Regional Express Holdings Limited (ASX:REX), Australia’s largest independent regional airline, released a profit warning on Friday evening in which the Chief Operating Officer used very strong language to warn of the sector’s imminent collapse.
Target $1.18 (was $1.20). The broker has undertaken a reality check to account for still tough conditions and now forecast a 45% drop in FY net profit. Increased costs and a weak pricing environment were held to blame. The broker also expects ongoing weakness in traffic data and the falling AUD will continue to make things tougher.
A general sector update on transport stocks in Australia has revealed a downgrade in rating for Regional Express. RBS analysts are forecasting subdued proift results for the sector overall in the short term, but they see value emerging on a longer term view.