbers.

Speaking to investors at the company's earnings briefing, Rex chairman Kim Hai Lim said Virgin Blue was a takeover target.

"Virgin's shareholdings have been extremely fragmented, which means that Virgin is now extremely vulnerable to a takeover bid, whether hostile or friendly,'' Mr Lim said.

Mr Lim said Rex had purchased a parcel of Virgin Blue shares so it could have some influence over the future of the company.

"We purchased a block of Virgin shares,'' he said on Wednesday. "We were hoping that we could take a small strategic interest so we could have some small influence as to the future of Virgin.

"Virgin does have an impact on regional aviation and it has already entered some of our markets.

"So we felt it was in our strategic interest.

"Also we do feel there is a certain undervaluation of Virgin shares.''

Rex had 19.1 million Virgin Blue shares as at December 31, equating to about 1.82% of the stock.

The Singaporean investors behind Rex hold about a 55% stake in the carrier are also said to be quietly building up their stake in Virgin Blue.

Rex reaffirms guidance

Rex today reported a slight lift in first half profit despite a fall in demand for air travel.

The regional carrier reaffirmed guidance that it expects to deliver fiscal 2009 profit in line with the prior financial year's result of $24.3 million.

Rex's net profit for the six months ended December 31 rose 1.9% to $10.5 million, from $10.3 million in the previous corresponding period. The company said passenger numbers fell by 8.9% to 703,725 in the first half.

The operating climate had deteriorated further, the airline said, with January 2009 passenger numbers down by 20%.

Rex declared no interim dividend.

Rex deputy chairman John Sharp said the company's first half results were ``outstanding'' given the current global economic environment.

"We've been preparing for the global financial crisis for some years,'' Mr Sharp said on a teleconference on Wednesday. "These results demonstrate the strength of this company.''

Rex shares were steady at 90 cents in midday trade.

Virgin Blue on Tuesday announced 400 jobs would be affected when it axes as many as five aircraft from its local fleet, although it was too early to say whether these would include redundancies.

Come on big fella, don't pretend like you knew it was coming!

Amazing how REX can say they are making a profit, and they CONTINUALLY do this, yet....... we can't pay our pilots anything more!!

WHAT THE??????

Crack-up Mr. Hat :D

Trust a polititian to grab a favourable situation and claim it as their own! I knew I should've thrown up on him when I had the chance at the post cricket match booze up some years ago!

I guess life's full of lost opportunies:{

Mate if he knew it was coming he could have had a quiet word with 6 billion other people while he was at it.

Admittedly though there was one chap seen on youtube from American tv that had it right word for word more than a year ago and his collegues were just making fun of him....

Mr. Hat
 

..........

Say no more...;)

I love irony!:ok:

Arnold E

"plane dumb " "expidential expansion " ??????????????

You are obviously way out of your depth - back to the kiddies pool.

Or spells like a Gen Y cadet!:E

I'm not sure that I'm dumb probably just average. I did often say during the boom that what goes up must come down.

I just found the fellows remark a little silly. Thought he'd be better off saying "we've got an extremely low cost base that has allowed us to deal with the credit crunch a better than others".

I know some really really intelligent people that didn't see it coming. I only know of one person that sold up at the height of the boom and is now smiling/grinning.

Anyway the thread isn't about my IQ:cool:

Yeah ok, I shouldn't criticise people directly, I apologise, and so I cant spell after a few beers, but Gen Y, jeez wish I was.

VB just posted a 101.4 million net loss for the first half.