Rex would have stood down 90% of staff without bailout

written by Hannah Dowling | March 30, 2020

Regional Express (Rex) and the Airlines for Australia and New Zealand industry group have both welcomed Saturday’s $298 million government bailout for the regional airline industry.

Rex deputy chairman John Sharp said the business has the “utmost gratitude” for the financial package, which will keep a revised schedule operating for six months. Sharp indicated that, without the aid, it would have stood down 90 per cent of its workforce.

On Friday, the business warned it would struggle to transport coronavirus testing samples without help, while eight separate independent carriers said the government had washed their hands of them.

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A Rex SAAB340B (Seth Jaworski)

As Deputy Prime Minister Michael McCormack noted in his announcement of the latest package, regional aviation services are “critical” for regional communities that rely on regular passenger transport (RPT) services, as well as for the provision of essential pharmaceutical and medical services, and for the 26,000 staff employed in the regional aviation sector.

Commenting on the much-anticipated bailout package, Sharp noted that the relief package would allow “critical and essential regional aviation services” to continue to run “amid the worst operating conditions the industry has ever seen”.

“All regional communities and residents should be extremely grateful to the Coalition government for its commitment to the future of the regional cities,” Sharp said.

“This meaningful assistance package not only seeks to keep essential air services going, but also tries to prevent the existing regional aviation providers from collapsing.”

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Sharp noted that the government assistance package will see “all previously sustainable” regional operators “spring back into business if the crisis dies down” within six to nine months.

“With the network of regional aviation operators intact, not only will thousands of jobs be saved but regional communities can retain a minimum of vital air links which can be quickly expanded to assist the regional communities in their rebuilding efforts after the crisis,” he said.

The bailout package was announced as the regional airlines struggled to keep themselves above water.

In their open letter to the government, the eight regional airlines – including Airlink Airlines, Aviair, Alliance Airlines, Chartair, Fly Corporate, Fly Pelican, Hardy Aviation and Sharp Airlines – stated that their “financial survival” would be determined in a matter of days.

Further, had Rex not received news of the bailout, it would instead today be announcing the complete shutdown of its network, and standing down 90 per cent of its workforce, according to Sharp.

However, the regional airline will now be able to continue its operations to almost all of its 59 destinations, in a diminished capacity to account for dwindling passenger numbers.

The airline will also make network schedule changes based on support provided from local and state governments in the affected localities and is prepared to “exit” from routes with “no or inadequate support” from local governments and councils, deeming them “non-viable”.

Under the $298 million bailout terms, Rex believes it will have the ability to sustain this revised national network schedule for at least six months, even if passenger demand drops by 95 per cent – noting that current demand levels are down 85 per cent as of Friday.

The airline will still be required to stand down a majority of staff members, mainly flight crew and engineers, due to the estimated drop in flying activity of 80 per cent, however the government assistance will see the company save 30-40 per cent of its staff.

“On behalf of all staff at Rex, I would like to express our utmost gratitude to DPM McCormack and the Morrison government for making such a big difference to so many families,” Sharp said.

Industry group Airlines for Australia and New Zealand (A4ANZ) congratulated the government for quickly recognising and responding to the needs of the regional airline industry.

A4ANZ chief executive Dr Alison Roberts said, “We thank the government for its commitment to Australia’s aviation industry.

“As a nation, we are more dependent on aviation than most countries around the world, and as the Deputy Prime Minister said today, ‘regional aviation has been smashed by COVID-19.”

She continued, “All our member airlines play a vital role in providing regional Australian residents access to essential social, medical, business, financial and educational services, as well as moving important freight including life-saving medicines; and in encouraging growth in tourism and business.

“We share the Deputy Prime Minister’s desire for as many people as possible to have jobs on the other side of this crisis.

“We welcome this package from the government, their commitment to working directly on these measures with airlines, and to ongoing engagement with the aviation industry throughout this crisis.”

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