Regional Express (REX) has been sniffing around the Northern Territory as uncertainty continues over the future of Airnorth following its parent company filing for bankruptcy protection in the United States.
Airnorth has been scooting around the Top End for several decades and services townships throughout the Northern Territory. Additionally the airline runs flights from Darwin to Dili, down the West Australian coast, the Queensland coast, and links Toowoomba with Melbourne.
The Darwin based airline carries some 300,000 passengers annually using a fleet of 12 Embraer jets and five Fairchild Metro turboprops.
In 2015, a division of Houston based Bristow Group brought Airnorth. Unfortunately for Airnorth, Bristow began to suffer financial embarrassments in the United States. It filed for bankruptcy protection in May 2019, leaving Airnorth in a precarious position.
The airline is up for sale via auction. First round bid offers are due this week. Allied Capital is assisting Bristow with the sale.
There was some speculation REX is interested. The Financial Review claims REX wanted to talk to Airnorth and Bristow late last year, but has since “moved on.”
But more recent media reports indicate that may not be the case. In June 2019, John Sharp, REX’s Darwin bound deputy chairman claimed REX had been approached by “concerned (Airnorth) stakeholders to ensure the long term viability of regional air services in the Northern Territory”.
REX has a strong presence in western Queensland, including flying on many subsidised regulated passenger routes. They’ve also made a go of flying in regional Western Australia, taking over routes to Esperance and Albany Virgin Australia abandoned.
Airnorth currently code-shares with Qantas on several of its routes. REX has an interline agreement (of sorts) with Virgin Australia. A takeover of Airnorth by REX would have implication for that.
Whether REX has the financial muscle to take over Airnorth completely is an interesting question. REX makes a profit, but not a big one. Alternatively, it could cherry pick routes. It could see REX pick up a jet fleet.
Australian aviation is littered with the corpses of commuter airlines that failed to transition successfully to jet fleets, moving away from their core competencies of serving small communities with turbo props.
The REX board who have successfully steered the Wagga based airline through the perils of Australian commercial aviation for a couple of decades are no doubt finely attuned that that.