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Rex closes in on $150m to fly Sydney-Melbourne-Brisbane

written by Adam Thorn | September 22, 2020

A file image of a Regional Express (Rex) Saab 340B (Seth Jaworski)
A file image of a Regional Express (Rex) Saab 340B (Seth Jaworski)

Rex has revealed it is in advanced negotiations with an APAC investment firm to secure $150 million so it can launch flights between Sydney, Melbourne and Brisbane in March next year.

The deal would see PAG Asia Capital initially invest $50 million in secured convertible notes that could allow it to hold 23 per cent of Rex’s shares by December.

Rex’s executive chairman, Lim Kim Hai, said, “With PAG’s support, I have every reason to believe that Rex can successfully launch its domestic major city jet operations.”

After the initial investment, the regional carrier would then be able to draw down the remaining $100 million over three years, which would see PAG then hold 48 per cent of the business.

The deal, based on current issued share capital, is subject to due diligence being completed and a review by an independent expert.


“PAG is a well-respected and highly successful investment group which manages more than US$40 billion on behalf of major global institutional investors,” said Kim Hai. “I am encouraged by the progress of Rex’s negotiations to date with an investor of PAG’s reputation and experience.”

In May, the airline announced its ambitious plans to take on Qantas and Virgin by expanding its network to service Australian capital city routes, including the coveted Golden Triangle – between Melbourne, Sydney and Brisbane.

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

The news that a deal for new routes might be close comes after Rex recorded an underlying profit before tax of $250,000 and an increase in revenue, from $318 million last year to $322 million in FY20, despite the coronavirus crisis.

The positive results also 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, even threatening to stop transporting COVID-19 testing samples.

The strong performance was in part attributed to the company accepting $62.1 million of government grants, including JobKeeper and regional aviation bailouts.

This led to Qantas chief executive Alan Joyce attacking Rex for accepting the handouts before unveiling plans to expand its network. “That doesn’t feel right,” said Joyce. “That doesn’t seem right.”

Rex fired back, stating Joyce was “misinformed by his advisers” and arguing that it was impossible to use the COVID-19 payments for improper means because they are “strictly audited” by Ernst & Young.

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Comments (21)

  • Gary


    I will go Virgin first, Rex second and Greyhound bus third…. Qantas will not get my support… to arrogant, out of touch and zero focus on service, value and comfort.

  • Steve Miso


    Joyce is an idiot. He has ruined Qantas. Well done Rex.

  • Jeff


    Pity some Australian Billionaires could not stump up the money to ensure some Aust ownership

  • Kim


    Would be great if REX could include Adelaide. We do seem to miss out with Qantas International not flying out of here, but maybe the auction between states will see their head office move to SA.

  • If you read between the lines PAG will end up with 48% of Rex if the full $150m is drawn down. I see this as a convenient exit for the Singapore based shareholders who don’t want to be around to have to find the $700-800 million to replace the 60 geriatric Saab 340B with the ATR 42-600 still not ordered.
    The Singaporean investors always want to step out with dignity.
    Replacing the turbo-prop fleet isn’t going to go away and if there was a grounding of the type it would be all over for Rex and a large part of Regional Services.

  • Corbin


    Wrong move, Rex!
    Do you really think QANTAS will let you inveigle your way into these routes?
    Doubt it, very much, & by trying to take them on, you’re living in the ‘pie in the sky’ ether.

  • Russell M


    Hey Dad, Dad, I’ve run out of money, need some more pocket money please, I’ll mow the lawn for you and even carry your covid and blood samples from regional areas for testing, huh Dad, can I have some money please.

    Hey Dad, Dad, look at me, I’m doing the golden triangle now…….

  • Craigy


    My gut feeling is this will be another Compass Mk1 and 2 within 2 years of starting operations. Having said that, there is a ready workforce with redundancies at Qantas and Virgin, but not at Qantas or Virgin pay rates.

  • Rod Pickin


    Frankly I am surprised that at this time with the re-emergence of VOZ REX has continued with its golden triangle mainline ops. desires. Everyone knows we are in a depressed market and yes it will improve but I have to say even if I had the opportunity to, as an investment potential I wouldn’t be calling my broker anytime soon. I think VOZ will have a measured approach and improve yield slowly, but based on past performances QF will not be happy, they have the complete ability to make commercial life for REX a tad difficult.

  • Ian



    qantarse is stuck between a rock a hard place. joyce is trying to reduce costs as he has to, but unions will fight him on this.

    Rex’s costs will be much lower, they already have a market, that now flies qantas or virgin when they get to BNE, SYD or MEL.

    However, would they be better just doing 1 route to start with either BNE/SYD or SYD/MEL ?

  • cj



    nothing like compass.

    They are probably going to get ex Virgin b738s for a song & crews at lower pay & they might have to do more for their money. We’re in a recession, so many will be looking for cheaper options, but not jetstar who qantas will never allow to fly frequently enough on triangle.

  • Good points Neil. I flew (brand new) AN Fokker F50’s in the late 1980’s which are still efficiently in service in 2020. The very early ATR42’s had already been in service, including with Air Queensland, for a couple of years at that stage. Fokker built an extremely robust airframe.

  • Bernard


    Yeah not sure this a good move Rex. I think a lot of people have high hopes for you and maybesome are right thinking the Singaporeans want out? I would think renewing the fleet to service existing routes for which you get handouts is critical and keeping an eye on how to nclude bigger planes for your capital city expansions is a close second. It woukd be a pity to end up like Compass, etc.

  • Rick


    REX is just positioning itself for the eventual collapse of Virgin MK11 – remember how V1 took off when Ansett collapsed..

    Same same.

  • David Grant


    Rex recorded a pretax profit of $250,000 last year, yet is talking about purchasing 10, yes ten, B737’s. So a used B737 is priced about the same as a small new city car? Am I missing something here?

  • Vannus


    To Gary above…..
    Doubt QANTAS will miss your business. It has way too many loyal customers’.

    To Steve Miso, as well….
    Do you have a BSc & a MSc, Steve?
    QANTAS CEO Alan Joyce has, so your claim ‘he’s an idiot’ is false.

    The Company is NOT ruined. Thank goodness Dixon isn’t CEO any longer. The only good thing he did was NOT appoint John Borghetti to follow him.
    So Borghetti went to Virgin. Well, we all know how that ended.

    In multiple years’ of being a QF passenger, I’ve experienced great service, good value for my money, & never had an aircraft seat that wasn’t comfortable.
    I suppose it depends how you treat their staff, in all departments’.

  • Dallas


    The money that was gifted to them from the federal government, if they had not received that, they would be grounded well and truly.
    They will fail as VA, JQ nor QF will let them succeed, there will be rock bottom fares that Rex will not be able to compete with.
    They should give back the money.

  • Brian


    Does REX have a FF program? Does it have deep pockets to withstand a sustained attack by Qantas dumping excess capacity onto the routes? Will they be a full service airline, or will it pick at the crumbs as a budget carrier? I fear that it will be aurevoir REX.

  • paul


    Qantas can’t afford to dump seats in peak hour BNE/SYD/MEL, as that is where they make a huge % of their profits.

    Can see Rex tying into some international airlines & hopefully have a better & simpler frequent flyer program, that qantas’s which is not that good.

  • Jim Thorn


    A very sad day as otherwise smart and experienced aerospace professionals forge ahead at mach speed to prove the age old adage that the best way to make a small fortune out of aviation is to start with a huge one! Will be fabulous news ultimately for Qantaslink when the whole thing implodes around ’22 or so.

  • Murray


    To Jim Thorn, above…..

    I think you’re being way too generous in your thinking of a 2022 ‘implosion’.
    Rex is going to make the mistakes’ that other airlines’ have done, to their detriment or worse, & that is ‘too big, too fast’. They’re obtaining ‘easy money’ with which they’ll expand too rapidly.

    I remember, back in the day, when Branson said Virgin would have NO FF Scheme, NO First Class, & eventually NO Business Class, & NO Airport Lounges’.
    Well, they went hell-bent creating ALL the above, trying to play catch-up with QF, to snag both Govt & Corporate flyers’.
    So by doing all that, it was the start which led to their current debt of $7bn.

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