Hi All
I know that I'm late for this submission but I'm new to the forum and thought I'll submit something regardless.
The stock that I'm going with is Regional Airlines(REX). The reasons are stated below:
- A healthy CAGR in Revenue of 6% over the last 4 years.
- Lack of competitors in the space, over 16 regional airlines have gone bankrupt since 2001 which has allowed REX to maintain good margins.
- I have analysed the routes that REX operates in; 66% of routes are ones with REX as the sole operator with an average ticket price of $ 570. 19.6% of the routes with REX being one of 2 operators and 14.2% of routes have REX as on one of 3 operators. While net margins are slightly better than Qantas (6% vs 5%), the P/E(TTM) is only 7.14 compared to 13 for Qantas.
-Having personally flown REX for work several times, I do speak from experience when i say that there are usually no alternatives to the routes they fly to and the ticket fares are not cheap.
- Also for FY19, REX stands 2nd in On-time departures and the cancellation rates are lowest in the industry.
- The low debt will provide wriggle room when the economy slows, Total debt currently stands at about $ 8 million , debt to equity ratio of 3.9.
- Own 2 pilot training academies, the Australian airline pilot academy, started in 2007 and the second one acquired just this quarter; ST aerospace academy.
- Also own 100% of Pel-Air which bids on miscellaneous services such as Air Ambulance