Regional Express (Rex) has slumped to a full year net loss for the first time in 13 years as non-cash charges due to the end of a defence contract, currency movements and weaker passenger demand pushed the airline into the red.
The company reported a statutory net loss of $9.56 million in the 12 months to June 30 2016, compared with a $6.67 million net profit in the prior corresponding period.
Rex said it booked $15 million in impairment charges in 2015/16 – the bulk of which came in the first half after the airline lost a Defence contract – while there was a 10 per cent deterioration in the Australian-US dollar exchange rate that impacted the company’s US dollar denominated expenses.
Revenue rose 2.2 per cent to $261.91 million, Rex said in a regulatory filing to the Australian Securities Exchange on Wednesday.
“The Group had to make some non-cash writedowns due to the cessation of a Defence contract which resulted in the first full year statutory loss Rex has reported since FY02/03,” Rex chief operating officer Neville Howell said in a statement.
Excluding those one-off charges, operating profit before tax was $4.3 million, down more than half from $9.3 million in the prior year.
Rex executive chairman Lim Kim Hai said in the company’s annual report the past financial year had been “very challenging”.
Further, Lim said the financial year ahead was “fraught with uncertainties both internationally and within Australia”.
Rex said in a slide presentation accompanying its financial results the “continued deterioration” of the regional economy had resulted in $1.2 million less passenger revenue due to poorer yields in the airline’s traditional network.
In terms of the year ahead, the company said an uncertain economic growth outlook and a declining Australian dollar would weigh on earnings.
On a positive note, Rex’s West Australian operations, which began in February, would contribute about nine per cent of total passenger numbers, while the lower oil prices would result in a $6.5 million reduction in the airline’s fuel bill.
“Rex group expected to post stronger performance in FY 17 compared to prior period,” Rex said.
However, the airline said it was unable to put a figure on the improvement in profitability at this time.