Rex - Regional Express (ZL, Wagga Wagga) is set to take the plunge and enter Australia's mainline domestic market after the carrier's board voted in favour of the move.

A stock exchange filing said that since the carrier's original announcement regarding the proposal back in May, several external parties have shown a strong interest in assisting the airline in raising the AUD30 million Australian dollars (USD20.6 million) needed to kick start the launch of domestic flights. Lessors have also shown a willingness to provide AUD30 million for 15 of Rex’s fleet of 60 unencumbered Saab 340s. As such, Rex's board has now concluded that it will be able to meet the minimum funding benchmark which will take place through one or more of the following avenues: sale-and-leaseback arrangement, equity injection, and convertible notes.

"Discussions with interested parties including lessors and private equity funds have not been finalised and the Board will reconvene within three weeks to decide on the structure of the fundraising and the maximum amount that will be raised," it said. "Where necessary, the Board will seek shareholder approval for the fundraising."

Rex management has therefore been given the green light to prepare for the induction of five to ten narrowbody jet aircraft to be based out of Sydney and/or Melbourne to service the golden triangle (Sydney Kingsford Smith-Melbourne Tullamarine-Brisbane Int'l). Subject to fund availability and regulatory approval, operations are expected to start on March 1, 2021.

In the meantime, Rex has also entered into a non-binding Memorandum of Understanding with Avions de Transport Régional wherein the Franco-Italian manufacturer will work with the carrier in finding sales/lease-back opportunities for its fleet of fifty-five Saab 340s (one Saab 340A, thirty Saab 340Bs, and twenty-six S340B(Plus)) and will initiate studies over the eventual replacement of the Saabs with newer ATR42/72 turboprops. ATR will assist in finding flexible financing solutions for any potential agreement. Other aspects include ATR setting up a flight-training simulator in Sydney.

“Rex has the biggest regional network in Australia and we are the only carrier in Australia that has been able to successfully navigate the turmoil and shocks over the last two decades with uninterrupted operational profits since 2003,” Rex’s Deputy Chairman, John Sharp, said in a statement. “With Rex’s expansive regional network of 60 destinations, existing infrastructure in all these capital city airports, superior efficiencies and unbeatable reliability, it will simply be an incremental extension for Rex to embark on domestic operations especially since one out of every ten flights in Australia was already a Rex flight during the pre-COVID days. Leveraging on Rex’s existing infrastructure and overheads, our cost base for the domestic operation is estimated to be at least 35% below Virgin Australia's (pre-COVID) with 50% lower additional headcount needed proportionately.”