Regional Express plunges to first full-year loss in 14 years

The regional airline has swung to a loss for the full year, following writedowns tied to the loss of a major contract.

A Rex aircraft at Sydney International Airport. (AAP Image/Joel Carrett)

The nation’s regional largest airline Regional Express has swung to a loss for the full year, its first red ink in 14 years.

For the year to June 30, Rex (REX) logged a loss of $9.6 million, a sharp turnaround on last year’s $6.7m profit owing to writedowns tied to the loss of a contract with the Department of Defence.

In total, the group booked impairments of $15m in goodwill and assets.

After stripping out the impact of one-off items, Rex recorded underlying earnings of $3m, less than half last year’s corresponding number of $6.7m.

The weaker figure came despite a 2.2 per cent advance in revenue to $261.9m.

“The group had to make some non-cash writedowns due to the cessation of a Defence contract which resulted in the first full-year statutory loss Rex has reported since FY02-03,” chief executive Neville Howell said.

He added the 2017 fiscal year would see improvements as the positive impact of new WA routes is realised.

“The new Western Australian routes, which began on 28 February 2016, are expected to contribute 9 per cent of Rex’s total passengers in FY17,” Mr Howell said.

“This, together with the reduced fuel costs from hedging initiatives, should see Rex post better results in FY17.”

Despite the confidence in improvement off a low base, the group admitted it had begun the current financial year with no momentum.

“Passenger numbers declined a further 0.8 per cent with trading conditions deteriorating drastically in the last quarter of the financial year,” Rex said in its full year report.

The admission helped drive a sharp decline in its share price, with the company trading down 5.3 per cent at 72c at 1.05pm (AEST).

No dividend was declared, with plans to offer a payout to investors on hold until conditions materially improve.