Rex rejects idea of government debt guarantee for Qantas

Regional Express (Rex) has responded to a proposed plan by the Australian Government Treasurer, the Hon Joe Hockey MP, to provide a sovereign guarantee on Qantas’s debts and on matters relating to Qantas’s financial predicaments.

Rex says it shares the position of the Regional Aviation Association of Australia (RAAA) that a level playing field should be the rule in the private sector. The carrier therefore believes that the Qantas Sale Act no longer serves any practical purposes and should be repealed by Parliament.

Moreover, states Rex, a debt guarantee to Qantas would create an uneven playing field with regards to regional carriers. The regional carrier believes that guaranteeing Qantas’s debts would place regional airlines in exactly the same position as Qantas claims to be in now, only worse, as regionals would be facing two so-called “government-backed” airlines (using the Treasurer’s term) as competitors.

“Regional carriers are suffering from little or no appetite from financial institutions to extend credit in today’s toxic aviation environment, and do not have recourse to capital from foreign investors or State-owned enterprises. Rex has announced a $50 million capital expenditure budget for this financial year and requires partial financing for this,” the Rex release declares. “As such, for the same reasons that the Qantas Sale Act should be repealed, the debt guarantee should be extended to all regional carriers if extended to Qantas. It is worth pointing out that when the global financial crisis struck, the then Labour Government provided debt guarantees across all financial institutions to avoid distorting the market and providing an unfair advantage to some at the expense of others.”

On the notion that Qantas should be given special consideration due to its contribution to the nation, Rex believes this an insult to all other carriers. “Qantas is not alone in supporting the nation. Rex has serviced the bush faithfully for the past decade since it was founded, with great distinction, reliability and safety in spite of very trying circumstances. The company has supported many worthy causes, community events and individuals in regional Australia, over that period. Qantas has always maintained that every one of its domestic/regional routes is profitable, which means that Qantas has not gone out of its way to service the community, unless they can make money out of it,” Rex emphasised.

According to Rex, both Virgin Australia and Qantas “have raised the spectre of withdrawal/reduction of regional services if they do not get their way”. Rex’s response to this is that the Federal Government should not be making decisions on the assumption that these two carriers are the only viable providers for regional air services. “Rex, by virtue of its superior financial performance and operational efficiency, is consistently benchmarked internationally as one of the two best regional carriers worldwide and stands ready to do its best to fill the void if the major carriers leave a regional city without a service,” the company confirmed.

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