Regional Express (Rex) says it will shut down its Regular Public Transport (RPT) air services in all States, except in Queensland from April 6 unless state and federal governments come to the party and underwrite the losses on these services.
Queensland is exempted, the company said yesterday because services in that state are underwritten by the Queensland Government.
“Operations will cease with effect from 6 April 2020 unless the Federal and State Governments are willing to underwrite the losses,” Rex warned.
Investors took note and sent the shares down nearly 20% to 45 cents.
The airline says the decision to close was made at a board meeting on Sunday.
“In addition to RPT services in Queensland, other activities of the Rex Group not to be affected include Ambulance Victoria fixed-wing air ambulance services, charter contracts with mining companies, freight services, and pilot training at its pilot academies in Victoria and New South Wales,” the company said on Monday.
Rex’s Deputy Chairman John Sharp said in Monday’s statement “Rex is supportive of the strong measures taken by the Federal and State Governments such as the shutting of State borders and imposing a lockdown within the States as well as discouraging all non-essential travel. These measures will definitely reduce the number of infections from COVID-19, prevent the health care system from being overwhelmed and save many lives.”
“However, tragically for the airline industry, this means that we can expect the year-on-year reduction of passenger numbers to nosedive to around 80% from the 60% we are experiencing today. There is a tipping point in the airline business beyond which it will no longer be sustainable to operate reduced services.”
