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Rex issues dire profit warning

written by australianaviation.com.au | February 10, 2014
REX has issued a dire profit warning for the 6 months to December 31. (Andrew McLaughlin)
REX has issued a dire profit warning for the 6 months to December 31. (Andrew McLaughlin)

Regional Express has announced that its financial results for the first half of the 2013/14 financial years would be “significantly deteriorated.”

In a statement to the ASX,  chief operating officer Garry Filmer said the forecast profit before tax (PBT) for the first half of the financial year would be approximately 40 per cent of that achieved in the same period last year.

“Leisure and other discretionary travel registered a slight decline, however it was business related travel that really plummeted, continuing the trend from the end of the previous financial year,” Filner said, adding that; “The entire aviation industry is financially haemorrhaging right now and approaching collapse. Qantas’s first half profits are expected to be registering a decline of over $450 million from a PBT of about $140 million in the prior period, to an expected loss of over $300 million. Virgin Australia shows a similar trend with a decline of about $80 million from a PBT of about $25 million, to an expected loss of more than $50 million.”

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He added that regional aviation had been “even harder hit”, citing slimmer profit margins and the collapse Brindabella last year as a consequence of “today’s toxic environment.”

“The Abbott Government to date has not made any significant inroads to reversing the devastation inflicted to the economy by the previous government,” he said. “We implore the Minister for Infrastructure and Regional Development to take immediate and forceful efforts to fulfil his election commitments to regional aviation outlined in the Coalition’s Policy for Aviation, as many regional carriers have little time left before they face the same fate as Brindabella.

“For many parts of regional Australia, this would spell the end of regular air services forever and it would be ironic if it were the Nationals that presided over this outcome.”

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3 Comments

  • Ron

    says:

    Seems Rex isn’t happy with either Government. Maybe it was Rex that was taken for a business-class ride.

  • Bob

    says:

    What rubbish… Although ridiculously high charges by Airservices, CASA and Airport owners are a factor, the real issue here is that REX is getting bashed up by Qantaslink and to a much lesser extent Virgin Regional and other players in the charter market. They are paying the price of failing to re-invest some of their past profits in their product and their markets.

  • Henk Luf

    says:

    I think there are a number of factor at play here apart from those already mentioned. True, there needs to be a better Government response to what are obvious danger signs. On the other hand REX has not really kept up with changing passenger demand. I am very concerned about the fact that REX has not made any move towards upgrading their fleet apart from tarting up their Saabs. Sadly the Saabs are not going to last forever, tarted up or not, and REX needs to start looking for alternatives. In overall terms, REX needs to take a broader approach rather than to blame everyone else for its problems.

Leave a Comment to Bob Cancel

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Rex issues dire profit warning

written by australianaviation.com.au | February 10, 2014
REX has issued a dire profit warning for the 6 months to December 31. (Andrew McLaughlin)
REX has issued a dire profit warning for the 6 months to December 31. (Andrew McLaughlin)

Regional Express has announced that its financial results for the first half of the 2013/14 financial years would be “significantly deteriorated.”

In a statement to the ASX,  chief operating officer Garry Filmer said the forecast profit before tax (PBT) for the first half of the financial year would be approximately 40 per cent of that achieved in the same period last year.

“Leisure and other discretionary travel registered a slight decline, however it was business related travel that really plummeted, continuing the trend from the end of the previous financial year,” Filner said, adding that; “The entire aviation industry is financially haemorrhaging right now and approaching collapse. Qantas’s first half profits are expected to be registering a decline of over $450 million from a PBT of about $140 million in the prior period, to an expected loss of over $300 million. Virgin Australia shows a similar trend with a decline of about $80 million from a PBT of about $25 million, to an expected loss of more than $50 million.”

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Advertisement

He added that regional aviation had been “even harder hit”, citing slimmer profit margins and the collapse Brindabella last year as a consequence of “today’s toxic environment.”

“The Abbott Government to date has not made any significant inroads to reversing the devastation inflicted to the economy by the previous government,” he said. “We implore the Minister for Infrastructure and Regional Development to take immediate and forceful efforts to fulfil his election commitments to regional aviation outlined in the Coalition’s Policy for Aviation, as many regional carriers have little time left before they face the same fate as Brindabella.

“For many parts of regional Australia, this would spell the end of regular air services forever and it would be ironic if it were the Nationals that presided over this outcome.”

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

3 Comments

  • Ron

    says:

    Seems Rex isn’t happy with either Government. Maybe it was Rex that was taken for a business-class ride.

  • Bob

    says:

    What rubbish… Although ridiculously high charges by Airservices, CASA and Airport owners are a factor, the real issue here is that REX is getting bashed up by Qantaslink and to a much lesser extent Virgin Regional and other players in the charter market. They are paying the price of failing to re-invest some of their past profits in their product and their markets.

  • Henk Luf

    says:

    I think there are a number of factor at play here apart from those already mentioned. True, there needs to be a better Government response to what are obvious danger signs. On the other hand REX has not really kept up with changing passenger demand. I am very concerned about the fact that REX has not made any move towards upgrading their fleet apart from tarting up their Saabs. Sadly the Saabs are not going to last forever, tarted up or not, and REX needs to start looking for alternatives. In overall terms, REX needs to take a broader approach rather than to blame everyone else for its problems.

Leave a Comment to Bob Cancel

Your email address will not be published. Required fields are marked *

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