Rex set to land FIFO provider National Jet Express for $48m

Independent airline Regional Express Holdings (ASX: REX) has signed an agreement to acquire National Jet Express (NJE), a leading provider of fly-in fly-out (FIFO) services in Western Australia and South Australia, for roughly $48 million.

Subject to regulatory approval, the merged group would have a "simply unparalleled" FIFO arm according to claims from Rex executive chair Lim Kim Hai, with plans to grow its footprint to Queensland and the Northern Territory in tandem with investments in modern aircraft and technology.

Lim, a 17.25 per cent shareholder in Rex, will stump up some of the funds from his own savings with those of joint venture partners, with the other half coming from the airline's cash and a $15 million convertible note facility from investment firm PAG. The debt funding will be converted into new shares in NJE to reduce Rex's debt burden.

NJE is the regional service arm of Adelaide’s Cobham Aviation Services (formerly known as National Jet Systems), and already operates freight services from Sydney to Adelaide, Brisbane, Melbourne and the Gold Coast, as well as air charter services in Papua New Guinea.

“I believe that NJE’s modern aircraft fleet and its long-term customer relationships overlayed with Rex’s proven record of safety, reliability and cost efficiencies would propel NJE to be the premier FIFO operator in Australia,” Lim said.

“NJE will naturally be the partner of choice for resource companies all over Australia who have been crying out for so long for a FIFO provider that is able to address their triple priorities of minimal impact on the environment, comfort and safety of its staff and reliability of service."

Rex is Australia’s largest independent regional and domestic airline operating a fleet of 60 Saab 340 and six Boeing 737-800NG aircraft to 58 destinations throughout all states in Australia.

Founded in 2002, the Rex Group also comprises wholly owned subsidiaries Pel-Air Aviation (air freight, aeromedical and charter operator) and two pilot academies in Wagga Wagga, NSW and Ballarat, VIC.

NJE was initially established to operate charter and scheduled services on behalf of National Jet Systems, and in the 2021 calendar year it was cruising with $142 million in revenue.

“FIFO services are expected to experience strong growth in Australia, and this acquisition positions the Rex Group to participate in this booming sector,” Lim Kim Hai added.

“With this acquisition, Rex will have a FIFO arm that is simply unparalleled in Australia. NJE has a completely modern fleet comprising eight Bombardier Q400 turboprops and six Embraer E190 jets for FIFO work.

“Both aircraft types are fuel efficient, have enhanced operational reliability and low carbon emissions when compared with the predominantly 40-year-old Fokker 100s used by the other major FIFO operators.”

In June, Rex announced it had signed multiple agreements with travel agencies, including Flight Centre (ASX: FLT), Helloworld (ASX: HLO), and Webject (ASX: WEB), in its bid to double its annual domestic jet revenues in FY23.

The news followed an update from Rex that it was increasing its weekday return services to 11 regional cities in New South Wales, Victoria and South Australia from 4 July by up to 67 per cent.