Covid Flare-Up Wrecks Rex

No profits for Rex, the country’s third airline in the year to June 30, 2021 thanks to Victoria’s continuing flirtation with Covid.

Regional Express (Rex) revealed on Wednesday that Victoria’s COVID-19 outbreak has ended its hopes of reaching break even this financial year, after the state’s lockdown forced it to cancel dozens of flights in and out of Melbourne.

Rex had told investors on May 10 that it was on track to be break even this year, despite the disruption caused by the pandemic and the cost of it launching flights between capital cities for the first time in March.

But the company said on Wednesday that the closure of state borders to Victoria had “severely disrupted Rex’s domestic and regional networks” and forced it to cancel a large number of flights.

“Rex is now forecasting a full year statutory loss before tax of about $15 million,” the company told the ASX.

“In line with its COVID Refund Guarantee, Rex will be crediting the full value of the tickets of the cancelled flights to the credit card that was used to pay for the ticket for passengers who booked directly with Rex.

“Rex has also sent advisories to travel agents to request refunds for their customers through the usual BSP channel,” the airline told the ASX on Wednesday.

Rex has survived the pandemic thanks to significant government support designed to maintain air connectivity to regional Australia.

Rex signed a $150 million funding agreement with private equity outfit PAG Asia Capital to finance its expansion of jet services onto the capital city network and taking on Qantas and Virgin on the capital city routes – especially the busy Sydney-Melbourne routes.

Rex shares dipped 0.4% to $1.25 – the news of the disappearing profits wasn’t too surprising given the shutdown in Melbourne.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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