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.
