Rex has confirmed it’s set to rival Virgin and Qantas and fly services between Sydney, Melbourne and Brisbane as soon as March 2021.
The business claims it only needs to raise $30 million to expand its network, and is so confident the target will be met that it’s instructed management to “start preparations in earnest”.
The move comes despite the airline telling the government in March that if it didn’t receive a bailout it would shut down its network and would not be able to transport COVID-19 testing samples to the regions.
Rex plans to operate an initial fleet of five to 10 narrowbody jets based out of Sydney and Melbourne to service the ‘golden triangle’ of Sydney-Melbourne-Brisbane, with a targeted start date of 1 March 2021.
The board believes $30 million is “all that is needed” and hopes to raise that money through a sale-and-leaseback arrangement, equity injection or convertible notes.
While no deal has yet been rubber-stamped, the business says there’s been “strong interest” shown by organisations wishing to participate, including lessors happy to provide $30 million for 15 of Rex’s fleet of 60 Saab 340 aircraft.
Rex’s deputy chairman, John Sharp, said, “Rex has the biggest regional network in Australia and we are the only carrier in Australia that has been able to successfully navigate the turmoil and shocks over the last two decades with uninterrupted operational profits since 2003.
“Leveraging on Rex’s existing infrastructure and overheads, our cost base for the domestic operation is estimated to be at least 35 per cent below Virgin’s Australia’s (pre-COVID) with 50 per cent lower additional headcount needed proportionately.”
Rex has already signed a memorandum of understanding with turboprop manufacturer Avions de Transport Régional for a range of “potential commercial co-operation”.
The scope of the potential deal includes the eventual replacement of its current fleet with ATR42 and ATR72 aircraft.
“With Rex’s expansive regional network of 60 destinations, existing infrastructure in all these capital city airports, superior efficiencies and unbeatable reliability, it will simply be an incremental extension for Rex to embark on domestic operations especially since one out of every 10 flights in Australia was already a Rex flight during the pre-COVID days,” said Sharp.
“Rex’s domestic operations will be priced at affordable levels but will also include baggage allowance, meals on board and pre-assigned seating.”
The news represents a dramatic change of fortune after the airline warned it could go out of business if it didn’t receive a coronavirus bailout – which it eventually got in the form of a number of government supplement routes.
On 27 March, Australian Aviation reported Rex’s warning that it may not be able to transport COVID-19 testing samples from regional areas to capital cities for analysis unless it received a government bailout. It said it would announce the “shutting down of its network” that day if it didn’t receive “concrete proposals” of financial aid.
Weeks later, on 7 April, Rex raised the stakes in its fight for more financial aid yet again, this time claiming that “lives could be lost” if the airline was unable to transport medical tests on selected routes. The business praised Queensland and Western Australia for offering to subsidise essential services, but said, “no other states have shown any interest”.
Australian Aviation detailed regional aviation’s battle for survival here.