THE not-so-surprise confirmation that Regional Express would acquire the fly-in fly-out (FIFO) operations of Cobham Aviation followed rumours earlier in the week about the deal, which was part of a tender process in which the UK-based private equity owners of Cobham had placed the business on the market some months ago. Rex will acquire 100% of National Jet Express (NJE), the FIFO division of Cobham which also has significant freight operations between Australia’s major east coast capital cities.
An ASX announcement confirmed some financial details of the deal, with Rex itself to pay half of the $48 million purchase price and the remainder to come from the airline’s joint venture partners – who convolutedly include the carrier’s Executive Chairman and major shareholder, Singapore-based Lim Kim Hai. Lim and his fellow private investors have agreed to convert their debt funding into shares in National Jet, so that ultimately Rex and the joint venture backers will each hold 50% of the acquired operation.
National Jet Express recorded $142 million in revenue for the 2021 calendar year – about half of Rex’s pre-pandemic sales, meaning the overall deal is likely to initially boost its TTV by about 50%.
Lim was enthusiastic about the deal, saying he believed FIFO services were likely to experience strong growth in Australia. He also contrasted the National Jet Express fleet of Bombardier Q400 turboprops and Embraer E190s with the “predominantly 40-year-old Fokker 100s used by the other major FIFO carriers,” suggesting that key resources customers were likely to gravitate towards the Rex offering because of its lower carbon footprint and cost efficiencies.
He also flagged ongoing expansion of the National Jet operation, saying the joint venture would “invest in modern aircraft and technology to enable NJE to expand from its traditional bases of WA and SA and bring our unique brand of FIFO services also to Queensland and the Northern Territory”.
The acquisition is subject to regulatory approvals including a tick from the Foreign Investment Review Board.