Rex’s capital city 737 flights generated a $2 million profit in October — up significantly from recording “slight profitability” the month prior.
The news comes days after Qantas upgraded its half-year profit forecast by an extra $150 million and suggests the entire domestic sector is benefiting from strong consumer demand.
In a statement released to the ASX, Rex said its unaudited management accounts for October show a profit before tax for the domestic jet operations of “about $2 million”.
It added its regional Saab operations are still loss-making for October due to the “predatory actions of Qantas”, but its EBITDAR (earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs) was a positive $1 million for the month.
The airline believes its smaller aircraft will return to profitability by Q3 of FY 2023.
In its last profit update in October, Rex’s chairman Lim Kim Hai hailed the first signs of profitability in its capital city network as being “truly unprecedented in the airline world” and added the business would look to acquire another two 737s to expand its fleet of seven.
“This result was foreshadowed in our media release of 24 June 2022 when we predicted that the agreements with corporates and travel agencies, finalised at the tail end of the prior Financial Year (FY), would very quickly translate into strong passenger and revenue growth,” said Lim.
“True to form, our domestic jet network passenger numbers for the first three months of this FY grew by 60 per cent, 34 per cent and 77 per cent respectively when compared to June 2022.
“Revenue growth has been even stronger at 84 per cent, 47 per cent, and 137 per cent for the same three months, suggesting significant yield improvements.
“The board gave guidance on 2 August 2022 that it expected FY 2023 to be profitable overall, and the current results have further strengthened its conviction.”
Lim was referring to its 10-year deal with Flight Centre to become a “partner of choice” alongside agreements with other travel agents, including Helloworld, Webjet, and Consolidated Travel.
Rex first launched capital city flights in March 2021 after securing $150 million in investment.
It follows Qantas days ago revealing it would target a remarkable underlying profit of up to $1.45 billion.
The result comes despite the wider group recording an underlying loss before tax of $1.86 billion in its last full-year results and claiming the pandemic cost its airlines $7 billion in total.