After vehemently accusing Qantas (ASX: QAN) of anti competitive behaviour, Regional Express Airlines (ASX: REX) have lodged their own competitive bid.
The Company is intent on acquiring National Jet Express, the regional division of Cobham Services Australia.
National Jet Express is a key provider of Fly-In, Fly-Out services to Western Australian and South Australian workers. The Company also flies freight between Sydney, Adelaide, Brisbane, the Gold Coast and Papua New Guinea. All diversified flying activities combined saw the Company bank $142 million in revenue for the 2021 calendar year.
“FIFO services are expected to experience strong growth in Australia and this acquisition positions the Rex Group to participate in this booming sector,” said Executive Chairman, Lim Kim Hai.
“With this acquisition, Rex will have a FIFO arm that is simply unparalleled in Australia. NJE has a completely modern fleet comprising eight Bombardier Q400 turboprops and six Embraer E190 jets for FIFO work. Both aircraft types are fuel efficient, have enhanced operational reliability and low carbon emissions when compared with the predominantly 40-year-old Fokker 100s used by the other major FIFO operators.”
Those shiny new jets come at a cost though, with the proposed acquisition to cost Rex $48 million.
With the blessing of the Australian Competition and Consumer Commission (ACCC), Rex will progress with acquisition proceedings, presenting the deal to the Foreign Investment Review Board for approval.
Lodged last week, Rex is keen to see approval within the next few months.
The move comes after a longstanding spat with rival airline, Qantas. The mud slinging fest is the stuff of Netflix producer dreams involving pilot unions, public slandering and snippy CEO comments in market announcements.
Rex has chosen to withdraw from several routes, including some they have held a monopoly on for years, due to Qantas entering the scene. The regional airline has been exceedingly vocal about Qantas’ alleged anti-competitive and “predatory” behaviour.
Qantas has defended their actions on multiple occasions, even going so far as to label Rex’s dissatisfaction as “a classic Rex tantrum”. Ouch.
Biting back, last month Rex announced “massive expansion” of services to major regional centres within their network by up to 67% to retain customer’s loyalty.
Additionally, the Company has also locked in partnerships with numerous travel agencies such as Flight Centre (ASX: FLT), Helloword (ASX: HLO), Webjet (ASX: WEB), Consolidated Travel and Corporate Travel Management (ASX: CTD). These partnerships are said to be “critical to [the] success [of Rex]”, and will effectively result in more than doubling the airline’s annual domestic jet revenues in FY23, with no increase in fleet size.
It’s clear the Rex is resorting to an offence based strategy, bolstering their routes, customers and future revenue.
By focusing on new niches like FIFO services and growing their business, could Rex finally be shedding their Qantas shaped baggage?
Perhaps this is the final episode in the Rex vs Qantas saga after all.
Cabin crew, please take your seats for landing.
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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