Rex Airlines set for a loss in the 2021 financial year

Victoria’s lockdown and border closures are playing havoc with Rex Airlines’ bold foray into the capital city market.

Rex’s bold foray into the capital city market has hit turbulence thanks to ongoing Covid-19 lockdowns and border closures.

Covid-19 lockdowns and border closures are playing havoc with Regional Express’s bold foray into the capital city market, putting the airline on track for a loss in the 2021 financial year.

In a statement to the ASX on Wednesday the carrier, which trades as Rex Airlines, revised its previous interim profit guidance, which had forecast a break even situation by the end of June.

The statement from chairman Lim Kim Hai said the latest round of border restrictions and lockdowns had severely disrupted Rex’s domestic and regional networks.

As a result, the carrier had been forced to cancel a “large number of flights to and from Melbourne”.

“Rex is now forecasting a full year statutory loss before tax of about $15 million,” said Mr Lim.

In the first half of the 2021 financial year, Rex managed a $9.9 million statutory profit after tax, aided by significant federal government assistance.

The gain came as the airline embarked on a series of capital city routes, competing against Qantas, Jetstar and Virgin Australia.

Despite some early turbulence and fierce fare wars, Rex issued interim guidance on May 10, forecasting a break-even situation for the full year.

“Rex is one of the rare airlines in the world able to achieve this incredible outcome during the pandemic whilst at the same time funding the expansion of the business into the domestic airline market,” said the statement.

The expansion has seen Rex take delivery of six former Virgin Australia 737s, with the help of a $150m injection by Asia Pacific investment firm PAG.

Another four 737s are expected to join the Rex fleet by the end of the year, to aid in the airline’s domestic network expansion.

Rex also operates 60 Saab 340s on regional routes, as well as Sydney to Canberra.

Since the start of the pandemic, the airline has seen its share price career from a low of 54 cents on March 23, 2020 to a high of $2.07 in December, before slowly sinking to $1.26 a share on Wednesday.

In the 2020 financial year, Rex slumped to a $19.4 million after tax loss, after receiving $62 million in government handouts.