Ann: Rex Enters Voluntary Administration, page-12

This debacle is the perfect example of why certain management teams/CEOs/Boards are only useful at certain stages of a company's life cycle: seed stage, start up stage, growth stage, maturity stage, and renewal (or decline) stage.

In this case the management team was filled with similar thinking "yes men" who didn't realise that their belief that REX was still in the growth stage was the incorrect one. Instead of focusing on keeping the existing business churning along steadily, the management team decided to compete with the large airlines on the main thoroughfares with new expensive aircraft, whilst at the same time being completely oblivious that the company was already progressing from the maturity stage to the renewal or decline stage.

The proper decision should have been to provide a renewal of the regional air services, focusing on new growth areas, and to keep the business small and sustainable and steadily ticking along. The biggest irony of the whole thing is that the ONLY part of airline revenues which would foreseeably be unaffected by downturns would be those servicing population centres in regional Australia. Airlines have been proven many times over to be a poor investment for shareholders, so REX could have been the stand out airline which was less prone to consumer behaviour in tough economic times.

And yet, as usual, the highly paid executives have managed to cock it up. Again.

Fantastic.