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Joyce accuses Rex of using $60m aid to fuel growth

written by Adam Thorn | September 3, 2020
A file image of a Regional Express Saab 340B. (Dave Parer)
A file image of a Regional Express Saab 340B. (Dave Parer)

Qantas chief executive Alan Joyce has attacked Rex for accepting $60 million in government handouts and then unveiling plans to expand its network to fly between Sydney, Melbourne and Brisbane.

“That doesn’t feel right,” said Joyce. “That doesn’t seem right.”

This week, the regional carrier announced a full-year underlying profit before tax of $250,000 and an increase in revenue, despite the coronavirus crisis.

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It marked a remarkable turnaround from March, when Rex warned it would have no choice but to announce the “shutting down of its network” if it didn’t receive financial aid from the government, even threatening to stop transporting COVID-19 testing samples.

Then, in May, after it received its effective bailout, the business announced ambitious plans to take on Qantas and Virgin by expanding its network to service Australian capital city routes.

The regional carrier later confirmed to the ASX that it intends to have its new network up and running as soon as March 2021, and was confident of securing funding.

Speculation later linked the airline to the lease of 10 Boeing 737s from Virgin Australia.

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But Joyce, speaking at CAPA’s virtual Australia Pacific Aviation Summit on Wednesday, shot down his rival’s apparent bravado.

“They should not be using government subsidies to fund growth,” Joyce said. “When we set up Jetstar in 2003, it was $120 million to set up an airline. To set up an airline is quite an expensive thing, so I hope they’ve done their numbers correctly.”

Rex’s ability to ride out the coronavirus storm compares well with Qantas, which blamed a “near-total collapse in travel demand” for recording a statutory loss before tax of $2.7 billion for the last financial year.

Just last week, the flag carrier and announced nearly 2,500 more jobs are at risk because the business plans to outsource its remaining ground handling operations.

The proposed cuts, in addition to the 6,000 already announced, would include 370 job losses at Jetstar and more than 2,000 at Qantas.

Fly into Spring with Australian Aviation’s latest print edition. Starting from $49.95 a year, you can read comprehensive coverage on all sectors of the industry to keep you in the loop. Get your hands on the subscription today. Subscribe now at australianaviation.com.au.

20 Comments

  • Nicholas

    says:

    Not often I agree with Joyce but this is a terrible look. Not even locally owned either.
    Worst of all history suggests that this money will go up in smoke.

  • Mark

    says:

    Ha ! A bit rich surely, when Qantas receives at least $11M a week in job keeper payment for the 15 000 or so “stood down” staff, plus a decent share of a $750M “waiver of Commonwealth fees and charges”? Fair go is a fair go. Great airline, but gee Qantas hates any competition with a passion.

  • Stewart Corfield

    says:

    I am certainly not a fan of Joyce but I must agree with him on this. It should have been stipulated that any handout monies were to be used in maintaining rural services. I feel that the government and taxpayers have been conned..

  • Tony Pearce

    says:

    Me thinks the pot is calling the kettle black here!

  • AgentGerko

    says:

    Mr Joyce = Pot, Rex = Black.

  • Geoffrey Walker

    says:

    Not sure how much JobKeeper Joyce has taken but it is very very substantial. All to just layoff staff once it winds down. I smell hypocrisy with a capital H.

  • Rod St Hill

    says:

    The QANTAS CEO might think his airline has a divine right to monopolise the trunk routs, but he is wrong. And, of course, QANTAS has pocketed plenty of government subsidy during the COVID-19 pandemic.

  • Td

    says:

    Underlying profit before tax of 250,000 was probably in part the government paid for subsidies for regional flights without which there really was no profit at all. Add to that all the other handouts and maybe Rex has been flying on borrowed or granted fumes.

  • Hein Vandenbergh

    says:

    Not only the Fed’s bailout but add to that the manner in which REX blackmailed local councils and airport owners into ‘forgiving’ any outstanding debts owed by REX. Shameless as always, not a good corpirate citizen. Surprise surprise – NOT.

  • Ben

    says:

    Jobkeeper is NOT a subsidy… it’s 100% passed onto the stood down employees, pretty sure that’s required by law. Rex has done it’s usual trick of screaming that the sky is falling and that they are on the ropes only to play it perfectly and wow look at all this money we have, lets start a jet operation. I’m not an AJ fan in the slightest, but you’d expect nothing but rejecting a third player when the industry is so depressed.

  • James

    says:

    Why all the childish, emotional comments?

    Qantas is a huge carrier with a lot of staff, stands to reason they would have a lot of staff on jobkeeper and that as a company, they took in a large amount of government money to keep going.

    I think the point of the article was that comment in relation to the claim that Rex was using the government money to fund their GROWTH.

    Not just to survive.

  • Reginald Browne

    says:

    Commercial reality, Mr. Joyce. Like it or lump it.

  • Steve A

    says:

    I agree with what Mr Joyce said previously that tax payers money should not be used by the Federal government to prop up badly run airlines.
    On that basis then no more money should go to Qantas, the worst run airline in Australia.
    Firstly, shareholders were not paid any dividends for 7 consecutive years and only averaged 8 cps over the period of Mr Joyce’s tenure.
    Secondly, QF has been severely asset-stripped with a billion dollars of assets being sold.
    QF has been severely asset-aged with its fleet being kept on instead of being replaced.
    Staff have been bullied and threatened in a shocking display of corporate thuggery.
    Staff numbers have been decimated with the laying off of 13,500 staff in recent times with more to come, and most of the others on tax payer subsidies.
    QF is just a shell of what it used to be.
    People say that Mr Joyce is not responsible for COVID 19, and he isn’t. But this was happening long before the current pandemic.
    What a shame to see such an iconic national brand wrecked in 12 short years

  • Vic J

    says:

    So AJ is happy to take half a billion or more in Fed Gov handouts, keep his $24 million + salary whilst sacking over 8000 staff and then attempt to give Rex a pep talk on their behaviour?? When it comes to CEO’s that are morally and ethically bankrupt….he’s won that award for several years running !

  • Peter

    says:

    I wish commentators would get their facts correct as to where funds to Qantas have gone.
    It was totally unknown as to how long the impact of COVID 19 would prevail – so naturally best decision was to retain staff (but stood down as no work for them) and subsidise with Job Keeper, just like any other business. But time has moved on and there is much more clarity as to the impact of COVID 19 and the recovery timeline. Hence Qantas is basically forced to substantially reduce its workforce – and even then the losses will be massive. Do people expect taxpayers to continue to fund Qantas with a huge surplus of staff. Apart from JobKeeper the other government funds Qantas received was to underwrite repatriation flights and base services that in no way were viable. It was right for the government to subsidise these flights rather than have them not operate or operated by foreign carriers paid to operate these services.

    Rex is another matter. Nothing wrong with government funding JobKeeper and other essential services – but not to have these funds used to expand their operations. That was never the intent of the funding.
    And same applies to Virgin. They received Jobkeeper funding and funding for essential operations. But it was not used to expand Virgin and Virgin was massively insolvent (due past legacies) and relied on the administrator selling the business. This has been achieved without a major drain on the taxpayer. And Virgin will I going be biting the bullet to substantially reducing its staff numbers in an endeavour to become viable.
    There is nothing wrong with Qantas’ intention to outsource its ground services. Happening all over the world and many Qantas staff will gain employment with the specialist ground handling companies who can get economies of scale and more work place flexibility.

  • harriet

    says:

    Do you actually think that rex is using government funds for the domestic expansion. it would be a bad scandal for the government and damage the airline’s reputation as well. It just wouldnt happen

  • Rick

    says:

    As an ex employee of Qantas they have always been anti competitive they cannot handle competition suck it up AJ

  • Robert

    says:

    So Mr Joyce, stop crying & get flying! Petition the prime minister to remove the travel ban – Australia the only civilized country to imprison its citizens contrary to the Universal Declaration of Human Rights we signed after the 2nd world war – Article 13(2) “Everyone has the right to leave any country, including his own, and to return to his country.”

  • Tobin

    says:

    To Harriet above……

    Are you being just plain facetious, or do you NOT know how Rex have been acting for the past six months’?
    Maybe time for you to wake-up from la la land.

  • Harriet

    says:

    Hi Tobin, Yes i am aware of how Rex has been acting for the past six months. Also aware that there is no way that the Department would allow Rex to use the funds which were awarded to keep the regional airline solvent, on its domestic operations plans. I’m not in la la land, I just don’t buy into the speculation that Rex is using gov funds to fund its expansion. We live in Australia, that would be a massive rort scandal, cost government jobs, and damage the airline’s reputation permanently. It’s already earned heated public debate – there’st just no way the government would allow the expansion to be paid for by tax payer dollars. Not sure what is facetious in that opinion.

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Joyce accuses Rex of using $60m aid to fuel growth

written by Adam Thorn | September 3, 2020
A file image of a Regional Express Saab 340B. (Dave Parer)
A file image of a Regional Express Saab 340B. (Dave Parer)

Qantas chief executive Alan Joyce has attacked Rex for accepting $60 million in government handouts and then unveiling plans to expand its network to fly between Sydney, Melbourne and Brisbane.

“That doesn’t feel right,” said Joyce. “That doesn’t seem right.”

This week, the regional carrier announced a full-year underlying profit before tax of $250,000 and an increase in revenue, despite the coronavirus crisis.

Advertisement
Advertisement

It marked a remarkable turnaround from March, when Rex warned it would have no choice but to announce the “shutting down of its network” if it didn’t receive financial aid from the government, even threatening to stop transporting COVID-19 testing samples.

Then, in May, after it received its effective bailout, the business announced ambitious plans to take on Qantas and Virgin by expanding its network to service Australian capital city routes.

The regional carrier later confirmed to the ASX that it intends to have its new network up and running as soon as March 2021, and was confident of securing funding.

Speculation later linked the airline to the lease of 10 Boeing 737s from Virgin Australia.

PROMOTED CONTENT

But Joyce, speaking at CAPA’s virtual Australia Pacific Aviation Summit on Wednesday, shot down his rival’s apparent bravado.

“They should not be using government subsidies to fund growth,” Joyce said. “When we set up Jetstar in 2003, it was $120 million to set up an airline. To set up an airline is quite an expensive thing, so I hope they’ve done their numbers correctly.”

Rex’s ability to ride out the coronavirus storm compares well with Qantas, which blamed a “near-total collapse in travel demand” for recording a statutory loss before tax of $2.7 billion for the last financial year.

Just last week, the flag carrier and announced nearly 2,500 more jobs are at risk because the business plans to outsource its remaining ground handling operations.

The proposed cuts, in addition to the 6,000 already announced, would include 370 job losses at Jetstar and more than 2,000 at Qantas.

Fly into Spring with Australian Aviation’s latest print edition. Starting from $49.95 a year, you can read comprehensive coverage on all sectors of the industry to keep you in the loop. Get your hands on the subscription today. Subscribe now at australianaviation.com.au.

20 Comments

  • Nicholas

    says:

    Not often I agree with Joyce but this is a terrible look. Not even locally owned either.
    Worst of all history suggests that this money will go up in smoke.

  • Mark

    says:

    Ha ! A bit rich surely, when Qantas receives at least $11M a week in job keeper payment for the 15 000 or so “stood down” staff, plus a decent share of a $750M “waiver of Commonwealth fees and charges”? Fair go is a fair go. Great airline, but gee Qantas hates any competition with a passion.

  • Stewart Corfield

    says:

    I am certainly not a fan of Joyce but I must agree with him on this. It should have been stipulated that any handout monies were to be used in maintaining rural services. I feel that the government and taxpayers have been conned..

  • Tony Pearce

    says:

    Me thinks the pot is calling the kettle black here!

  • AgentGerko

    says:

    Mr Joyce = Pot, Rex = Black.

  • Geoffrey Walker

    says:

    Not sure how much JobKeeper Joyce has taken but it is very very substantial. All to just layoff staff once it winds down. I smell hypocrisy with a capital H.

  • Rod St Hill

    says:

    The QANTAS CEO might think his airline has a divine right to monopolise the trunk routs, but he is wrong. And, of course, QANTAS has pocketed plenty of government subsidy during the COVID-19 pandemic.

  • Td

    says:

    Underlying profit before tax of 250,000 was probably in part the government paid for subsidies for regional flights without which there really was no profit at all. Add to that all the other handouts and maybe Rex has been flying on borrowed or granted fumes.

  • Hein Vandenbergh

    says:

    Not only the Fed’s bailout but add to that the manner in which REX blackmailed local councils and airport owners into ‘forgiving’ any outstanding debts owed by REX. Shameless as always, not a good corpirate citizen. Surprise surprise – NOT.

  • Ben

    says:

    Jobkeeper is NOT a subsidy… it’s 100% passed onto the stood down employees, pretty sure that’s required by law. Rex has done it’s usual trick of screaming that the sky is falling and that they are on the ropes only to play it perfectly and wow look at all this money we have, lets start a jet operation. I’m not an AJ fan in the slightest, but you’d expect nothing but rejecting a third player when the industry is so depressed.

  • James

    says:

    Why all the childish, emotional comments?

    Qantas is a huge carrier with a lot of staff, stands to reason they would have a lot of staff on jobkeeper and that as a company, they took in a large amount of government money to keep going.

    I think the point of the article was that comment in relation to the claim that Rex was using the government money to fund their GROWTH.

    Not just to survive.

  • Reginald Browne

    says:

    Commercial reality, Mr. Joyce. Like it or lump it.

  • Steve A

    says:

    I agree with what Mr Joyce said previously that tax payers money should not be used by the Federal government to prop up badly run airlines.
    On that basis then no more money should go to Qantas, the worst run airline in Australia.
    Firstly, shareholders were not paid any dividends for 7 consecutive years and only averaged 8 cps over the period of Mr Joyce’s tenure.
    Secondly, QF has been severely asset-stripped with a billion dollars of assets being sold.
    QF has been severely asset-aged with its fleet being kept on instead of being replaced.
    Staff have been bullied and threatened in a shocking display of corporate thuggery.
    Staff numbers have been decimated with the laying off of 13,500 staff in recent times with more to come, and most of the others on tax payer subsidies.
    QF is just a shell of what it used to be.
    People say that Mr Joyce is not responsible for COVID 19, and he isn’t. But this was happening long before the current pandemic.
    What a shame to see such an iconic national brand wrecked in 12 short years

  • Vic J

    says:

    So AJ is happy to take half a billion or more in Fed Gov handouts, keep his $24 million + salary whilst sacking over 8000 staff and then attempt to give Rex a pep talk on their behaviour?? When it comes to CEO’s that are morally and ethically bankrupt….he’s won that award for several years running !

  • Peter

    says:

    I wish commentators would get their facts correct as to where funds to Qantas have gone.
    It was totally unknown as to how long the impact of COVID 19 would prevail – so naturally best decision was to retain staff (but stood down as no work for them) and subsidise with Job Keeper, just like any other business. But time has moved on and there is much more clarity as to the impact of COVID 19 and the recovery timeline. Hence Qantas is basically forced to substantially reduce its workforce – and even then the losses will be massive. Do people expect taxpayers to continue to fund Qantas with a huge surplus of staff. Apart from JobKeeper the other government funds Qantas received was to underwrite repatriation flights and base services that in no way were viable. It was right for the government to subsidise these flights rather than have them not operate or operated by foreign carriers paid to operate these services.

    Rex is another matter. Nothing wrong with government funding JobKeeper and other essential services – but not to have these funds used to expand their operations. That was never the intent of the funding.
    And same applies to Virgin. They received Jobkeeper funding and funding for essential operations. But it was not used to expand Virgin and Virgin was massively insolvent (due past legacies) and relied on the administrator selling the business. This has been achieved without a major drain on the taxpayer. And Virgin will I going be biting the bullet to substantially reducing its staff numbers in an endeavour to become viable.
    There is nothing wrong with Qantas’ intention to outsource its ground services. Happening all over the world and many Qantas staff will gain employment with the specialist ground handling companies who can get economies of scale and more work place flexibility.

  • harriet

    says:

    Do you actually think that rex is using government funds for the domestic expansion. it would be a bad scandal for the government and damage the airline’s reputation as well. It just wouldnt happen

  • Rick

    says:

    As an ex employee of Qantas they have always been anti competitive they cannot handle competition suck it up AJ

  • Robert

    says:

    So Mr Joyce, stop crying & get flying! Petition the prime minister to remove the travel ban – Australia the only civilized country to imprison its citizens contrary to the Universal Declaration of Human Rights we signed after the 2nd world war – Article 13(2) “Everyone has the right to leave any country, including his own, and to return to his country.”

  • Tobin

    says:

    To Harriet above……

    Are you being just plain facetious, or do you NOT know how Rex have been acting for the past six months’?
    Maybe time for you to wake-up from la la land.

  • Harriet

    says:

    Hi Tobin, Yes i am aware of how Rex has been acting for the past six months. Also aware that there is no way that the Department would allow Rex to use the funds which were awarded to keep the regional airline solvent, on its domestic operations plans. I’m not in la la land, I just don’t buy into the speculation that Rex is using gov funds to fund its expansion. We live in Australia, that would be a massive rort scandal, cost government jobs, and damage the airline’s reputation permanently. It’s already earned heated public debate – there’st just no way the government would allow the expansion to be paid for by tax payer dollars. Not sure what is facetious in that opinion.

Leave a Comment

Your email address will not be published. Required fields are marked *

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