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Rex issues profit warning, warns of staff and network cuts

written by WOFA | April 27, 2011

Rex has warned of job and network cuts. (Seth Jaworski)

Regional Express (Rex) has warned of a 10 per cent tall in profit before tax for the current financial year compared to its 2009-10 financial year result, and has said it may need to cut jobs and routes.

Rex said in guidance issued on April 20 that it expects profit before tax for the year to be “in the region” of $23.5 million, while profit after tax is likely to be just $17.1 million, 30 per cent down on last financial year’s result.

Executive chairman Lim Kim Hai said the “sharp” increases in fuel prices and a “slight weakening” of passenger numbers was behind the fall in profitability, while the removal of the federal government’s once-off investment allowance is contributing to the bigger drop in after tax profits.

“In response to the challenging environment, Rex is reviewing its network and may have to pull out of some marginal routes. We will also have to redouble our efforts at making productivity gains and we may have to contemplate retrenchment – something we avoided even in the depths of the global financial crisis.”

Lim noted that, “The aviation environment this year has been extremely toxic and we have seen all the major carriers in Australia announcing significant declines in profits. Looking ahead we do not see the situation improving much with both the domestic and international economies threatened with much uncertainty and risk.  

“Regional aviation in Australia is now extremely vulnerable and it does not help that the federal government is proceeding with plans to increase significantly the cost burden on regional carriers.”


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