Summary
- Rex, Australia’s largest independent domestic and regional carrier, has successfully established itself on domestic routes, with passenger revenue and total group revenue greater than doubling in FY23.
- Rex expects revenue to proceed rising in FY24, driven by increased flying with more Boeing 737s, a soon-to-be-announced Rex Frequent Flyer program, and growth from other parts of the group.
- The acquisition of National Jet Express has been a hit, with a ground-breaking FIFO contract and two additional turboprops joining the fleet. Rex’s pilot training academy can be addressing the acute pilot shortage attributable to larger airlines poaching regional pilots.
In a little bit greater than two years, Rex has gone from operating its first domestic jet flight from Melbourne to Sydney to a full schedule of Boeing 737 services to seven destinations across the country. It has in some way launched a brand new domestic airline when others were parking their fleets and was rewarded yesterday when it announced a statutory profit for the twelve months ending June thirtieth, 2023 (FY23).
Rex is now established on domestic routes
Perhaps more encouraging than the profit of AU$14.4 million ($9.5m) is what’s on the horizon for Rex, Australia’s largest independent domestic and regional carrier. Passenger revenue in FY23 soared from AU$230.5 million ($152m) last yr to AU$556.2 million ($367m), and total Rex Group revenue greater than doubled from AU$319.2 million ($210m) to AU$642.8 million ($424m) in FY23.
Photo: Rex
Trying to FY24, Rex said it expects revenue to rise again in FY24 from increased flying with more Boeing 737s joining the fleet and from the impact of a soon-to-be-announced Rex Frequent Flyer program. There’s also upside coming from the opposite parts of the group, including Pel-Air aeromedical services, increased pilot training on the Australian Airline Pilot Academy and continued growth from its joint-venture fly-in fly-out charter and freight operator National Jet Express.
The acquisition of National Jet Express (NJE) in September 2022 is already proving a hit, with a ground-breaking FIFO contract in Queensland resulting in a brand new operating base at Brisbane and two De Havilland Dash 8-400 turboprops joining the NJE fleet. NJE operates its charter, FIFO and freight network to 37 destinations in Australia and Papua Latest Guinea, using a combination of Dash 8 turboprops, Embraer E190s and British Aerospace BAe146 jets.
Image: Rex Group
As an organization listed on the Australian Stock Exchange, Rex Group must lodge details about its investments and related entities. Rex is a 50% shareholder in NJE with joint control, and in keeping with accounting rules, it has recorded an AU$44.5 million ($29.4m) positive contribution from its 50% acquisition in September 2022. The Rex Group financial statements said the group had assessed the fair value of the NJE assets and liabilities acquired, leading to the gain.
In June Rex foreshadowed an FY23 operating loss and that materialized with a loss before tax of AU$31.7 million ($21m), in comparison with a lack of AU$109 million ($72m) in FY22. The fair value gain from the National Jet Express acquisition was AU$44.5 million ($29.4m), and the Group posted an FY23 Statutory Profit after tax of AU$14.4 million ($9.5m) in comparison with a lack of AU$46.1 million ($30.4m) in FY22.
Commenting on the operational loss, Rex Executive Chairman Lim Kim Hai said:
“The legacy effects of COVID continued to smash the aviation industry in FY23 manifesting itself in acute pilot shortages and severe dislocation of the provision chain.”
A pipeline for Australian and international pilots
What’s not said there’s that because the larger domestic airlines ramped up capability and were in need of pilots they poached significant numbers of Rex regional pilots, resulting in the acute shortages that heavily impacted regional flying. As Australia’s only airline with an in-house pilot training academy, Rex is solving that issue by inducting and graduating more cadet pilots and moving them into regional line operations.
Photo: Steve Worner/Shutterstock
It is also price declaring that because the Boeing 737-800 domestic fleet grows Rex has the pilots and other resources needed to support the brand new routes and increased frequencies. Rex has two pilot training academies in Australia and in FY24 it expects to enroll 40 Rex cadets and 200 international cadets from Vietnam, Singapore and China, already adding 60 in August.
Photo: Michael Doran I Easy Flying
Many commentators and a few competitors predicted doom for Rex’s daring move to launch domestic jet services in the midst of the pandemic. While there have been loads of challenges to beat and little doubt more to follow, it looks just like the airline has some blue sky flying ahead.
Have you ever flown on a Rex 737 yet? Tell us within the comments.