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Rex: We can’t transport COVID-19 tests without bailout

written by Adam Thorn | March 27, 2020

Rex has said it may not be able to transport COVID-19 testing samples from regional areas to capital cities for analysis unless it receives a government bailout.

Australia’s largest independent airline said it would announce the “shutting down of its network” on Friday if it hadn’t received “concrete proposals” of financial aid.

The statement further raises the stakes in regional airlines’ battle to secure help. On Thursday,  eight independent carriers warned they could go out of business in “days rather than weeks” unless the government underwrites Australia’s small airline operators.

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Rex deputy chairman John Sharp said, “The federal, state and local governments all need to act urgently and decisively to determine specific assistance packages so that the airlines can at least provide the bare minimum of essential air services to keep the communities running.

“For example, Rex carries critical blood supplies daily to regional and remote communities on its network, as well as transporting COVID-19 testing samples from regional centres to capital cities for analysis. This may no longer be possible in the foreseeable future.”

Meanwhile, earlier in the week, Rex declared it would shut down its “expansive regular public transport” air services in all states except Queensland from 6 April, unless there is a financial aid package.

Sharp said then that the current package of help for the aviation industry was not enough.

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He said, “The federal government has acted swiftly by promising a rescue package to the airlines of $715 million.

A Regional Express (Rex) Saab 340 aircraft.
A Regional Express (Rex) Saab 340 aircraft.

“However, the direct benefit to Rex from this package is only $1 million a month, which is grossly insufficient to cover the $10 million a month we expect to lose running the heavily reduced schedule we announced last week.”

Rex said it is seeking a rescue package similar to what has been promised in the US, which, the business said, would amount to 20 per cent of one year’s worth of revenue.

“Australia’s total airline revenue is $23 billion, indicating that an equivalent effort in Australia would require a rescue package in the order of $4.6 billion instead of the $715 million proposed,” it said.

On Friday, the ACCC granted interim authorisation to allow Rex to co-ordinate with Qantas and Virgin Australia on 10 routes where they would normally be rivals. Those are:

Sydney to:

  • Wagga Wagga
  • Albury
  • Armidale
  • Dubbo

Melbourne to:

  • Mildura

Adelaide to:

  • Port Lincoln
  • Whyalla
  • Kangaroo Island

Townsville to:

  • Mount Isa
  • Cairns

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35 Comments

  • Peter

    says:

    Nothing like a bit of scare tactics to blackmail the government! Shareholders should be injecting cash into their businesses before government does. I’m not saying governments shouldn’t help airlines but need to be careful how all Australian Tax Payers money is spent now given we do not known how long this will last. A better approach would be to support staff wages to keep them employed and reduce burden on companies.

  • Peter

    says:

    I struggle to understand why the Federal and State governments are so slow on this. It’s obvious the previous package is of little benefit if you are not actually flying. Rex and the smaller regionals do not have the capacity to borrow and need help. Redirect the $715M to where it is needed. These are essential services not holiday routes. Plenty of money being spent elsewhere now get on with it.

  • Tom

    says:

    The world doesn’t revolve around REX. Get your foreign owners to bail you out rather than reply on the Australian tax payers.

    • Hein Vandenbergh

      says:

      Indeed, well spoken.

      • Scott

        says:

        Tom and Hein, can you please stand up and tell that to 1500 REX staff.
        I can remember when Qantas share price was 93c, the airline grounded itself, the 767 crew might have been made redundant and I cannot remember 1 negative post about Qantas or it’s pilots. The shoe is on the other foot and the attitude is typical and telling. Sad all the carriers below Qantas, from Virgin down to Sharps (Rex included) don’t get the support that was offered to them in their time of need. (And that was saying NOTHING inflammatory or negative) that’s all you need to do.

        • Hein Vandenbergh

          says:

          Surely that’s not really the point, Scott. Many people are staff, in all sorts of commercial entities, that’s understood. But if you think this – mooted subsidies – is going to flow on to REX staff, you are mistaken: it will go to the overseas, not societally invested, interests which own REX. The airline will still be grounded, but staff will be asked to queue-up at CentreLink.

        • Jabiru Joe

          says:

          Yep, good point. Unique circumstances like now require unique action.

  • Russell M

    says:

    Government response should be – absolutely yes, we’re drawing up a cheque right now in fact for $500,000.
    When you give us the share certificate for 10% ownership of the company, we’ll deposit the cheque to your account.

  • Ronald Spencer

    says:

    If these companies cannot handle a week or to of no revenue are they viable at all

  • Hein Vandenbergh

    says:

    This is blatant extortion. There are provisions in the various States’ Crimes Acts to deal with this. OK, let them shut down services, but explain it in terms of ‘because’, never in terms of ‘unless’. My gawdd, community does not transcend national borders. As though we chouldn’t have known. Go away, REX, a good corporate citizen will take-over once we get through this tunnel. Shame on you.

  • Craigy

    says:

    If REX gets government assistance which is likely, it should come with a load of strict conditions on how the funds are used and that none of it is taken by the shareholders. The US bailout looked at grants and loans. REX should get a loan and be expected to pay it back post crisis.

  • Sum Ting

    says:

    Rex’s announcements smack of desperation and each one gets worse. This one is appalling – using the current crisis like that. Shame on its SINGAPOREAN owners.

  • DanSyd

    says:

    Putrid tactics! They’ve mismanaged their business and their funds. Their business isn’t doing well because they’ve failed to invest in their business: no investment in fleet development, Safety, or business continuity. To constantly be negligent and run your business into the ground and then hold tax payer money over the barrel at a tough time is a low act. Let them fold and give the bail out funds to VARA – then you’re saving VA jobs and keeping a duopoly.

  • Justin

    says:

    What deplorable tactics from a totally unsafe and foreign owned company! Every other airline will jump at chance to help right now and they act like a spoiled child!

  • Reed

    says:

    REX – RIP !! You have burned the people enough !!

  • Dennis Goodman

    says:

    This is blackmail (as I see it from NZ).

  • Ken

    says:

    A clear case for nationalisation and two-thousand-dollar fares.

  • Rais

    says:

    The Federal and State governments should provide the assistance required in return for shares in the companies. Then in better times they can recoup the money by selling the shares or keep them as a source of revenue.

  • Geoffrey Walker

    says:

    If all these regional carriers go into liquidation, any residual value will go to lawyers and liquidators. We will be back to camel transport outside the major cities. Better to bail them out but make sure it is in exchange for equity or even control.

  • If there is an award for poor PR and bully tactics by that Nationals hack John Sharpe this is it. The company is owned by primarily Singaporeans who have just milked Rural Australia. If they were serious long term investors they would have committed to fleet renewal of this primarily retired American Airlines fleet. Rex have shown no intention of a fleet repacement programme which would suggest they are running the assets to the end and intend then just cashing out and going back to Singapore. If the nationals bully any money for Rex it should be loans guaranteed by the shareholders and Directors. On this basis watch the need for money evaporate!

    • Peter

      says:

      Most of this is factual. However these are excellent airframes and still have many years of life left in them, perfectly sized for the routes they fly and no real viable alternate. Yes they could do with modernising.

  • Cambo

    says:

    I hope all of you above whingers don’t take the risk of ever leaving the comfortable safe cities. Without Rex, there would be no health products, locum surgeons, other workers, business supplies, etc, to the regions. it would be medically dangerous. There may be the RFDS, but many of their staff rely on Rex to get their workplace, and they don’t deliver supplies. AND it’s underwritten by the taxpayer. If you economic purists chose to only fly a locally airline, there would be no Rex, no Virgin, and only 50% Qantas. Where were the deep Aussie pockets when Ansett went bust? Loyalty is two ways.

  • john

    says:

    plenty of trucking companies can deliver anywhere. They don’t need airports.

  • Biggles

    says:

    I’ m pleased to see that commentators are seeing blackmailers for what they are.

  • Jabiru Joe

    says:

    As much as I love regional air services and desparately want them to carry on the “unless” word smacks of extortion. In these times, when the operators, who do so much to benefit small regional areas, are forced to stop flying, through no fault of their own, I feel a considered assistance package is vital and urgently required. I’m sure all the communities that have these operators service them agree that at the end of the COVID era there should be a resumption of services.

  • Marum

    says:

    Goodbyeee WREX.

    Tata….Marum.

  • Stephen Smith

    says:

    No tax payer money should be given to REX a PRIVATE company.If the Government had to bail out every private company in difficult times this country would soon go bankrupt.If it does transpire they get tax payers the condition should be it be paid back within a specified time frame.

    • Peter

      says:

      Private? Publicly Listed!

  • Mark

    says:

    Qantas just borrowed more than 1b to keep itself in the game, good riddance to REX I say. There’s plenty of airlines that will pick up the pieces and support rural Australia.??

  • Red Cee

    says:

    There are a number of other rural airlines beside RSX. I haven’t yet seen them wit heir hands out. Why should REX be given a subsidy, when others haven’t? If a subsidy is given, the Government should be looking at shares.

  • Dan

    says:

    The Government can use my tax dollars to help out REX, IF and ONLY IF, REX either a) repay the bail out when they’re back in the black or go bust, or b) give the Government between 25%-49% of the company. It’s invesment 101; the Government (and therefore the people) should get something in return. I like the latter myself!

  • AlanH

    says:

    Call out the RAAF! A C-27 Spartan or a B350 King Air can land anywhere that a Saab 340 can. This is pure an unadulterated extortion of the Australian Government by a foreign-owned company.

  • Hein Vandenbergh

    says:

    Actually, Cambo I AM a medico who left SYD in order to provide a better medical service in a – researched – area of dr shortage. So, tuck your head in matey.

  • David

    says:

    Just read their history of media statements to understand the company’s culture, attitudes and strategies.
    Take the testing and other services faster to the regions, as is happening. Spend the funds with a new strategic eye for future regional travel.

  • Marum

    says:

    I observe that overseas based companies have been shipping supplies back to their home countries. They also remit their profits.
    BE IN NO DOUBT WHO THEY OWE THEIR LOYALTIES TO.

    Yet they are in line with their hands out when things turn sour. They want the Australian taxpayer to bail them out. How about their own country? Tell them to get stuffed.

    If much needed medical equipment, samples, etc, are needed, I am sure the Air-force could do it during a national emergency.
    Regards….Marum Katze

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