LONDON – It has proved to be a good quarter for the Australian regional carrier Rex Airlines. The airline’s jet aircraft, the Boeing 737 churned $2 million in profit in October – a significant boost from the previous slight mark-up in profitability in the month prior. While turboprop operations are still struggling, the airline cites unfair competition from Qantas as a cause.
Rex Airlines, however, is not the only one to show prosperity – other airlines, including rival Qantas, have also updated its half-year profit forecast by an extra $150 million in the domestic market alone.
This shows that the Australian domestic market is growing gradually and becoming more competitive, driven by healthy consumer confidence in macroeconomic terms.
In a statement released by the airline, its raw accounts for the month of October clearly state that it has a made profit before tax only for domestic operations of approximately $2 million.
Good days for 737s but not so much for turboprops
The airline also cited that its turboprop operations or Saab are staying in the red with little prospect of making a profit. The airline blamed the Australian flag carrier Qantas for being ‘price predatory’.
Despite this Rex’s EBIDTA or earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs stood at a positive $1 million this month.
Good days lie ahead: Rex believes that its turboprop aircraft will be in the green (profitability) by the third quarter of the 2023rd fiscal year.
In October alone for its latest profit update, Mr Lim Kim Hai, Rex’s chairman hinted signs that profitability for routes at major Australian cities was being “truly unprecedented in the airline world” as demand is surprisingly higher than anticipated.
The airline now has 7 737s in its fleet and is purchasing 3 more to expand its operations. This shows that the airline is bullish about its strong network flying from Australian cities.
The airline’s chairman added: “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. ”
He continued: “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.”
The chairman noted that the airline has a 10-year agreement with Flight Centre to become a “partner of choice” alongside other travel agents, including well-known ones such as Helloworld, Webjet, and Consolidated Travel. This would totally boost the airline’s image and reputation across Australia.
Rex Airlines has enjoyed considerable uninterrupted growth within the Australian domestic market.