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Rex has rejected claims by Qantas chief executive Alan Joyce that it used government handouts to expand its network.
The business said on Friday that Joyce was “misinformed by his advisers” and argued it was impossible to use the COVID-19 payments for improper means because they are “strictly audited” by Ernst & Young.
The row began when the regional carrier this week announced a full-year underlying profit before tax of $250,000 and an increase in revenue.
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.
Joyce said on Wednesday the airline “should not be using government subsidies to fund growth”.
“That doesn’t feel right,” said Joyce. “That doesn’t seem right.”
In a statement of response, the regional airline said, “Rex has publicly stated several times that its proposed domestic jet operations will proceed only with new funds being made available by external parties.
“These funds will be ringfenced solely for the new domestic services. Rex is yet to complete negotiations to secure funding.”
Rex then accused Qantas of misusing Commonwealth grant money itself to fund its “predatory” new route between Sydney and Orange, in the latest salvo between the two airlines over the route.
“Given this heavily loss-making initiative, one cannot but conclude that some managers in Qantas thought it fit to conduct a predatory strike to destabilise Rex at the expense of the taxpayers,” Rex added on the issue. “What is even more tragic is that the more additional losses Qantas incurs, the more staff it will have to retrench on top of the 8,500 already announced.”
Qantas previously responded to Rex’s complaints over the route by saying the airline was “clearly uncomfortable about facing competition and seeing their monopoly on flights to Orange coming to end”.
Craigy
says:Sorry but I don’t believe a word from Rex management. Dishonesty reigns supreme I think.
Graham
says:What the hell would Qantas be doing in orange? Focus on the big picture al
Captain Rod
says:Don’t worry AJ, QANTAS is still the Fed. Govt’s favourite and as such will still throw lots of taxpayer dollars your way …..
Rod Pickin
says:It’s in AJ’s DNA to whinge, continually, to the extent that maybe he is losing credibility. However, whilst one should never say never, – REX, seriously, a B737 triangular ops SYD MEL BNE? – Maybe if VOZ had gone but not now.
AgentGerko
says:There is a clear difference between the two carriers. QF is predominantly interstate and international, both of which have been heavily hit by border restrictions. Rex is predominantly intrastate so not subject to the same restrictions. Just as QF can make profits in a good year that Rex could only dream of, they can also succumb to massive losses in a bad year. Rex’s margin between a good year and a bad year is much smaller, so it’s not surprising that the govt subsidies were able to transfer a bad year into a fair year.
Sean
says:Yep, as much as I don’t like Alan Joyce – this simply does not pass the pub test.
Ian
says:who would you believe ? Obviously not Qantas.
It will be great to see another flag carrier on golden triangle where peak hour fares for a day trip are often more than flying to USA return. (eg. Monday day trips SYD/MEL/SYD in peak hour often cost more than $1000. You can often fly to LAX return for $800 ish lik in early Jan 2021.
Wrex
says:The best thing I ever did when working for REX was leave!
Nothing positive to say about REX except met some very good people, none of which were in management.
Nick
says:I think the ‘external funding’ provided for REX to open new routes would have been better put to use supporting the existing REX network so the government didn’t have provide what seems to be a bailout. The more news that comes out about REX this year the more I wonder if the airline survives on political push and shove rather than actually flying planes.
Hai Horse
says:You couldn’t trust Rex as far as You could throw them.
Always whining or crying poverty about something.
Vannus
says:Rex, from John Sharp down are very good as whingers’.
Their business model leaves much to be desired.
When Dom Avn gets going again, they’ll have a real battle on their ‘wings’ with QF, who can up the ante very easily, & throw everything at them.
At that point, Rex will go bleating to McCormack that they need more money.
Hope they’ve heard of the old saying, ‘be careful what you wish for’………..
Paul Robson
says:Rexs alleged threats to say covid test samples would not be able to get to a test centre if they had to stop flying to e.g. broken hill, were pathetic!
Rex seemed to forget broken hill is a major base for the RFDS, who I am sure would have taken them!
Robert
says:Lots of people whining about REX !Afraid of a bit of competition eh! Come on Whingers – its Business!!
Grahame
says:Why should Australian tax payers subsidize a foreign owned airline in the first place. If Rex are doing it tough then funds should come from its Singapore Head Office. All the profit goes back overseas. Was it just coincidental that just after they were given the massive bail out they announced they were going to operate ML-SY- BN with B737’s ?? As for whinging about competition, Rex had no concerns about knocking off the local operator in Cairns operating the Queensland Gulf and Peninsula runs forcing that operator to close. Perhaps they may get some of their own medicine back with QF in Orange.
Ten Tribes of Texas
says:REX announced the possibility of inter capital city routes when it looked like Virgin would go bust and competition would be lost not because they got jobkeeper payments for its staff. Time regional airlines went electric to reduce intrastate air travel costs and reduce carbon emissions.