QF have decided to attack Rex's regional market and rex are just...

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Starry001

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28/12/20

16:54

Post #: 49833878
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Originally posted by SouthernLad: ↑

As you have noted Alonso I am not (currently) a REX shareholder. Neither do I hold QAN or have any financial interest in Virgin. You may remember from an earlier exchange I am a shareholder in AQZ and have a keen interest in how they are going to deploy 30 E190’s over the coming year. It’s fair to say I have a degree of scepticism that the REX main trunk services will succeed, however I will be first to congratulate REX management and shareholders if my scepticism is proven wrong. I might even be tempted to jump on board the REX shareholder plane if reports in early March of loads and yield are positive.

To me, forums like HC exist to expand interested parties knowledge and to share opinions that interested parties have. The forum serves limited purpose if all it does is convey cheerleaders commentary without any analysis. When I started reading the REX Notice of Meeting and the Leadenhall report, I was surprised that the conclusions they had reached based on the analyse they had carried out (with full access to REX data and management) didn’t result in some comment or debate on HC on their conclusions. My above posts were an attempt the encourage shareholders to read the document and to then debate whether their conclusion was right and importantly what where the implications of the proposal to existing REX shareholders. For example, assuming the proposal is passed, Leadenhall have determined that REX shares are worth less than the $2.06 they closed at last Thursday. Isn’t that a view that is relevant to all existing REX shareholders? Who was aware of this until I started posting?

Thanks Alejandro1 for your comments. Agree timing is a huge factor that may well help REX get an established foothold with a very competitive cost structure. The low amount of flying that many Australians have done in 2020 also creates an opportunity for a reset in peoples ‘go to’ airline. I disagree that QF is wounded - they raised $1.5 billion mid year to see them through the COVID crisis. To them $150m is not a significant amount, especially if their accountants do the math on the return on investment that forcing REX to retreat will achieve. Likewise, VA now has access to capital to enable Bain to transform the airline, get it producing a positive cash flow and then on-sell. Bain will be very determined to ensue that VA is not destroyed. I would also point out that QF launching a number of regional routes in direct competition to REX could well result in the existing profitable REX business being under a far greater challenge to keep delivering high profits. This is classic behaviour of a competitor to attack on many fronts to put the incumbent under pressure.

I’ve done a bit of web surfing this afternoon. Admittedly 1 March is still two months away but unless REX is looking to sell every seat between MEL and SYD (and vice versa) at $79, it doesn’t look like first day sales have been phenomenal. VA looks to be matching REX pricing but QF only has more expensive fares available. Does this suggest VA sees REX as a threat but QF doesn’t (to the same extent anyway)?

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QF have decided to attack Rex's regional market and rex are just letting them take their market share. It might be their undoing.

REX Price at posting: $2.07 Sentiment: None Disclosure: Held
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