Australia’s third domestic airline, Regional Express Holdings (Rex), has posted a financial year after-tax loss of A $ 46 million ($ 31.7m). In the 12 months to June 30, 2022 (FY22), Rex increased its total revenue to A $ 319.2 million ($ 220m), a 25% increase from last year.
However, Rex’s fuel expenses soared from A $ 25 million ($ 17.2m) to A $ 65 million ($ 45m) and other costs from A $ 253 million ($ 175m) to A $ 326 million ($ 225m). Consequently, its after-tax loss of A $ 3.9 million ($ 2.7 million) in FY21 was thoroughly eclipsed by this year’s A $ 46 million. Its statutory losses before tax climbed from A $ 7.2 million ($ 4.96m) to A $ 68.3 million ($ 47.1m).
Better times ahead for Rex
Rex is looking to add two more Boeing B737-800s to its domestic mainline fleet, which includes the Melbourne-Sydney-Brisbane Golden Triangle routes. Photo: Rex
In his statement, Rex executive chairman Lim Kim Hai said the “lingering impact of COVID-19 meant that passenger services did not start to recover until February 2022.” Before the pandemic restrictions were largely removed in early 2022, Rex’s domestic Boeing B737 and regional Saab 340 operations were either completely suspended or greatly reduced. The chairman added:
“Considering that COVID devastated practically three quarters of the financial year and the war in Ukraine starting in February, causing crude oil prices to skyrocket by over 70%, peaking at a near-record high of A $ 174 [$120] per barrel in June 2022 as well as other supply shocks on the international economy, I am mildly pleased that our performance is not much worse than it is. “
Globally, airlines are cautious about making profit forecasts, with many simply saying the operating environment is too uncertain for them to be meaningful. Lim noted that the operational statistics for the new financial year have “been very encouraging and indicate we have turned the corner.” Rex has formed partnerships with Australia’s major private and corporate travel agency groups, which has contributed to the strong start to FY23. The airline also expects a further boost from its proposed commercial tie-up with Delta Air Lines, to include interline ticketing and baggage services.
Noting on Friday that oil prices have retreated to A $ 130 ($ 90) per barrel in the most recent week, Lim said:
“We are continuing to see very strong bookings in August with the past week showing a 50% increase over the same period in July last month. Barring further external shocks, I am confident that the Group will return to good profitability in FY23.”
While the losses have accumulated, Rex has distinguished itself by leading the way in on-time departures and cancellation rates. Based on Australia’s Bureau of Infrastructure and Transport statistics, Rex had the highest on-time departures at 85.4% of flights, placing it first for the third consecutive year. Rex also had the lowest cancellation rate of 2.3%, marginally ahead of Virgin Australia Regional with 3.3%, but streets in front of Qantaslink at 8.4% of services.
Rex is doing well on domestic and regional routes
Rex’s turboprop operations performed exceedingly well in July. Photo: Regional Express / Rex
In July, the domestic jet operations, where Rex competes head-on with Qantas and Virgin Australia, operated with an 86% load factor, while regional turboprop services exceeded pre-COVID passenger numbers. It operated 246 weekly return services to major regional centers in June, which jumped 35% to 315 services in July. This month Rex received its seventh Boeing B737-800 and said it’s in “advanced discussions to lease another two more aircraft.” Earlier this year, it added another Saab 340B (Plus), bringing its fleet of Saab 340s to 61, and announced a new Boeing flight simulator center to be built in Sydney.
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