Australian carrier Regional Express Holdings (Rex) expects the strengthening performance of its new domestic narrowbody jet operation will help it return to profitability in its current fiscal year.
The carrier told shareholders on Nov. 25 that the domestic jet services achieved a pre-tax profit of A$2 million ($1.4 million) in October. This was an improvement from a marginal profit in September, which was the first profitable month for this division.
However, Rex’s core turboprop regional operations made a loss in October, despite recording a gain of A$1 million in terms of earnings before interest, taxes, depreciation and amortization.
Rex predicts that the turboprop side of the business will return to monthly pre-tax profitability by the quarter ending March 31, 2023, the third quarter of its fiscal 2023.
The Rex board has reaffirmed its earlier forecast that the carrier will be able to achieve a full-year overall profit for fiscal 2023 despite its accumulated losses from the first four months of the fiscal year.
Rex is primarily a turboprop operator, but last year it diversified its business by launching narrowbody jet operations on Australia’s major trunk routes. This has contributed to intense competition on routes between the country’s east coast state capitals.
The carrier has expanded its jet fleet to seven Boeing 737-800s and has recently said it is trying to obtain another two 737s. These are expected to be introduced in the second half of fiscal 2023.
Thanks to the addition of the jet services, Rex’s capacity is up by 78% versus 2019 levels, according to data from CAPA and OAG.
However, it is still overshadowed on the trunk routes by incumbents Qantas, Jetstar and Virgin Australia. In the key Sydney-Melbourne market, Rex had an 8.4% share of seat capacity for the week of Nov. 21.
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