Rex “pleased” with FY19 result, but warns of future profit decline

Sydney, Australia - September 1, 2018: REX Regional Express Saab 340B aircraft at Sydney Kingsford Smith Airport runway. Registration VH-ZJS (Sydney, Australia - September 1, 2018: REX Regional Express Saab 340B aircraft at Sydney Kingsford Smith Airp

Regional Express (Rex) has revealed a profit increase for the last financial year, but has warned investors that FY20 won’t be so rosy for the airline.

Rex posted a statutory profit after tax of $17.5 million in the 12 months to 30 June 2019, up 3.6 per cent on the previous financial year.

The company’s total revenue rose 7.5 per cent to $317.6 million in FY19, with passenger revenue up seven per cent to $278.4 million.

However, Australia’s largest independent regional airline was hit with a big increase in fuel costs during the last fiscal year, up a whopping 30 per cent to $42.5 million.

Rex executive chairman Lim Kim Hai said: “The global economic climate has deteriorated significantly since United States escalated the trade war with China in November last year.

“Australia is not spared and its economic growth slowed to a decade low of 0.4 per cent in the third quarter of the [financial year] with the [financial year’s] already revised downwards outlook of 1.8 per cent appearing to be unachievable.

“In this harsh environment, with Qantas reporting a PAT decline of 6.5 per cent [and] with Virgin Australia expecting to again announce significant losses, I am pleased that Rex is still able to maintain the same level of profitability as the prior FY with the strong momentum of the first half just about balancing the downward pressures of the second half.”

Kim Hai warned that, in line with the global economic outlook and the possibility of a recession in Australia, the Rex board expects its profit will fall by 15 to 20 per cent in FY20.

But the airline’s executive chairman said they were “confident that Rex’s strong foundation, highly efficient operations and almost no debt will see the company through these turbulent conditions”.

Rex’s financials come not long after the company suffered significant reputational damage as a result of media outlets reporting what it claims were “trumped-up and sensational” allegations against the airline around its safety practices.

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