Regional airline Rex faces uncertain future after halting trading

Regional airline Rex has halted trading and begged for government help as it struggles with a massive downturn due to coronavirus.

Australia’s biggest regional airline Rex has entered a trading halt and called on federal government support as it faces crippling financial losses due to the coronavirus crisis.

Regional Express Airlines, or Rex, told its shareholders this morning it would not trade until Thursday pending an announcement.

It is not clear what impact that will have on the airline.

But it comes as Rex’s chief executive called on Deputy Prime Minister Michael McCormack to take “vigorous, swift and unprecedented action” to help ensure Australia's regional airlines survive the unprecedented challenges posed by the pandemic.

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In the open letter to Mr McCormack, Neville Howell said impact of coronavirus on the airline was “severe”.

He said Rex would soon announce “drastic schedule announcements” including the axing of some routes as it struggled to stay afloat amid a downturn in travel.

Rex has halted trading as it struggles with the impact of coronavirus.

“Rex, like most businesses in Australia is already seeing the severe impact of the drop in business due to COVID-19. Just this past Friday we saw our passenger numbers dropping 13 per cent year-on-year,” Mr Howell wrote.

“One cannot even begin to comprehend what the economic impact will be if the infection rate rises to high double digits.”

Mr Howell called on the government to lift the fuel levy temporarily and suspend costs for passenger and baggage screening.

He also said the government should waive charges for services such as terminal navigation and meteorological services.

However, he warned the coming months would be very difficult for regional operators.

“While these measures will provide a lifeline to regional aviation, they will still be insufficient to allow the regional carriers to survive the next six to nine months due to the very negative cash flow expected,” he said.

“In these unprecedented circumstances they will need additional lines of credit from the banks

which will be almost impossible to obtain.”

Airlines around the world are facing unprecedented challenges due to coronavirus.

Mr McCormack said he was in ongoing discussion with Qantas, Virgin Australia and Rex during their “difficult times”.

It comes as Qantas announced it was slashing its international capacity by 90 per cent, and its domestic capacity by 60 per cent, as it deals with a massive downturn due to the coronavirus crisis.

Qantas said the reduction across Qantas and Jetstar services “largely reflects the demand impact of severe quarantine requirements on people’s ability to travel overseas”.

The cuts represent the grounding of 150 aircraft, including almost all wide-bodied aircraft in the Qantas Group’s fleet.

Earlier, the Sydney-based CAPA Centre for Aviation warned many of the world’s airlines will be bankrupt by the end of May due to the ongoing effects of coronavirus.

It said the aviation industry would be crippled unless government worked quickly to act.

“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” it said.

“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.

“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon.”