Regional Express (Rex) says there are signs the worst may be over after swinging back to profitability in the first half of 2016/17.
The company reported statutory net profit after tax of $6.2 million for the six months to December 31 2016, a return to the black following a $11.4 million statutory net loss in the prior corresponding period when Rex booked an impairment charge relating to the loss of a Defence contract.
Revenue rose 8.8 per cent to $144.3 million, Rex said in a regulatory filing to the Australian Securities Exchange on Tuesday.
Rex chief operating officer Neville Howell said the company was pleased with the first half results.
“We see indications of the bottoming of the decline in regional travel in the first half of the financial year,” Howell said in a statement.
“If this trend continues in the second half, then this would strongly suggest the beginning of a recovery in the Australian regional economy.
“Rex is well positioned to take full advantage of a recovery in the regional economy and we are confident of turning in very strong results when the rebound happens.”
The company said in its half-year report the improvement in the bottom line was supported by the performance if its new West Australian routes that commenced a year ago, reduction in fuel costs and a stronger Australian dollar.
Passenger numbers rose 11 per cent to 612,284, while passenger revenue per available seat kilometre improved 1.3 per cent.
Meanwhile, the average fare increased to $213.50, from $205.70 in the prior corresponding half.
Rex began two WA-government regulated routes in February 2016, taking over Perth-Esperance and Perth-Albany services from Virgin Australia.
A slide presentation accompanying Rex’s half year results highlighted the performance of the two routes in comparison to the rest of the airline’s network with load factors on WA flights at 75.5 per cent in WA versus 56.6 per cent on the rest of the network.
Despite the broadly positive set of numbers, Rex said there were still some headwinds in the period ahead, citing the prospect of a stronger US dollar and the the threat of “protectionism by USA” which could slow the world economy.
While Rex declined to offer specific profit guidance for the full 2016/17 year due to “global uncertainties and extreme volatility”, the company did say profit before tax was expected to “be an improvement” from the prior year.
Also, the company said the board would recommend the resumption of dividends “if the full year results indicate that the trend of passenger decline has bottomed out”.