'Poking the bear': Regional airline Rex using downturn to challenge Qantas, Virgin

As Virgin Australia shrinks to survive the pandemic, tiny Regional Express Holdings Ltd (Rex) is picking up some of its larger rival’s planes and staff on the cheap - and attracting investors who see profit in the high-stakes plan. A Boeing Co 737 leasing deal announced on Wednesday is the latest step in Rex’s gamble to take on Qantas Airways and Virgin starting with Sydney-Melbourne, the world’s fifth-busiest domestic route before the pandemic. The move by Rex, until now an operator of ageing 30-36 seat turboprops, is a rare example of an airline expanding into new markets as the pandemic cripples air travel. Shares in Rex and charter operator Alliance Aviation Services Ltd have risen this year as investors look for counter-cyclical growth stories. Rex’s shares reached a one-year high on Thursday. Rex entered the pandemic with a licence, little debt, a paid-off fleet and no planes on order. Last week it signed a term sheet with Asian investment firm PAG Asia Capital for up to A$150m of convertible notes to pay for service to big cities, funds Rex Deputy Chairman John Sharp said will be kept separate from its government-subsidised regional operations.<br/>