Purchasing Rex is not currently under serious consideration by Virgin Australia, according to Race Strauss, VA’s Chief Financial Officer.
Speaking on a panel at the CAPA Airline Leader Summit APAC in Cairns today, Strauss was asked
by a member of the audience whether VA is considering purchasing the beleaguered Rex.
“We look at Rex like every other investment – through a very disciplined capital management framework,” he said.
“Would it return its cost of capital over the cycle? That is the most important thing.”
Strauss suggested that while Rex’s regional business is a very strong business, the problem in his view is that it “didn’t invest in the fleet, that means that [it has] a significant capital cliff that
whoever takes that business needs to address”.
He admitted that in the short term, that is not something VA is willing to take on.
“Looking at the numbers of that, it will give an airline like us that applies that very disciplined framework an economic issue.”
Strauss said that removing that hurdle would make Rex appealing, but the way it is positioned at the moment put VA out of the running.
