COVID-19 forces Rex cuts to rural areas as airline bankruptcies loom

Rex 'can't survive six months of coronavirus' unless govt helps airlines

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Regional Express says the coronavirus emergency is of proportions not seen since the Second World War and is not expected to abate for at least nine months.

Regional Express says the coronavirus emergency is of proportions not seen since the Second World War and is not expected to abate for at least nine months.

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Rex is one of just five airlines worldwide to have stayed profitable for 17 years straight, but its shares are in a trading halt

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Australia's largest regional airline, Regional Express, faces crippling financial losses due to coronavirus' impact on travel activity and says bush carriers are on the brink of collapse.

Although the company has no debt and believes it is one of just five airlines worldwide to have stayed profitable for 17 years straight, Rex shares were yesterday placed in a trading halt until Thursday.

It has withdrawn earlier profit forecasts and is set to drastically reduce its flight schedule to rural Australia, dropping some routes altogether.

Rex anticipated at least a 25 per cent slump in passenger demand for six months, noting as an example, last Friday's passenger traffic was down 13pc on the same time last year.

The airline has described "extremely dire consequences of the COVID-19 pandemic on regional aviation and on regional communities".

Rex cannot survive the next six months of this global emergency if the forecast of worldwide health experts materialises - Neville Howell, Regional Express

The federal government today responded to concerns across the industry setting aside $715-million for a coronavirus relief package for the aviation sector.

The package included refunding and waiving a range of government charges on the industry including fuel excise, airservices charges on domestic airline operations and domestic and regional aviation security charges.

On Monday Rex chief operating officer Neville Howell told Deputy Prime Minister Michael McCormack regional carriers would be the first impacted by the coronavirus carnage in Australia because of their smaller market base and limited financial resources.

Only weeks of reserves

He warned many had just weeks of reserves left and without a lifeline from governments the airline industry would have "a sectorial financial crisis piled on top of the public health emergency".

"Even Rex cannot survive the next six months of this global emergency if the forecast of worldwide health experts materialises,'' Mr Howell said.

"If Rex, with all its strengths, were to collapse, probably following the collapse of all other independent regional carriers, and maybe even a domestic carrier, there will be utter chaos and mayhem on many regional and rural communities which depend on regional air services to be their socio-economic lifeline."

Nine month emergency

The company believed the current crisis was a national emergency of proportions not seen since the Second World War and one not expected to abate for at least nine months.

Rex's warning followed national carrier Qantas grounding at least 150 jets and slashing 90 per cent of its international routes this week.

In Europe, historic Luthansa grounded two thirds of its fleet last week and called for German government help, while Norwegian Airlines said it had just weeks of financial reserves left to stay afloat.

A 40-year-old British regional carrier, Flybe, is already in administration, blaming the coronavirus impact on business.

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The International Air Transport Association issued an urgent call to all governments to look at extending lines of credit, reducing infrastructure costs and lightening the tax burden on airlines to help the industry survive.

Rex grew out of the collapse of national and Asian carrier Ansett Australia in 2002, establishing itself specifically as a link between regional communities and capital cities.

It has about 1500 weekly flights to 60 destinations in all states, operating a fleet of 60 Saab 340 turboprop aircraft, including via its freight, aeromedical and charter subsidiary Pel-Air Aviation.

Rex also trains pilots at its Australian Airline Pilot Academy in Wagga Wagga in NSW and Ballarat, Victoria.

"We look forward to working closely with the government to implement measures it can adopt to provide regional carriers with a fighting chance," Mr Howell said.

Mr McCormack conceded the airlines were facing difficulties, "but they tell me they're okay at the moment".

"We'll keep looking at what we can do as a government to help."

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