http://www.orientaviation.com/section.php?currenyIssue=I20070125140145-mA6W4¤tSection=latestnews¤tArticle=A20070202130205-W50a2&
MSN Philippines News, 20 Sep 2009
Singaporean boss pilots
Australian carrier Rex to profit
Singaporean entrepreneur Lim Kim Hai is the first to admit that
glamour and prestige did not even figure when he made the decision
to invest in a regional Australian airline in 2002.
Seven years after Lim's big gamble on Rex, the domestic carrier
born out of the collapse of Ansett is turning in healthy profits
despite the dismal state of the global aviation industry.
"Glamour doesn't sell very many
seats and glamour doesn't produce profits," he told
AFP in an interview in his Singapore office, from where he runs the
airline's headquarters in Sydney largely by remote control.
"If you are in it for the glamour, you will be in big trouble,"
said Lim, an engineer by training who serves as the airline's
executive chairman.
Trouble was exactly the word to describe the state of Rex -- short
for Regional Express Holdings -- which lost 35 million Australian
dollars (30 million US) in its first year of operations in 2002 and
needed a further capital injection to stay afloat, he said.
Lim and a Singaporean partner pumped another five to six million
dollars into Rex, well aware of the odds stacked against them and
the high probability of never seeing their money again.
Due to a confidentiality clause, Lim cannot reveal the amount he
initially invested in Rex but says he is currently the biggest
shareholder with a stake of over 20 percent in the publicly listed
carrier.
In the first year of Lim's tenure
running Rex, he turned the loss-making carrier around with a profit
of one million dollars in the year to June 2004 as he initiated new
practices to curb wastage and inefficiencies.
And Rex has never looked back
since Lim took charge, churning out profits every year through to
the current fiscal period ended June with profits down just 5.6
percent to 23 million dollars.
"Even though our profits were reduced, it's quite comforting in
this environment," said Lim.
"Obviously we know how severe the recession is... So being able to
overcome this year of really, really negative impact with
relatively minor damage, I think it is quite satisfactory," he
said.
Aviation analyst Peter Harbison said Lim injected a new management
style into Rex, making the carrier a rare success story in a
country where the airline industry has had a list of notable
failures.
"He applied a lot of business sense and he brought solid business
discipline," said Harbison, who is with the Sydney-based Centre for
Asia Pacific Aviation consultancy.
Even Lim admits he did not give himself much of a chance in saving
the carrier from the brink of collapse, but said giving up without
even trying was not an option.
"The commonly accepted view at that time was the airline would last
only six months," said Lim, who will turn 52 next month.
"We knew the difficulties and the decision to carry on was not so
much not knowing the facts but more of saying here is an airline
that is losing money but it is operationally doing okay.
"The airline was doing about 50,000 flights a year... So on the
operational part of it, things were not broken, but on the
profitability part, it was losing money quite substantially."
With the second round of capital injection coming entirely from him
and his Singaporean partner, Lee Thian Soo, 54, Lim decided it was
time for a fresh perspective on how Rex should be managed.
Lee is a Rex director and has other business interests in Southeast
Asia including a medical equipment supply company and a mobile
gaming firm.
"My business partner and myself agreed we will give it one more
try. We may be foolish but we will try it one more time," Lim
said.
"We dug into our pockets and financed it again and since every cent
that is in the company comes from us now, we will do it totally our
way."
The carrier has a fleet of 88 planes comprising mainly Saab 340
34-seaters plying routes in southeastern Australia, connecting the
country's main cities to rural towns.
A one-way ticket is about 130 dollars on average, Lim said.
He says he makes just four trips a year to Sydney for the company's
board meetings and maintains that running Rex from his Singapore
office does not put him at a disadvantage.
"I think with technology today, it's very, very easy," said Lim,
who gets up to 300 emails daily from his key management
staff.
"We keep each other in the loop. All the time, I am getting
information from everywhere so I am very connected virtually and
have a good idea of what is happening."
Having an engineering background did help him in making the crucial
decisions to turn Rex around, said Lim.
Rex's corporate website says Lim started his career as a defence
engineer specialising in underwater warfare before he entered the
corporate world.
"As an engineer, we are trained to think very, very rigorously and
logically," he said. "So this training carries on into the business
and I approach any issue (as) an engineer."
If he had known everything he knows today, Lim admits, he probably
would have had nothing to do with the industry regardless of the
prestige and glamour that comes with owning an airline.
"In hindsight, it was totally stupid and naive. We didn't know how
treacherous airlines were," said Lim.
"I certainly wouldn't do it again. It is just too tough."
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