Rex pleads for government help in face of coronavirus downturn

Regional airline Rex has urged the government to enact a range of measures to ensure regional aviation isn’t destroyed.

A Rex Saab 340 aircraft. Picture: Supplied

Regional Express Airlines is in a trading halt pending an announcement to the Australian Securities Exchange on Thursday that’s expected to reduce flying by 25 per cent.

The trading halt was requested on Tuesday morning, following the release of an “open letter” to the Deputy Prime Minister Michael McCormack by Rex chief operating officer Neville Howell.

The letter highlighted the collapse of UK regional carrier Flybe, and urged Mr McCormack to take “vigorous, swift and unprecedented action” to ensure that regional aviation in Australia was not destroyed by the impact of the coronavirus.

Mr Howell said the Rex board had initiated a suite of measures to reduce costs and conserve cash and would soon announce “drastic schedule reductions as well as dropping some routes altogether”.

“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.”

Among the measures Rex wanted the federal government to take, included a waiver of all Airservices charges for services like terminal navigation, fire fighting and meteorological services.

Mr Howell said the fuel levy should also be lifted for the time being and airports should suspend all passenger and baggage security screening costs.

“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.”

To that end, Rex also called on the federal government to provide “a sovereign guarantee for any new line of credit or banking loan taken out, to enable regional carriers to continue operations through to the end of the pandemic”.

“We look forward to your immediate attention on this matter,” signed Mr Howell.

On Monday, Mr McCormack said he was having ongoing discussions with airlines including Qantas, Virgin Australia and Rex.

“These are difficult times. We will get through them but we need to get through them in a calm and rational manner,” Mr McCormack said.

Since January 24, when the Chinese government banned outbound group travel, Rex shares have slumped from $1.16 to 83 cents, a three-year low.

The airline operates a fleet of 43 Saab 340 aircraft with an average age of 25-years.

Last month Rex announced it would pull out of routes to Ballina and Kangaroo Island because it was unable to compete with Qantas.