The Australian regional airline Rex – Regional Express has been going through a serious crisis in recent months. Despite its long-standing success in Australia's regional flight markets, the company is now forced to limit flight operations and restructure due to a shortage of aircraft, pilots and spare parts, as well as a failed expansion project. The attempt to enter the national market with Boeing 737-800 aircraft failed, and ultimately led Rex into insolvency.
Rex has traditionally had a fleet of Saab 340 aircraft operating on regional and rural routes. These aircraft are considered the backbone of the airline, but over the past 12 to 24 months the availability of these machines has been severely limited. The lack of pilots and spare parts has led Rex to suspend many flights or reduce frequencies. Of a total of 57 Saab aircraft, 25 are currently reported as "Aircraft on Ground" (AOG) according to ch-aviation's database, which means they are not operational due to technical problems or maintenance.
Despite these challenges, the company has put four of its Saab 340B aircraft up for sale. The aircraft - VH-RXE, VH-ZJS, VH-ZLX and VH-ZRH - were put on the market ahead of the July 2023 bankruptcy filing, according to Australian Aviation. However, the sale of these aircraft is said to be on hold while the airline's fate is being determined, according to insolvency administrators Ernst & Young. Despite this, Queensland-based C&L Aerospace continues to advertise the aircraft in question on its website.
Bankruptcy and failed Boeing 737 expansion
Another reason for Rex's economic difficulties was its failed attempt to penetrate the domestic aviation market. In 2020, the airline decided to move away from solely operating the Saab 340 and lease Boeing 737-800 jets to position itself as a serious competitor in the domestic market. This move was risky, but Rex speculated that Virgin Australia, which was in bankruptcy at the time, would be liquidated, allowing Rex to fill a gap in the market.
However, this bet did not pay off. Virgin Australia was acquired by Bain Capital and successfully relaunched. The airline is thriving today, while Rex failed with the B737 project. The attempt to gain greater market share in Australia ultimately led to financial overload and forced Rex to file for bankruptcy. Jet operations with the Boeing 737s were discontinued, while the Saab 340s continue to be used on its traditional regional routes.
Wet-lease agreements and prospects for a new start
While the focus has returned to the Saab operation, liquidators Ernst & Young are now trying to find an investor who could recapitalise and restart the airline. Despite the challenges, Rex still provides important regional services within Australia and remains a significant player in rural communities where alternatives are often unavailable.
The Saab fleet currently serves 13 destinations from Sydney, 13 from Brisbane, 7 from Melbourne, as well as other cities such as Perth, Adelaide, Townsville and Cairns, demonstrating that despite the difficulties, Rex continues to play a key role in Australian regional transport.
Future prospects and challenges
Although Rex continues to be a major contributor to regional aviation in Australia, the airline faces significant challenges. The sale of the Saab 340B aircraft could free up much-needed capital, but it remains to be seen whether the airline will be able to find an investor and remain profitable in the long term. The decision to go for Boeing 737-800s was a risky move that put Rex in a precarious position. The bankruptcy and current restructuring measures demonstrate the uncertainties that smaller airlines face when trying to enter larger markets.
In an industry that is heavily dependent on more external factors such as fuel costs, regulatory requirements and demand for domestic flights, Rex will have to pull out all the stops to overcome the current challenges. Selling aircraft and having the opportunity to start over with fresh capital could help the airline cement its role in regional aviation and possibly even get a second chance in the domestic aviation market.
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