Rex credits God and government assistance in trading update

The airline’s chairman has credited God, government assistance, staff and customer support for its survival in an effusive trading update.

Rex is emerging ‘bigger and stronger’ from the Covid-19 pandemic. Picture: Tim Hunter

Rex chairman Lim Kim Hai has credited God and government assistance for the airline’s positive post-pandemic outlook, claiming they were emerging “bigger and stronger” from Covid-19.

In a statement to the ASX titled Rex profit guidance, Mr Lim said the airline had achieved “astonishing results” in the first month of the 2023 financial year, prompting a prediction they would soon be back in the black.

His optimism came from pre-audited results of $31.5m in revenue from Rex’s operations in July, including $13.6m from the fledgling domestic business — almost double the monthly average of the prior three months at $6.87m.

Load factors on the airline’s Boeing 737s had improved to an average of 86 per cent and regional routes flown by Saab 340s were performing as well as they did in July 2019.

The statement coincided with Rex’s 20th anniversary of operations being celebrated by the airline in Wagga Wagga on Tuesday.

“The last two decades could not have been worse for aviation in Australia — droughts, fires, floods, an oil price shock, worldwide pilot and engineer shortages, the global financial crisis, Covid-19 and an even more severe oil price shock – and yet, here Rex is, still standing tall,” said Mr Lim.

“By the grace of God, the timely assistance from the federal and state governments, our dedicated staff, and most importantly, the support of the Australian people, Rex has not only survived but has emerged even stronger and bigger.”

Over the course of the pandemic, Rex received $87.4m in handouts from the federal government which were credited with keeping the airline flying.

For the first half of the 2022 financial year, Rex posted a $36.7m after tax loss and will report its full year results later this month.

The airline last recorded a profit of $17.5m in 2019, before slumping to a $19.4m loss the following year.

Rex deputy chairman John Sharp said the prediction of a return to profit in 2023, stemmed from the company’s performance over the past three months.

“We’ve seen a doubling in the revenue and a doubling in the numbers of passengers, and (the guidance) is also reflective of the fact companies like Flight Centre and Helloworld have only hit about 30 per cent of their targeted passenger numbers in the arrangements we have with them,” he said.

“That suggests considerably greater growth opportunities ahead as a result of those particular companies being able to direct more passengers in our direction.”

Mr Sharp attributed the turnaround experienced in recent months to the “poor performance of other airlines” which had resulted in more passengers giving Rex a go.

“I now get anecdotal evidence that people are travelling with Rex because we depart on time and we don’t lose people’s luggage,” he said.

“The other thing which I contend is our cabin product is the best in the market today.”

In June, Rex achieved the highest on-time performance rate of any airline, landing 80 per cent of its flights within 15 minutes of schedule. At the same time, its cancellation rate was a low 0.7 per cent compared to Qantas’s 8.1 per cent and Virgin Australia’s 5.8 per cent.

Mr Lim said Rex’s “unparalleled reliability” was attracting new corporate sector passengers which only added to his confidence a return to profit was achievable.

By the end of August, Rex planned to add a seventh Boeing 737 to its fleet which would allow an increase in the frequency of flights on domestic routes.

Rex also flagged plans to launch a frequent flyer program to go head-to-head with Qantas’s juggernaut loyalty scheme and Virgin’s Velocity program.