Australian regional airline Rex approves plans for big-city operations

* Rex would compete against Qantas, Virgin Australia

* Will raise at least A$30 mln for the initiative

* Flights with 5-10 jets could start March 1, 2021

SYDNEY, June 29 (Reuters) - Regional Express Holdings Ltd (Rex) said on Monday its board had approved plans to raise at least A$30 million ($20.57 million) to launch jet services that would compete against Qantas Airways Ltd and Virgin Australia Holdings Ltd.

Rex, a regional airline that operates turboprops, would aim to have a fleet of five to 10 jets based in Sydney and/or Melbourne to service flights between Sydney, Brisbane and Melbourne from March 1, 2021, pending funding and regulatory approval, the airline said in a statement.

It will raise at least A$30 million through one or more of a sale-and-leaseback arrangement, equity injection and convertible notes, Rex said, adding that lessors were willing to provide funding covering 15 of its fleet of unencumbered Saab 340 turboprops.

“Rex’s domestic operations will be priced at affordable levels but will also include baggage allowance, meals on board and preassigned seating,” Rex Deputy Chairman John Sharp said. “Lounge membership will be available for subscription. It is the hybrid model that Rex has so successfully pioneered over the last two decades for its regional operations.”

Rex currently operates on less competitive regional routes like Sydney-Wagga Wagga and Adelaide to Port Lincoln using a fleet of ageing Saab 340 turboprops with 30 to 36 seats.

Its announcement of board approval to launch the jet flights came after U.S. private equity group Bain Capital on Friday agreed with Virgin Australia’s administrator to buy the country’s second-biggest airline.

Rex said it has also signed a non-binding memorandum of understanding with turboprop maker ATR, a joint venture between Airbus SE and Leonardo SpA, to study the eventual replacement of its Saab 340 fleet with larger ATR42 and ATR72 planes. The MOU includes plans to explore financing solutions, such as with ATR’s partner export credit agencies. ($1 = 1.4584 Australian dollars) (Reporting by Jamie Freed; Editing by Kim Coghill)