15/07/2022 - 12:51

Rex takes flight with $48m FIFO buy

15/07/2022 - 12:51

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Rex has acquired the fly-in, fly-out arm of Cobham Aviation for $48 million, a move it hopes will help it become a premier operator in the lucrative resources sector.

Rex takes flight with $48m FIFO buy
Rex confirmed this morning it had inked a sale and purchase agreement to acquire National Jet Express, the entity responsible for servicing Cobham’s FIFO contracts.

Regional Express has acquired the fly-in, fly-out arm of charter airline Cobham Aviation for $48 million, a move it hopes will help it become a premier operator in the lucrative resources sector.

After several months of media speculation, Rex confirmed this morning it had inked a sale and purchase agreement to acquire National Jet Express, the entity responsible for servicing Cobham’s FIFO contracts.

It comes 48 hours after Rex confirmed it was one of the parties involved in the acquisition process and was entering a trading halt.

Cobham currently ranks as one of the country’s largest aviation companies, with eight Bombardier Q400 turboprops and six Embraer E190 jets and annual revenues in the order of $142 million.

NJE provides FIFO services for the mining and oil and gas sectors in Western Australia and South Australia, with freight services operating nation-wide and an air charter service in Papua New Guinea.

Rex is already an established provider in its own right, operating a fleet of 66 aircraft travelling to more than 60 destinations nation-wide, its own Flight Training Academy and FIFO services subsidiary Pel Air.

But Pel Air accounted for less than one per cent of the FIFO market, which is currently dominated by industry giants Qantas and Virgin.

Deputy chair John Sharp told Business News the acquisition would aid Rex Group’s efforts to change that, delivering greater competition for mining companies and a more modern, fuel efficient aircraft.

“It always seemed to us to be a very stable market with very steady growth,” he said.

“When the opportunity arose with the sale of Cobham, we believed it was the perfect opportunity to expand into the market.

“This is obviously a very big expansion that gets us into a market and one that shows potential for considerable growth.

“We see this as an industry that, in time, we can expand, grow the business and hopefully grow the profits.

“As a result of entering this market, we will create a competitive environment where mining companies have got choice and they can also enjoy competitive pricing; because that’s what Rex has done with its regional airlines. 

“Now in the domestic airline business, we’ve come in with much lower prices than its competition and that's been good for consumers in that space. 

“We think Rex’s entry into the fly-in, fly-out market will be very good for mining companies because it will increase competition.

“This expansion is quite a big step for us, but it's certainly a continuation of the expansion of the company.”

Rex’s executive chair Kim Hai Lim said the acquisition meant Rex would have a FIFO arm that was unparalleled in Australia, becoming a partner of choice for resource companies which have been crying out for a provider able to minimise its environmental impact.

In the announcement this morning, Rex flagged its intention to invest and expand beyond its traditional bases of WA and SA into the Northern Territory and Queensland.

The completion of the sale remains subject to regulatory approvals.

The move comes after Rex expanded into the domestic market last year and moved into international operations via an agreement with US-based Delta Airlines.

Shares in REX were up 2.88 per cent this afternoon to trade at $1.25.

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