Australia’s Regional Express (Rex) is “cautiously optimistic” that it will return to profitability in its 2023 financial year, amid “positive developments” in its mainline and regional operations.
The forecast comes as Rex widened full-year losses in its 2022 financial year to 30 June, despite a strong rebound in passenger revenue, and on the back of a steep increase in fuel costs.
For the year to 30 June, the airline reported a pre-tax statutory loss of A$68 million ($47.3 million), significantly steeper compared to the previous year’s loss of A$7.2 million.
Revenue for the year rose about 25% to A$319 million, led by a 84% spike in passenger revenue. Freight and charter revenues also rose compared to the previous financial year.
However, much of the revenue increase was offset by a near-threefold rise in fuel costs, at A$65 million. As the airline resumed flying following domestic lockdowns, other operational costs also rose, leading to a 41% year-on-year increase in group expenses.
Rex executive chairman Lim Kim Hai says the airline’s passenger operations “did not start to recover” until February 2022, when much of Australia’s pandemic restrictions were eased.
“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…as well as other supply shocks on the international economy, I am mildly pleased that our performance is not much worse than it is,” Lim adds.
Already the airline is seeing strong demand in the near-term: it reports an 86% load factor on its mainline operations for July, while its regional network is seeing passenger numbers rise above pre-pandemic levels.
In August, Rex says operational results “continue to be encouraging”, with forward booking in its mainline network 30% higher month on month.
Adds Lim: “Barring further external shocks, I am confident that the group will return to good profitability in [fiscal] 2023.”
The airline is also expecting to complete its takeover of resources charter operator National Jet Express. In an interview with FlightGlobal, Lim says the entity, which will give Rex a foothold in the lucrative fly-in, fly-out market, will likely retain its name and fleet.
Lim also confirms that the Boeing 737-800s will remain in the fleet for the foreseeable future, operating mainline domestic routes. The airline was in “advanced talks” with lessors over adding two more 737s in the near-term, to beef up its mainline domestic fleet.