Rex has finally signed off on a $150 million investment that will allow it to launch flights between Sydney, Melbourne and Brisbane from March next year.
The airline will draw down an initial $50 million in January next year from PAG Asia Capital and the deal will see the APAC organisation nominate two directors to sit on the board.
Rex’s executive chairman Lim Kim Hai said, “I look forward to tapping into the experience and expertise of PAG’s nominated directors whose professionalism I have grown to respect over the last few months of extensive discussions.”
The pair first revealed they were in advanced negotiations in September but today’s news means the airline can confirm it will fly Sydney–Melbourne with three aircraft on 1 March 2021, before ramping up to five by Easter.
“Once the initial services are well established, we aim to progressively grow our fleet to cover all the major cities in Australia,” said Lim.
“PAG is a well-respected and highly successful investment group which manages more than US$40 billion on behalf of major global institutional investors.
“Preparations for our domestic operations are proceeding to plan with our first Boeing 737 800NG aircraft delivered on 5 November 2020. Our crew will carry out training on the aircraft over the next three weeks before the CASA proving flight on 2 December 2020.
“We anticipate CASA approval shortly after. Five other similar aircraft will be delivered from next month to March 2021.”
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.
The news that a deal for new routes will launch 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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