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Rex reports 2014/15 net profit falls 13.6 per cent to $6.7 million

written by australianaviation.com.au | August 28, 2015

A Regional Express (Rex) Saab 340 aircraft.

Regional Express (Rex) has reported a double-digit fall in 2014/15 full year net profit and says the future is uncertain amid ongoing weakness in Australia’s resources sector and declining passenger numbers.

The company said on Friday net profit for the 12 months to June 30 2015 tumbled 13.6 per cent to $6.67 million, compared with $7.73 million in the prior corresponding period. It was the third straight year of declining profits at the airline.

Revenue rose 1.1 per cent to $256.2 million, Rex said in its financial results filed to the Australian Securities Exchange (ASX) on Friday.

Rex deputy chairman John Sharp says the “regional headwinds” the airline is facing, comprising not just the downturn in mining investment and weaker commodities prices, but also drought and bushfires, had made life difficult for the regional carrier.


“All of the serious calamities that regional Australia has been faced with have all made it a very difficult economic environment for a company like Rex to operate in,” Sharp said at Rex’s full year results presentation in Sydney on Friday.

“It’s tough going in the bush at the moment.”

Rex said passenger numbers dipped 1.9 per cent in 2014/15 to 1.025 million, 19,500 lower than the prior year. That represented a $3.1 million fall in passenger revenue from Rex’s non-subsidised RPT network.

Meanwhile, capacity measured by available seat kilometres fell 2.2 per cent, while load factors were stable at 54.7 per cent. The figures did not include Rex’s five Queensland government route contracts that began on January 1 2015.

The carrier’s 2014/15 results said trading conditions deteriorated “drastically in the last quarter of the financial year”.

The weaker Australian dollar had also increased US-dollar denominated costs over the past year.

Sharp said while passenger numbers on mining-linked routes had been weaker, load factors on some leisure destinations in Rex’s network such as Merrimbula had been quite stable.

“It’s quite clear from our analysis of the way the passenger numbers are changing that the mining slowdown has had quite an impact on our passenger numbers overall and we are not the airline to experience such a thing,” Sharp said.

On a more positive note (or tailwinds as the company described it), Rex said it expected the first full year of operating Queensland government regulated routes in 2015/16 would help boost profits, while it expected to book a $4.5 million benefit from lower global oil prices in the current year.

Rex said fuel costs fell $1.85 million in 2014/15, while the end of the carbon tax yielded a $2.5 million boost to the bottom line.

The company declined to offer profit guidance for the current year due to the uncertain operating environment.

“We are certainly not confident to predict the net outcome of headwinds and tailwinds,” Sharp said.

Rex shares were down 9.5 cents, or 10 per cent, at 85 cents in afternoon trade on the ASX on Friday.

The company deferred a decision on whether to pay a dividend to November’s annual general meeting.

Meanwhile, Rex also flagged interest in bidding for some government regulated routes Western Australia that were open for tender.

Sharp noted WA and the Northern Territory were the only two states where Rex did not have operations.

“Rex is now giving serious consideration to tendering for some of these licensed routes in Western Australia and to establish a beach head if you like further growth and development of the company in that particular state,” Sharp said.

“That’s another thing we think if we decide to proceed with it will be a boost to the company’s financial performance over the course of the next four months.”

Curiously, Rex’s financial results first appeared on the ASX website at 1154 Sydney time, some 10 minutes after the company’s presentation concluded.

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Comments (13)

  • TSV


    Interesting there is absolutely no mention of Rex’s botched acquisition and subsequent closure of Aviex…

    Anyone close to the operation would wonder how on earth Rex makes a profit at all, they couldn’t organise a BBQ in a butcher!

    • australianaviation.com.au


      Hi @TSV, we’re following up the Aviex story.

  • Deano


    54% load factor and still a profit
    I have said it before and will say it again
    Link your hubs REX !!!
    You are making a profit on some of the hardest routes and 10%-20% of the thousands of passengers you put through SYD MLB and ADL are continuing on to ADL MLB and SYD
    For the life of me I can not understand why you let these passengers hit these hubs and go onward with your competitors
    You could likely fill a couple of 717s with your own customers and a few random point to point flyers
    But do it with a difference
    3-2 seating with plenty of legroom at a price around the top economy fares
    You could even use 717s to serve
    Gold Coast

    You at REX have such a strong feeder network
    Wake up and take the next step…………….

  • As a long term shareholder of Rex, my gut feel is that it would be very wrong for Rex to start looking at much larger jet aircraft such as Boeing 717. If one compares Rex operations to Flybe where they operate 60+ Q400 aircraft plus they have 15+ Embraer 195 aircraft for more longer distance leisure markets e.g. Birmingham to the Costa Del Sol, whereas the traditional type short haul markets like Rex is operating are operated using Q400. If one looks at traditional Rex routes a more sensible option might be to acquire some older 70 seat aircraft such as the very good Fokker 70 aircraft. This gives a useful step up to the right higher capacity with aircraft available in Europe and some F70 aircraft already in use in Australia with another airline.

  • Ben



    You do know Rex doesn’t have 717s right?

  • Ben


    Interesting above comment re: using 717s on domestic trunk routes. I agree, either that or a partnership with say Virgin Australia to become their regional feeder service. Maybe even take on the ATR 72 from VA Regional Airlines to take over their all their regional routes as well as Rex’s current regional network. (New airline: Virgin-Rex?) I use Rex about once a month to fly SYD-BHS. It’s only a short flight, usually 25-30 minutes in the air. Mostly the flights are only barely half full. There are only 3 flights a day. However it serves a purpose. My alternative would be a 3-4 hour bus or train ride or car trip through the M4 and stop and start traffic over the mountains. Rex mostly have really good service and their on time performance would embarrass mainline domestic carriers. My only concern is the fleet. I like the Saab’s and the newer ones with the more modern/brighter interiors are good. However some of the interiors are very dark, tired and old. I would be looking at a new fleet replacement in the medium/long term. Trouble is there are limited choices to replace like for like. Your standard Q400 or ATR 72 would be practically empty on the SYD-BHS route. I think a good choice would be the ATR 42-600 or maybe a one off order of the Embraer 120. They can still be ordered as new builds if requested even if no longer in regular production. However if Rex profit continues to drop I can’t imagine a fleet replacement happening any time soon. I hope they are able to continue to grow and prosper though. They seemed to have found a niche market to a lot of places that QF/VA would not serve, even with their regional subsidiaries.

  • PaulE


    Come on QANTAS, just buy out REX and grow your feeder network! Put us all out of our misery. Although getting government approval to have a monopoly on some of the routes such as ADL – PLO may prove problematic. But hey, there’s a fleet of nice small, well maintained aircraft just waiting to be repainted with a red tail! Or what about Virgin? There’s your feeder network growing and another way of increasing pax.

  • Invested interest


    Expanding their fleet to include new aircraft, that the company has no experience operarting to service your estimates of 20% passengers, into a highly competitive market, in which many bigger payers have struggled to make a profit recently… Very bold move for a company whos profits fall slowly whilst s!lowly expanding.

  • Deano


    Profits fall and their planes are 1/2 full because
    Dubbo to Melbourne
    Change airlines at Sydney or book an onward flight straight though on Qantas
    No brainer right!!!
    It’s not about competing on trunk routs so much as giving their customers an option which they don’t have, but the competition does
    Picking up some trunk rout passengers would be a bonus
    But as I said before, make a point of difference to Qantas / Jetstar and Virgin / Tiger

    The markets that REX compete on are hard enough without having to fight with one hand tied behind your back because you can’t offer same airline connections to other major ports

    As for REX working with Virgin
    If memory serves me correctly, they did at one time
    Now Virgin have grown and compete head on at
    Coffs Harbor
    juts to name a fer from Sydney

    Even if REX breaks even on trunk routs, their bottom line will improve on their regional opps as they win more market share as they could offer connections

    If introducing 717s, F70s or F100s would be risky, why not test the waters with a couple of SAABs…………

  • Deano


    I reckon that they stand a better chance filling 3 flights a day with SAABs running SYD MLB than Townsville Cairns or even Sydney Wagga

  • Random


    It does surprise me that Rex hasn’t chosen to this point to connect what are essentially disconnected networks in South-Eastern and Northern Australia.

    They could easily commence a route like Newcastle-Toowoomba (Brisbane Wellcamp) and set-up a base in Toowoomba that would allow a crossover point between the networks without having to go head-to-head with the mainline airlines on trunk routes, whilst getting a currently untapped route.

    An aircraft like F70 or E170 would be a big change to the prop based fleet. Perhaps a tie-up with Alliance or Airnorth using wet-leased or co-branded aircraft would allow them further capacity and range without the full overheads.

  • Ben


    Well as far as Rex competing with Virgin there are far many more routes that they don’t compete on – Just in NSW: Armidale, Bathurst, Broken Hill, Dubbo, Grafton, Griffith, Lismore, Merimbula, Moruya, Narrandera, Orange, Parkes, Taree and Wagga Wagga. Also Rex don’t fly to Canberra, Coffs Harbour or Port Macquarie. Even though they do fly to Ballina, a lot of the services are through Newcastle. The only other service they compete on directly with Virgin (I think) in NSW is Albury-Sydney. So really a partnership or merger (Virgin-Rex Airlines) would complement and expand each others regional routes. Also they both operate out of the same terminal at Sydney. It’s a perfect marriage. Plus if Rex took on the EMB 120 to replace the Saab, per my earlier post, they could then use VA EMB E-jets to operate the higher density regional routes like Coffs Harbour and Ballina. Then as far as product consistency goes for the Virgin group. They would have 737 and A330 on domestic trunk routes. Embraer jets and turboprops on regional routes and A320s for the LCC (Tiger Air). A pretty formidable competition for QF/QFlink/Jetstar. Or maybe I’m just being greedy as I’m a VA Frequent Flyer and don’t get any points on the many Rex flights I take 🙂

  • JR


    Word is that Jetgo is going to go in hard on a lot of their routes. Nice late model Embraer Jets great service and reliable… they are starting Dubbo-Mel soon and then Dubbo-Sydney

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