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Rex increases revenue thanks to $62m government aid

written by Adam Thorn | September 1, 2020
A Regional Express (Rex) Saab 340 aircraft.
A Regional Express (Rex) Saab 340 aircraft.

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.

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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.

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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.

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11 Comments

  • mike

    says:

    thought rex was going to lease 10 ex VA B738s from lessors, not buy them from Virgin ?

  • Graham

    says:

    I’m sorry but how can this airline declare a profit at the expense of the tax payers while the other 2 airlines are laying off staff. The handouts to REX only prove it’s who you know not what you know.

  • Bernie Flyer

    says:

    They sure conned the Government as far as I can see. Cry poor, rake in the cash and then have a bash @ the big boys while they are down. Perhaps I am just cynical?

  • David Palmer

    says:

    I guess it helps when you have a former Liberal/ National Party MP as Deputy Chairman to seek financial handouts from the Liberal/ National Party government.
    Such an incredible turnaround from an airline on the brink of collapse to announcing route expansion plans an possible leasing of Virgin Australia 738’s within such a small time space.

    Will Rex return any taxpayer funded assistance from these announced profits?

  • Geoffrey

    says:

    Can someone ask REX why they won’t increase capacity in NSW? People can’t book cause there’s no flights, REX says no people are booking can’t increase capacity? Come on REX do the right thing for regional ports and staff and get NSW’s sky’s open. School Holiday’s coming up, give people the opportunity to travel.

  • Cedric

    says:

    Broke one day, profit the next. Geeezzz……..

    Commenter, Graham, above’s correct.
    It sure is a WHO you know in ‘top echelons’.
    Let’s see where they’re at, in a year’s time, when there’s no more JobKeeper multi-millions’ $$$$$$ coming in to them.

    I’m sure many of the future travelling public will remember them ostensibly ‘blackmailing’ the Fed Govt back in March to ‘give them money’, by boycotting them.
    The gall of John Sharp calling it ‘profit’.

    They’ll get what’s due to them, in time, particularly if they try it on with QANTAS, flying ‘Golden Triangle’ routes’.

  • Peter

    says:

    Great regional airline. The states would be worse off without REX. look forwatd to their entry on the MEL/SYD/BNE Routes.

  • Neil

    says:

    Cannot get over this!Here is REX telling the Goverment they need financial assistance or they will go Under.Both Virgin And Qantas ask for Goverment Assistance,& get knocked back but only assisted by Jobkeeper.Under Bain taking over from Virgin 3.500 jobs disappear.Qantas get rid of 6000+2500 jobs plus Jobkeeper.Virgin got knocked back because the LNP said they were not going to help out because it was a foreign owned Company.NOW.REX! John Sharp CEO,just goes to show you who you know in higher places,and former Deputy PM & Leader of the National party and mates with Michael McCormack,(Federal Transport Minister),can just go ahead and receive a $62 million dollar hand out plus Jobkeeper.”Guess what”REX is the big winner,apart from the handouts from the federal Goverment.REX is also a Foreign airline run from Singapore!And on top off this with all the assistance from the Federal Goverment,now they want to expand and run the Golden Triangle routes- Sydney-Melbourne- Brisbane and fly 10 leased Ex Virgin Boeing 737-800 Jets.How does that figure?

  • AlanH

    says:

    I can already imagine the crocodile tears when they find they can’t make a profit on the Golden Triangle routes and they complain to the Government that they need huge subsidies to prevent them from going under … again! Why don’t they just focus on their primary raison d’etre … regional express! What about expanding their regional network and upgrading their fleet to something built this century, e.g. ATR 42s for which there is an already well-established service facility. They DO perform a great service for the rural sector, but at what cost to the travelling pax and to whose real benefit???

  • Neil Campbell

    says:

    Can’t believe it! Virgin get’s knocked back with government assistance to hang onto the Airline but gets Job keeper to assist & still 3500 workers who work for the Airline lose their jobs. Qantas then ask for a handout as well, also run at a loss, get Job keeper, but sack 6000 worker+ another 2,500 worker due to further loss of 2.7 billion dollars in the financial year. The Federal government reason for not helping support for Virgin was because the government was not going to prop up a foreign Airline. NOW REX! Rex threaten the Federal Government if they don’t receive help they will pull out off flying altogether. Not surprised to see how convenient it is to know people in higher places! John Sharp CEO of REX Airlines and former Deputy Prime Minister and Leader of the National Party. Just make shore you are mates with the federal Transport Minister Michael Mc Cormack,(also Deputy Prime Minister).Strange how REX Airlines is successful at receiving a 62 million grant as well as Job keeper for their redundant staff. Then they enter the ASX and announce expanding their Airline by flying between capital Cities, The Golden Triangle, Melbourne-Sydney & Brisbane using 10 leased Ex Virgin Boeing 737-800 jets. The problem is Why was REX Airlines successful with the Government with the 62 million Grant & Job keeper,& not made to suffer like Virgin & Qantas, but guess what REX Airlines is foreign owned by a Singapore Consortium.

  • Craigy

    says:

    Alan Joyce questioned recently REx’s budget for setting up this jet operation for the golden triangle. He said that it cost Qantas 170 million to setup Jetstar. Where is REx going to get the additional funds if their sums are wrong already?

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