Rex plunges to first loss in over a decade

Active young female dancing underwater, enjoying summer vacation in blue transparent water, dive to the bottom of sea, enjoyment and freedom concept

Regional Express has posted its first loss in more than a decade due to the loss of a defence force contract.

The airline known as Rex made a loss of $11.4 million in the six months to December 31, due to almost $15 million in writedowns related to its charter jet business Pel-Air and fuel price hedging.

Pel-Air’s contract with the Australian Defence Force ended in October and was not renewed, reducing the value of the business and leaving some aircraft idle.

Excluding the writedowns, Rex’s operating profit dropped 15 per cent to $3.3 million, as higher revenue and lower fuel costs were offset by increases in other costs as it added several new regional routes.

The airline said demand from business customers is expected to soften in the second half of the financial year due to plunging oil prices and China’s weakening economy.

But new routes and more beneficial fuel price hedges are expected to offset that weaker demand.

Rex shares were down four cents, or 4.6 per cent, at 83 cents at 1305 AEDT.

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