Simple Flying Australian carrier, Regional Express, has moved to slap down speculation it is interested in non-core regional routes flown by Virgin Australia. This came after allegations this week that the airline was eyeing off some routes and thinking of entering into a consortium to recapitalize Virgin Australia.
REX has said almost no Virgin Australia regional routes match its own fleet capacities. Photo: Andrew Curran / Simple Flying.
REX squeezes money from marginal regional routes
Regional Express, better known as REX, flies 57 Swedish built Saab 340 turboprop aircraft across 59 regional routes around Australia. While not exceptionally well known in the larger cities, the airline provides a valuable service linking rural and regional communities. But itâs a tough business, eking out a profit on these marginal routes.
Although REX usually manages to make a slender profit, the airline is known for running on the smell of an oily rag. As the 2020 pandemic began to bite, REX fought hard for government assistance. In late March, REX won the lionâs share of a USD$129 million regional airline assistance package after threatening to shut the airline down.
Although Singaporean entrepreneur Lim Kim Hai holds a 17.25% stake in the airline, REX isnât cash-rich. In the year ending 30 June 2019, REX had total revenues of USD$206.5 million. The airline had an after-tax profit of USD$11.4 million. The pandemic and subsequent travel downturn have seen REX withdraw its 2020 profit forecast.
REXâs Vice-Chairman says his airline has ability but not money
Against this background, speculation that REX had the financial capacity to join any consortium interested in recapitalizing Virgin Australia was a stretch. In mid-April, REX Vice-Chairman John Sharp was asked on ABC Radio if the airline was in a position to replace Virgin Australia.
âThereâs no question a company like REX would have the ability to run a company like Virgin, itâs a question of whether we have enough capital to do it and I would suggest to you that we arenât in a position at this stage. We donât have the capital to take on the liabilities of running a company as large as Virgin,â Mr Sharp said.
John Sharp says REX could take over Virgin â if only it had the money. Photo:Â Simon_sees via Flickr.
The Vice-Chairman also threw this into the mix;
âCertainly, REX could step up and offer more services between some of the destinations that Virgin flies now. We donât operate large commercial jetliners, we operate turboprop aircraft, small and medium-sized regional aircraft, and so we could step up and offer some services.â
But what regional routes would REX be interested in?
Earlier this week, The Australian newspaper floated the idea of REX joining a consortium in a bid to recapitalize Virgin Australia and take over some of Virgin Australiaâs existing ânon-coreâ regional routes.
The Vice-Chairman also threw this into the mix;
âCertainly, REX could step up and offer more services between some of the destinations that Virgin flies now. We donât operate large commercial jetliners, we operate turboprop aircraft, small and medium-sized regional aircraft, and so we could step up and offer some services.â
But what regional routes would REX be interested in?
Earlier this week, The Australian newspaper floated the idea of REX joining a consortium in a bid to recapitalize Virgin Australia and take over some of Virgin Australiaâs existing ânon-coreâ regional routes.
REXâs fleet of SAAB A340 is a good fit for smaller regional routes. Photo: Andrew Curran / Simple Flying
REX slaps down suggestion it will take over Virgin Australia regional routes
Given REXâs financial limitations and only operating one aircraft type, the SAAB A340s (which can seat about 34 passengers), what existing Virgin Australia routes would REX have been looking at?
We put this question to REX who told us;
âVirgin Australia has almost no regional routes that are suitable for our fleet of Saab 340.â
