Australian regional airline Regional Express (REX) is reportedly discussing taking some Boeing 737s off Virgin Australia’s hands. REX recently announced plans to ramp up its operations and start flying jets between Australia’s east coast capital cities. It’s a bold plan that so far lacks one core ingredient – jets.
But The Australian Financial Review is reporting that REX is talking to lessors about taking up to ten spare Virgin Australia Boeing 737s.
Opportunism or a nice coincidence?
Following its collapse in April, restructuring, and subsequent sale, Virgin Australia is downsizing to a smaller all Boeing 737 fleet. Presently, the airline has 79 Boeing 737-800s on its books. In the immediate future, the number will drop to around half that. Given that approximately half of Virgin’s 737s are leased, that’s easily achieved by sending the planes back to their lessors.
Meanwhile, Virgin Australia’s flatmate in many an Australian airport terminal, REX, wants to start flying jets on selected Australian mainline routes next year. It’s a big step up for an airline that has previously stuck to flying commuter turboprops to regional centers and bush towns.
While many question the wisdom of REX’s ambitions, it could be a perfect solution for some aircraft lessors. In many cases, the planes wouldn’t even have to move between airports!
Cashed-up REX forging ahead with jet ambitions
Some pundits assumed REX’s foray into mainline routes was contingent on Virgin Australia disappearing off airport departure boards altogether. But that’s not how things have turned out. However, REX has not taken a step back, announcing in June they were looking at a fleet of “five to ten narrowbody jets.”
Right now, REX is flush with cash after pocketing nearly US$40 million in direct government grants this year. That’s a lot of money for an airline that only made a US$12.5 million in the 2018/19 financial year. More than enough to put a downpayment on a few leases in a market oversupplied with aircraft.
Sources in the aircraft leasing industry have told Simple Flying that leasing a 737-800 would cost around US$200,000 per month, depending on the credit quality of the lessee. REX could get a small discount if they took a number of aircraft off the same lessor, pushing down the monthly bill.
Meanwhile, REX told Simple Flying that it hasn’t decided on what aircraft it will use and remains “in active discussions with lessors from all over the world.”
According to The Financial Review, Virgin has flagged the aircraft it wants to keep and is happy for lessors to distribute the surplus planes elsewhere.
Whether the lessors simply need to get a tug and push their planes to the REX gates in the same terminal or fly them around the world to a new home remains to determined. We should find out soon.