Rex warns of up to 30% profit downgrade

Regional Express (Rex) is warning that its profits could be down 20-30% for financial year 2020 compared with the previous year due to “a very challenging economic environment ahead”. Despite the profit warning, Australia’s largest independent regional carrier is pursuing four major developmental projects in the belief that it can “weather the downturn and emerge stronger at the other end”, John Sharp, Rex's deputy chairman told investors at the airline’s annual general meeting. Rex has revised its outlook based on a deterioration in trading conditions over the last six months, with the ongoing trade war causing a drastic slowdown in most developed economies. This is likely to lead to “sluggish” passenger numbers, while costs are expected to rise due to an extremely weak Australian dollar, Rex believes. Rex operates around 60 Saab 340 turboprops on regional routes primarily in eastern Australia, more recently adding a number of services in Western Australia. In the financial year ended 30 June, Rex reported a A$17.5m net profit, up from A$16.9m the previous year, with revenues climbing 7.5%. Its total fuel bill, however, leaped 30% to A$9.8m despite hedging efforts. In fiscal year 2019, Rex carried 1.27m passengers, up 3.6%.<br/>