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Rex has set its eyes on massively expanding its fleet of Boeing 737s to 30 aircraft over the coming five to seven years, with an aim to enter one new plane into service every two to three months.
The news was revealed by Rex chairman Lim Kim Hai at the iconic Singapore Airshow, and nearly doubles Rex’s previous public fleet expansion goals.
“That’s a very good medium-term objective,” Lim said. “There’s a lot to be said for economies of scale.”
It comes after Rex first announced in May 2020 that it was gearing up to rival Qantas and Virgin to take on domestic routes between capital cities and started operating its first 737s in March 2021.
Then Rex revealed late last year that it intends to expand its 737 fleet from six to 14, to support its growing domestic operations.
Lim said the 2021 and 2022 operating environment has “not been easy”, following months of travel restrictions, the Australian Omicron surge and staff shortages.
“No airline makes money when planes are half-full,” he said.
However, the Rex chairman said the worst is likely behind the airline, as bookings pick up steam and point to recovery.
“I’m just starting to see in the last six or seven days a turnaround,” he said. “Significant enough for me to believe that probably the bottom has been reached.”
While the increase in demand is not yet enough to make all flights profitable, Lim said it “gives us some encouragement”.
“You just hope that you ride out the bleed and be there when you recover,” he said.
It’s the latest move in Rex’s rapid expansion of its domestic operations, after earlier this month announcing it will increase its footprint at Sydney Airport with a brand-new Boeing 737 flight simulator and aircraft hangar.
Rex successfully secured the funding for this expansion under the NSW government’s $250 million Jobs Plus program, which provided tax relief, streamlined planning approvals and rebates on constructing infrastructure for businesses creating at least 30 new jobs in NSW by June 2024.
Earlier, speaking at the CAPA Australia Pacific Aviation Summit in Sydney in December, Rex deputy chairman John Sharp said the business has not finished expanding.
“Next year, we intend to go to all capital cities around Australia and indeed to include our growth to some of the larger regional centres, particularly on the east coast of Australia,” said Sharp.
He added Rex’s rapid expansion was made possible because COVID caused “thousands” of aircraft to hit the market at low prices, with lessors “happy to accept any price”.
The pandemic also led to Rex being able to hire staff recently made redundant from larger rivals Qantas and Virgin.
Also in December, Rex started operating flights between Brisbane and Sydney, finally completing the airline’s goal to service the so-called “Golden Triangle” of Sydney-Melbourne-Brisbane.
Rex’s growing domestic network now includes flights between Adelaide, Melbourne, Sydney, the Gold Coast and Canberra.
Terrance
says:So Sharp’s going to commit to leasing fees’ for a further 24 second-hand B737’s?
Wow! He must think Rex is going to become ‘profitable’ in the next little while.
That makes a change from the losses’ it’s had FY’s 19-20 & 20-21.
He’s probably miffed at QANTAS’ multi-billion $ order of NEW aircraft with Airbus, & thinks he’s in the same league.
Wrong!
Come 30-6-2022, it’ll be interesting to hear Rex’s financial situation then……
Gary Topping
says:Go Rex, We can all do with a good bit of competition as much as QF would love to have the country to themselves.
Lindsay
says:Well, QANTAS is our National Carrier, Gary.
Sharp is under the mistaken belief Rex is.
The way he lambasts it is beyond belief, & that attitude does his airline no increase in passenger loads.
AgentGerko GERCKEN
says:Rex may fly SYD-CBR but their little Saab 340’s are never going to compete successfully with QF’s faster and more comfortable Dahs 8’s and 717’s who offer the pollies their Chairmans Lounges and the public servants their FF points. The only good Rex does on this route is to force QF to keep a plug on their often ridiculously expensive fares for this route.
Matt
says:I totally agree with you there. Rex pulled out of Sydney to Canberra and while REX seem to blame Qantas for everything, they need to have a look at their fleet – the Saabs are getting too old. I understand Rex have a challenge because the Saabs are ideal for the airports that arent suitable for 70 seater aircraft as there is currently no one that manufactures aircraft in the 30-40 seat range. The ATR42 would be the closest they could do to replace the Saabs.
The Saab 340s were great in the 80s and 90s and even 2000s but theyre too old now.
Nicholas
says:Is it April Fools day?
Steve
says:So, Rex will acquire used 737-800 or 900 for this , or will they aquire 737-Max? Boeing only makes Max now.
Ashley
says:Rex will be leasing 2nd-hand jets.
They’ve not the funds to buy new ones’.
Imagine the leasing costs’ each, & every month, for maybe 30 B737’s. And there’re STILL paying leases’ on some of their old Saabs.
Where’s the money coming from to do all this?
Doubt their Singaporean owners’ are chipping in.
Rex has had poor financial results for the last few years’, so there ain’t much moola in its’ coffers’.
If, & that’s a big if, Bonza start flying, they’ll make inroads into Rex’s balance sheet.
Rod Pickin
says:WOW!! they say confidence is everything and clearly between REX and BONZA there is a truck load of it. Unfortunately history dictates that in our industry more substantial and sustainable attributes within management are essential and with respect, I don’t see the latter in these industry aspirants; – it is not going to be pretty.
chris
says:So, what exactly does “National Carrier” mean? Does it mean that QF should have a monopoly on Australian air travel?? I’m sure they would like you to believe that…
Neil
says:Why on earth would you invest in more outdated Boeing 737-800s?Some more than 14 years old or more! Especially after watching the competitors Virgin,& new start-up Bonza about to fly the Boeing 737 MAX. After the announcement of Qantas about to operate Airbus A321 Neos,& A220s,my bet is I recon I will be sticking firmly with Qantas!
Warwick
says:Don’t forget the A350’s too, which QANTAS will get for their ‘Project Sunrise’ long-haul flights from here to other continents’.
Rex can only lease 2nd-hand jets as they’ve not the funds to buy new aircraft.
Their Singaporean owners’ seem to be very wary of giving it any largesse. Funny about that.
Even though a Rex subsidiary has a big contract coming up in Jan 2024, much can happen to parent Rex between now, & then, inclusive of a new competitor supposedly entering the Oz skies’, at sometime this year.
jdj
says:What’s actually outdated about the 737-800? It’s not the latest and greatest but jet airliner design has barely changed since its inception. The MAX just offers some tweaked aerodynamics, tweaked propulsion and tweaked electronics. The only differnce is refuelers put a little less fuel in them and the crew do a little less work.
Passengers getting on board are not going to notice the difference!
Vince
says:QANTAS has over $8 billion in debt and currently has a Book Value of 0.01 per share. Basically if you sold all the assets and paid off the debt, the company would be worth zero. Meanwhile REX trades at a Book Value of 1.29 per share. Since listing in 2005, REX has made an average gross return of 7% (triple that of QANTAS). Alan Joyce owns about 0.001% of available shares. Whereas REX insiders and management own over 50% of the company. I know who I’d rather invest with.
Craig Thomas Beatty
says:Qantas.
Howard Patterson
says:Qantas keeps telling us it is “Australia’s National Airline” but I think the government sold it some years ago – to mug ‘investors’. No one ever sells a good business.
Craig Thomas Beatty
says:The only way they can be a serious competitor is if they get 737 MAX aircraft. Presumably MAX8 and MAX10s.