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Rex announces impending stand-downs ahead of anticipated $18m loss

written by Hannah Dowling | August 11, 2021
Rex's latest 737, YH-RYU, arrives at Melbourne YMML (Victor Pody)
Rex’s latest 737, YH-RYU, arrives at Melbourne YMML (Victor Pody)

Rex has revealed that it will introduce “temporary stand-downs” of staff later this week as its full-year loss for 2021 was revised down from $15 million to $18 million.

It’s rumoured that hundreds of staff across the airline’s network could be affected, with the employees supporting Rex’s new Boeing 737 operations expected to be hit the hardest.

In an announcement posted to the ASX on Tuesday, Rex said that ongoing lockdowns and border closures across Australia’s most populous states of NSW and Victoria had “significantly impacted revenue”.

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The airline added that “no measures were taken initially to mitigate the losses as the lockdown [in NSW] was perceived as temporary and of short duration”.

The news comes just days after Rex criticised rival Qantas for announcing it would stand down 2,500 staff across its Qantas and Jetstar brands, with Rex deputy chairman John Sharp calling the decision “premature”.

Qantas made its announcement just one day after Deputy Prime Minister Barnaby Joyce introduced the federal government’s new Retaining Domestic Airline Capability scheme, which would see airline staff outside of COVID lockdown hotspots gain access to JobKeeper-style payments of $750 per week.

Previously, stood-down workers in aviation could only gain access to financial support if they live in areas that are locked down, through the government’s general COVID-19 Disaster Payment scheme.

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Despite earlier confusion on who is entitled to payments under the new scheme, the Deputy Prime Minister’s office later confirmed that any frontline staff employed by an airline are eligible”, including all airport or ground workers employed by an airline, however, subcontractors are not eligible.

Rex said it would confirm how many staff are to be stood down “at the end of the week” following consultations with stakeholders.

Meanwhile, Virgin Australia is expected to similarly announce mass stand-downs across its network with potentially 1,000 employees at risk, also as a result of ongoing lockdowns and border closures across the country.

In a statement, a spokesperson for Virgin said the company was “consulting with unions to manage the reduced demand in flying and the available hours of work over the next 1-2 months”.

Last month, Rex announced it had been forced to “greatly reduce” its regional and domestic services due to state border closures and lockdowns, and that restrictions saw the airline shut down 80 per cent of its business.

“It’s hit us really hard,” said Deputy Chairman Sharp at that time. “It’s devastating to see the impact. It’s really knocked out the vast majority of our business.

“We’ll lose revenue and we’ll have people we’ll have to pay people who we can’t generate income from. We’re back to where we were at the beginning of the COVID pandemic.”

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12 Comments

  • Warwick

    says:

    Sharp wanted to push Rex onto the ‘golden triangle’ to wrest business from QANTAS, & he did this in the middle of the pandemic in March 2021.

    He leased six old, second-hand Boeing 737-800’s for these routes’, which didn’t live up to his financial expectations.
    The leasing fees’ for all these would be in the ball park of approx $210,000/month, plus the leases’ still being paid for some of Rex’s Saab’s, average age 26 years’ old.

    Then he read the situation in NSW incorrectly, & didn’t ‘brace’ for a long-haul lockdown, &/or border closures’, from end of June 2021.
    His snipe at QANTAS, saying it was ‘premature’ with staff stand-downs’, has now come back to bite him.

    It’s surprising its’ loss is only $18mn, but reckon it’d be haemorrhaging money now.
    Wonder what’s in store in the next couple of months’ for Rex???

  • John Phillips

    says:

    Hopefully QF standing by, if REX go belly up, to take on the secondary routes.

    REX decision to load themselves up with cash bleeding 737’s at a bad time in the economy may well go down as one of the worst investments in Australian business history, but let’s hope it doesn’t get to that, and they pull though. (Of course hindsight is a wonderful thing!)

    As Geoff Dixon is reputed to have said “The Australian domestic market can only support one and a half airlines”.

    • Warwick

      says:

      Yes, John your summation of Sharp’s incomprehensible decision proves he’s no businessman.
      Same goes for his ‘thinking’, at end of June to not ready Rex for a protracted lockdown, & or border closures’.

      It’s amazing that Rex’s Singaporean owners’ have allowed him to stay in his job.

      His constant griping at QANTAS since March 2020. is beyond the pale, & shows him to be not in a good way.

  • Manu

    says:

    Didn’t the Rex chairman recently criticise Qantas for enacting stand-downs?

  • It’s time for the industry to start pulling together and all the back-biting to end. Unlike many industries, aviation is very vertically integrated from the smallest flying school, through GA, the regionals and up to the big guns. If any part of the chain falters, the whole thing can snap. Let’s not forget those organisations that support the industry – from ground handlers dealing with the majors to the engine shop in Tamworth supporting GA – they are being hit hard too. As an industry we are better than this; as a nation we are better than this. Let’s remember Team Australia!

    • Rocket

      says:

      Sorry, but someone should tell Sharp that, he’s the one that started the backbiting and brickbat throwing, all of it baseless as it turns out as well as being hypocritical.

      • Vannus

        says:

        Yes, Rocket, how true!

        It’s the way Sharp likes to run business, always sniping at a competitor, hoping to wear it down.
        He’s sure picked a wrong ‘un in QANTAS, & its’ CEO Mr Alan Joyce.

        It’ll be interesting to see situationally where Rex will be come Xmas.

        The fact that when Flight Centre made a deal with Rex, the former’s share price DROPPED.
        If that isn’t a ‘word to the wise’, I don’t know what is.

  • Ken Simpson

    says:

    If Rex Deputy Chair, John Sharp wanted to run with the big boys then he needed to accept that deep pockets were needed. Why start up a supposed competitive Airline in a pandemic? Did he expect Qantas and Virgin to just roll over and accept Rex on the main trunk routes without some response. He has done nothing but whinge in the last 2 years. Starting up and loosing an estimated $18 million is just throwing investors good money after bad. Time for a reality check Mr Sharp.
    Ken S

  • Nathan

    says:

    Sharp will certainly have to ‘eat humble pie’ with his snipe at QANTAS previously about its’ staff stand-downs’.
    But being an ex-pollie, he probably won’t.

    He’s probably made some very bad decisions’ for Rex, & these have brought about some financial woes’ for it.

    What will happen to it, will be interesting, over the next while.

  • Jon

    says:

    So how’s Sharp’s loud-mouthed brag ‘to pursue legal remedies’ against QANTAS, going to be paid for, in light of this multi-million $ loss?

    Just goes to show what happens to arrogant people, in that there’s always something that’ll come back to bite them big time.
    He’s an ex-pollie. ‘Nuff said.

  • Rod Pickin

    says:

    With due respect, Mr. Sharp wasn’t one that might be called a beacon of light and hope within politics either

    • Jonathan

      says:

      Yes, Rod, the story goes he left politics’ ‘under a cloud’, so that adds weight to what you said above.

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