Tuesday, March 21, 2023

Stuck in a time warp with Rex’s John Sharp


Stuck in a time warp with Rex’s John Sharp

Joe AstonColumnist

Regional Express, or Rex, raised $150 million in November 2020 to lease old Virgin Australia Boeing 737s, launch flights between Sydney, Melbourne and Brisbane, and capture 37 per cent of the domestic aviation market by 2025.

More than two years in, Rex has 6 per cent of the market.

Rex Airlines deputy chairman John Sharp now contends that “we don’t get particularly caught up in market share”.

John Sharp on his 15-acre NSW Southern Highlands estate, tended to by five full-time gardeners. Janie Barrett

“Whether you’re operating profitably, that’s what’s relevant.”

Rex posted a net loss of $17 million for the half to December 31, a period in which Qantas and Virgin generated record profits. It must be rather tricky to operate profitably as a trunk route airline without any passengers.

This logical contortion is just one of many outlandish disclosures by Sharp in an interview, published on Friday, at his NSW Southern Highlands property – specifically the conservatory of his 15-acre garden, attended by five full-time gardeners.

Momentously, Sharp recently introduced one of his personal favourites, the pork schnitzel sandwich, to Rex’s in-flight menu – apparently no Jews or Muslims fly Rex, which makes it far easier to maintain market share in the single digits – along with the Country Women’s Association recipe for scones with jam and clotted cream.

“If you go the pub or the RSL, these are very popular things,” he enthuses, segueing into an evocation of the sausage roll’s broad appeal at the rugby.

No “fancy words” like on the Qantas menu – Sharp recoils at the faintest scent of tamarind or harissa or, God forbid, white miso – just: “Nice comfort food.” White people food.

It’s a red flag when your deputy chairman inserts himself in menu planning. Sharp firing up the pie warmer – that’s what Rex investors really need, isn’t it? Maybe he should DJ the lounge playlist too, and they’ll have The Very Best of John Williamson on infinite loop.

It’s another red flag when some old duffer from Young attempts to overlay his Menzies-era landed gentry sensibilities on a product that must appeal to today’s capital city road warriors in order to achieve commercial scale.

There is almost no crossover between country pub customers and regular Sydney-Melbourne flight passengers, nor of their tastes. The latter are the source of the vast preponderance of domestic aviation revenue and are pretty comfortable with Asian culinary words. Shock, horror, some of them are even Asian themselves!

Sharp is unperturbed that not a single woman sits on Rex’s board or its executive management team. There are no vacancies, Sharp says, although Rex did once approach a female director to join its board who “in the end didn’t take the offer”. Who could blame her?!

Can you imagine the executive search firm’s brief? Must be attended by a large personal retinue of gardeners. Must prefer schnitzel to shawarma. Must know the CWA recipe for scones. Must bring scones and serve them at each meeting. Must tell the blokes they’re geniuses. Did Rex approach Esme Watson from A Country Practice?

Gender diversity isn’t the only corporate governance principle Sharp is dismissive of. He has served on Rex’s board for 19 years and rejects the merits of board renewal. “If you’re performing and doing the job, why would you go?” A self-serving argument; how out of character!

In truth, Sharp barely adheres to the mandatory elements of corporate governance, let alone the discretionary ones. In May 2020, he announced in this newspaper that Rex was raising $200 million to lease 10 jets and launch major city-to-city flights. Rex had not advised the Australian Securities Exchange of these intentions so the stock had to be halted and the ASX had to be placated with a promise that the board (read: Sharp) would receive further legal training in continuous disclosure compliance.

In his own eyes, Sharp is still performing. His supreme fitness for high office is beyond question. He’ll be wheeled out of the (Tyrannosaurus) Rex boardroom 20 years from now – and not before! – like Sumner Redstonedrooling onto his Ralph Lauren slippers.

Sharp claims his mother taught him humility. Who taught him time travel to the 1950s?

Rex’s market share is stuck at 6 per cent because only 6 per cent of Australians are stuck in a time warp – a time warp of scones and Aryan sandwiches, of female-free decision-making and life tenure. Rex is the Spirit of Bygone Australia. It may be time to broaden its appeal.

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Joe Aston has helmed The Australian Financial Review's Rear Window column since 2012. He is based in Sydney. Connect with Joe on Facebook and Twitter.Email Joe at joe.aston@afr.com