The possible closure of REX routes and job losses on the surging aviation fuel price and ongoing economic uncertainty.
The possible closure of REX routes and job losses on the surging aviation fuel price and ongoing economic uncertainty.

REX caught up in aviation woes

REX Express yesterday warned it may be forced to cease flying some of its marginal regional routes and lay off staff as it predicted a 30 per cent fall in after-tax profit this financial year.

The airline, which is the anchor tenant at Lismore Airport, has 1300 weekly flights to 35 destinations in NSW, Victoria, Tasmania, South Australia and Queensland.

Executive chairman Lim Kim Hai blamed the possible closure of routes and job losses on the surging aviation fuel price and ongoing economic uncertainty.

“In response to the challenging environment, REX is reviewing its network and may have to pull out of some of marginal routes,” he said in a statement to the market.

“We may (also) have to contemplate retrenchments – something we avoided even in the depths of the global financial crisis.”

A REX spokeswoman later told The Northern Star that the review had just begun and it was too early to rule in or out the closure of the Lismore route.

Australia’s largest independent regional airline said its profit after tax would be “severely impacted”, falling to $17.1 million this year.

“The aviation environment this year has been extremely toxic and we have seen all the major carriers in Australia announcing significant declines in profit,” Mr Lim said.

“Looking ahead we do not see the situation improving much with both the domestic and international economies threatened with much uncertainty and risk.”

Qantas, Australia’s largest airline, this week said it would once again increase its fuel surcharge by 5% in response to rising fuel prices.

Mr Lim said during the previous financial year the airline was able to take full advantage of the Federal Government’s one-off investment allowance.

However, since that program had been wound down, the price of Singapore jet fuel has risen to more than $136 a barrel.

“Regional aviation in Australia is now extremely vulnerable and it does not help that the Federal Government is proceeding with plans to increase significantly the cost burden on regional carriers,” he said.


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