The Rex (ASX: REX) share price has been last year’s big winner in the beaten down travel sector. Can the airline fly high in 2021?
The post Does the Rex (ASX:REX) share price have enough tailwind to keep soaring in 2021? appeared first on The Motley Fool Australia. –
The Regional Express Holdings Ltd (ASX: REX) share price has been last year’s big winner in the beaten down travel and transportation sectors, returning 75% over a year for shareholders.
So, can the Rex share price keep its momentum and fly to even greater heights in 2021?
What happened to Rex in 2020?
The regional airline was brought to its knees back in March as passenger numbers plummeted 90%. Rex subsequently announced a loss after tax of $19.4 million on a turnover of $321.8 million for financial year 2020.
However since then, things have been looking up.
In early December, the Rex share price smashed its 52-week high of $2.50. This came after the company announced it will break out of its regional roots and start servicing the “golden triangle” route starting in March 2021.
The Golden Triangle refers to the Sydney-Melbourne-Brisbane routes – among the busiest in the world.
Analysts see the entry of Rex into the domestic capital cities market as one of the biggest shake-ups in Australian aviation history. To celebrate the new route launch, Rex offered 100,000 promotional fares for the Sydney-Melbourne services.
All eyes on the annual general meeting (AGM)
In order to fund this expansion, Rex said back in May that it was in discussions with several interested potential parties.
Leading the pack was Asian investment firm PAGAC Regulus Holding Pte Ltd (PAG), which eventually signed an agreement with Rex in November 2020 to provide it with $150 million worth of fresh capital.
Rex had to jump a few regulatory hurdles to get its hands on the funds, the first being an approval it received from the Foreign Investment Review Board (FIRB).
In mid-December, the Australian Securities and Investments Commission (ASIC) declared that Rex could not utilise exemptions for reduced disclosure, and has ordered the airline to issue a full prospectus in order to raise funds from investors.
Finally and most importantly, Rex will need to get shareholder approval for the $150 million funding arrangements from PAG, which which could see it eventually own half of Rex.
Rex’s AGM will take place on Friday 29 January 2021. We will know by then whether shareholders have voted for or against the proposed funding from PAG.
If approved, Rex will commence its flights between the three Australian capital cities on 1 March 2021, with the maiden voyages being between Sydney and Melbourne.
About the Rex share price
As mentioned, the Rex share price has gained more than 70% in one year.
It has been in business for 18 years, founded by former Ansett Australia employees who acquired Hazelton Airlines and Kendell Airlines and merged the two companies into Rex Airlines.
The Rex share price is currently trading up 1.94% at $2.10. At this share price, the airline commands a market cap of $227 million.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.