UPDATE:
Sometime on the afternoon or evening of 30 July 2024 REX Express Holdings Limited appears to have informed the media it is going into "voluntary administration" - apparently before it notified the Australian Stock Exchange on which its shares are traded.
It has made announcements of imminent doom in past years, ceased ticket sales, suspended flights or air routes when seeking a government bailout or an increase in monies received from a government industry funding scheme.
Based on past behaviour receiving such financial assistance is no guarantee REX will not go ahead and abandon some regional airport destinations.
IMAGE: https://www.rex.com.au/flightinfo/network.aspx
Having built its Australian air routes by bullying regional councils & indulging in what looked suspiciously like corporate extortion at federal level, is the Singapore-based corporation operating REX Airlines, seeking yet another government bailout?
ABC News, 30 July 2024:
Rex Airlines' future uncertain in wake of ASX trading halt
Regional Australian airline Rex has suspended trading on the Australian stock market pending an upcoming announcement.
The ASX-listed company halted trade on Monday ahead of making an announcement dealing with a media report published over the weekend.
It is understood the announcement relates to a piece published in The Australian suggesting the airline has called in a turnaround team from consultants Deloitte.
The pause in trading is expected to remain in place until tomorrow or until Rex releases a statement to the market.
In a comment to the ABC, a spokesperson from Rex Airlines said the company was currently in an ASX trading halt "pending making a material announcement".
"In the meantime it isn't appropriate for us to make any further comments," the spokesperson said.
Transport Workers Union boss Michael Kaine said he had written to Rex as about 2,000 jobs were at risk.
"This is a sign that the aviation industry is broken, it's actually in crisis," he said.
"We're looking forward to hearing back from Rex as a matter of urgency, to try and get some more clarity on this situation.".
Government to 'work with' Rex
Asked whether the federal government would help keep Rex in the air if required, Prime Minister Anthony Albanese said it was "an important airline" and he was "very hopeful that they'll see their way through".
"We have sought information from the airline through [Minister for Transport] Catherine King, who came to see me about this today … we will continue to monitor what happens there," he said.
"There are a range of communities in New South Wales, in Queensland, in South Australia and right around the country that rely upon Rex … so it's important," he said.
The prime minister said the airline had come through COVID and received substantial government support, "and we will remain vigilant when it comes to this airline and continue to work with them".
"We want to see not just those jobs maintained, but we also want to see those communities continue to have access to aviation that's so important for their economy and for their way of life," he said.....
The Australian, 27 July 2024, p.25:
Rex calls in turnaround specialists
Stories abound of instability in the nation’s aviation sector. Budget airline Bonza fell into administration in April. The mooted listing of Virgin Australia keeps faltering, and now Qatar Airways wants to gobble up a strategically important part of it.
And what of Regional Express? Its executive chairman, Lim Kim Hai, was hot-swapped in June for deputy chair John Sharp, a former transport minister in the Howard government. Lim had served as executive chairman for 21 years, and aside from brief remarks issued by the company acknowledging his “extraordinary service”, no further reason was provided for this sudden and startling tweak to the board.
Seething, as you would expect, Lim went on to requisition a shareholders meeting to remove Sharp and three other directors from the board: Lee Thian Soo, Ronald Bartsch and Jim Davis. No reasons were provided for that development either.
This upheaval is taking place just as Rex finds itself in a spot of serious financial bother, so serious, it seems, that Margin Call hears that the airline has invited a turnaround team from Deloitte to rifle through its books and try to stop the proverbial plane from crashing into the mountain.
Leading that team are Sal Algeri and Richard Hughes, memorable for their role in the recovery of Virgin Australia after that airline slid into voluntary administration in 2020. Deloitte didn’t respond to questions about Rex and Rex itself declined to comment. “Given Rex is a public company, we do not respond to press or market rumours or speculation,” a spokesman said.
Rex’s troubles are not necessarily with its regional routes, which are said to be profitable, but with its expansion into the prized city destinations of Sydney, Melbourne and Brisbane, known in the industry as the Golden Triangle (a misnomer, by the way, the route connecting them forms no obvious triangle).
An expansion into those capital city markets began in 2020, its market share remains in the single digits, and the whole jolly has cost the business dearly. Deloitte’s partners are in a fever attempting a restructure solution as a rescue package. That too, we hear, is teetering towards failure.
Where to from here? Rex’s Golden Triangle dilemma could become intractable enough to push the airline into administration. Whether or not that occurs, the appearance of Deloitte’s clean-up team at least provides a plausible explanation for the airing of linen about to start in the boardroom.
After all, it was Sharp who said last year that profitability mattered more than market share, a remark made only after Rex posted a loss of $16.5m for the half to December 2022. Its latest results weren’t quite as fugly – a $3.2m loss for the half to December 2023....
AAP General News Wire, excerpt, 29 July 2024:
Rex reported a loss of $3.2 million for the first half of the 2023-24 financial year in February, compared with a $16.5 million loss in the prior period, saying escalating costs, particularly for fuel, made it hard to predict full-year profitability.....
The Australian, podcast, excerpt, 30 July 2024:
Anthony Albanese hails the importance of struggling Rex’s regional routes and promises to examine rescue packages, but questions the airline’s foray into competitive big city routes....
BACKGROUND
The Australian Stock Exchange 2024 announcement list re Regional Express Holdings Limited (REX) contained the following:
* 11.03.24 10:02.am ASX Release - REX announces partnership with UAE's national airline Etihad which entrenches REX passenger plane landing rights at Sydney and Melbourne airports as a connecting carrier of Eithad ticket holders.
* 06.06.24 8:33am Change to the Board - Deputy Chairman John Sharp ceases that board role & becomes Non-Executive Chairman. Kim Lim Hai ceases to be Non-Executive Chairman but remains a Non-Executive director & a significant shareholder in the company.
* 12.07.24 9:50am General Meeting of Members - Kim Lim Hai serves notice of a general meeting of members at which he will request the removal of six named directors as well as the majority of any directors that may have been appointed fron 5 May 2024 to the end of the general meeting.
* 29.07.24 9:50am Market Release - Pause in trade of Rex securities
* 29.07.24 10:17am Market Release - Trading Halt in Rex securities at own request until 31.07.24 and pending an announcement.
A LITTLE LOCAL BACKGROUND
North Coast Voices, 1 June 2022
Today REX Airlines began to abandon Northern Rivers regional airports - yet again
On 31 May 2022 Regional Express (REX) airlines confirmed that it was withdrawing airline services from Lismore and Grafton on 1 June 2022 and from Ballina on 2 July 2022.
At the same time it announced cessation of service to Kangarooo Island.
Very predictably this withdrawal again - as it has so often in the past - coincided with the cessation of federal government funding which heavily subsidizes REX.
The phrase 'shakedown merchant' comes to mind.
