Rex 3Q profit down, plans route cuts

Regional Express (Rex) has announced an unaudited group profit before tax (PBT) of A$15.7 million for the nine months ended 31 March 2011, representing a reduction of 9.8% from the same period last year.

In comparison to the same period in FY2010: group revenue increased by 2.8% to A$176.3 million; passengers carried decreased by 2.8% to 908,667; and capacity (ASKs) increased by 1.8% to 560 million.

Commenting on the results, Rex’s executive chairman Lim Kim Hai noted that the outcome is consistent with the profit guidance given on 20 April 2011 which showed an expected drop in PBT of 10% for the full financial year.

“The operating environment is extremely challenging with fuel price in the third quarter almost 20% higher than the previous period and with continued softening of passenger demand,” Lim commented. “The very high fuel price is making the situation quite untenable and all airlines are compelled to put in place rigorous measures to remain profitable. As foreshadowed in the earlier media release, the Rex Board has carried out a review of its network and has identified a number of routes that may not be sustainable should the situation degrade further especially in light of the Federal Government’s decision to significantly reduce its contributions to regional air services throughout Australia from 1 July 2012.”

The routes identified operate from Sydney to Taree, Grafton, Moruya and Bathurst and from Melbourne to Griffith, King Island and Merimbula. Rex has started briefing some stakeholders of these communities and will provide ample notice when the final decision is made.

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