Rex Airlines (ASX:REX), Australia’s largest regional and domestic airline operator, has shocked investors by announcing a forecasted loss of $35 million for the current financial year.
This unexpected downturn comes after earlier predictions of turning a profit. The company, which operates a fleet of 59 Saab 340 and seven Boeing 737 aircraft across Australia, had initially anticipated a year-end profit as regional flights rebounded following the COVID-19 pandemic.
However, various challenges including a shortage of pilots, engineers, and disrupted supply chains have hindered Rex’s operations and led to the financial setback.
Rex Airlines’ struggle to provide reliable services has raised concerns among regional West Australians.
Flight delays and cancellations have been cited as issues that not only inconvenience passengers but also pose risks to their health.
The airline’s efforts to address these reliability concerns have been undermined by the larger operational challenges they face.
The global shortage of pilots and engineers has severely impacted Rex Airlines, forcing them to scale back their flight schedule.
The company has had to make “significant reductions” to match the available aircraft, pilots, and engineers with the operational demand.
Additionally, post-pandemic supply chain disruptions have further added to the airline’s woes.
Another significant factor affecting Rex Airlines’ financial performance has been the decline in business travel during May and June.
Corporate travel budgets have been stretched due to the increasing costs of international airfares, resulting in reduced demand for domestic flights.
This decline in business travel has negatively impacted the airline’s revenue generation.
Despite the forecasted loss, Rex Airlines remains optimistic about its future prospects.
The airline continues to roll out its domestic jet operations, aiming to expand its service offerings.
Additionally, the joint venture with National Jet Express, a prominent fly-in-fly-out carrier with additional freight and charter operations, presents new opportunities for revenue growth.
