REX: Trading halt – Rumoured expansion to capital city flights post-pandemic

REX Holdings went into a self-requested trading halt on the Australian Stock Exchange today. The halt will continue up until Thursday 14 May, unless a statement is made to the stock exchange before then.

The AFR and SMH are reporting that REX is working on raising AU$200 million to fund aircraft leasing to commence inter capital city flights in direct competition with Virgin Australia and Qantas.

That’s a bold view mid-pandemic, and while Virgin Australia is in voluntary administration.

It brings in a third force to what has been a lucrative domestic market for the two lead players.

Busy Private Equity

Not only are private equity players looking to fund a re-booted Virgin Australia, but apparently they are also being approached about funding this expansion by REX. Not bad for an airline that stated it would not last another 6 months in this era of COVID-19 without a government funding lifeline. It got a lot of what it was asking for with the Australian Governments injection of AU$198 million worth of assistance to regional airlines.

2PAXfly Takeout

This is another timely reminder to wear your seatbelt when seated. Holding you close to your seat will protect you from the sort of injuries sustained on this flight, when unsecured passengers flew to the ceiling of the aircraft, and then came crashing down once the ‘drop’ ceased.

The hope will be that this is an anomaly – a ‘freak accident’ in casual parlance. If it is a systemic error either mechanical or electronic, then this is a larger concern for the airlines that fly Boeing Dreamliner 787 aircraft. Let’s hope it isn’t. If it is, it will pile on the woes to Boeing’s existing stack.

Well, this could get juicy. Add another domestic airline player to the recovery of demand post-pandemic, and I think you get a lot of lower airfares, not to mention a new airline loyalty scheme. Rex currently only has a Business Flyer program that gets you two reward flights (ex fees and charges) for every 18 flight sectors flown.

Next question is what narrow body jets are they going to lease – there will be plenty to choose from – for these new inter capital city flights.

Bet you Sydney – Brisbane – the second most lucrative air corridor in the world – will be on the cards.