Late in March, Rex warned it would have no choice but to announce the “shutting down of its network” if it didn’t receive financial aid from the government.
It even added that help was necessary to be able to transport COVID-19 testing samples from regional areas to capital cities for analysis.
Now five months on, and after receiving more than $62 million in handouts days later, the airline has revealed a full-year underlying profit before tax of $250,000 and an increase in revenue.
Executive chairman Lim Kim Hai said, “On behalf of all regional aviation, I would like to place on record our gratitude to the Morrison government and to the Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development the Hon Michael McCormack MP, for their swift and decisive actions that have saved Australia’s regional aviation industry.”
The news of the broadly positive results comes months after the business revealed ambitious plans to rival Qantas and Virgin by flying between Sydney, Melbourne and Brisbane.
Overall, for the previous financial year, the airline recorded a statutory loss after tax of $19.5 million caused by passenger numbers plummeting 90 per cent in the latter half of March and a $62 million impairment charge against its assets.
However, the $62.1 million of government grants, including JobKeeper and regional aviation bailouts, led to total revenue notching up from $318 million last year to $322 million in FY20 despite passenger revenue declining by $65 million.
Rex said that if it wasn’t for the aid, Australia’s regional communities “would have been dealt yet another mortal blow following the devastating effects of drought, bush fires, floods and now the pandemic”.
“Rex makes a solemn promise that it will give back to the community in the future when it is strong again,” said Lim.
“Rex believes that regional aviation will recover much sooner than the domestic or international sectors and, barring further waves of outbreak, Rex sees regional aviation returning to normalcy within two years.”
In May, the airline announced its ambitious plans to take on Qantas and Virgin, by expanding its network to service Australian capital city routes, including the coveted Golden Triangle – between Melbourne, Sydney and Brisbane.
The regional carrier later confirmed to the ASX that it intends to have its new network up and running by March 2021, and is confident of securing funding.
Speculation later linked the airline to the purchase of 10 Boeing 737s from Virgin Australia.
Rex’s ability to ride out the coronavirus storm compares well with Qantas, which blamed a “near-total collapse in travel demand” for recording a statutory loss before tax of $2.7 billion for the last financial year.
Just last week, the flag carrier and announced nearly 2,500 more jobs are at risk because the business plans to outsource its remaining ground handling operations.
The proposed cuts, in addition to the 6,000 already announced, would include 370 job losses at Jetstar and more than 2,000 at Qantas.