Rex Express Holdings Limited (Rex) reported a loss of $16.5 million after taxes for the six months ending on December 31, 2022. This is a 55% improvement over the same time last year.
This loss includes a negative effect of A$23M from the mark-to-market valuation of the Convertible Note and Warrant facility signed with PAG in 2020. This loss has nothing to do with cash and was caused by the value of Rex shares going up.
The quarter’s operating deficit after tax was A$1.9M, while cash in the bank almost quadrupled compared to the previous period. Domestic jet services recovered to monthly profitability in September 2022, just seven months after full domestic service resumed (February 2022).
Domestic operations grew consistently for four months to the conclusion of the quarter. Because Qantas’ predatory behaviour in entering routes too small to support two operators, regional operations have been a drag on the Group’s performance.
Nevertheless, regional services have been profitable at the EBITDA level for the last four months and will likely return to profitability in Q3FY23. Revenue (excluding government handouts) increased by 282.2% over the previous year.
Government grants and subsidies fell 93% to A$1.9 million. The Company also celebrated its 20th anniversary and the acquisition of National Jet Express (NJE), formerly Cobham Aviation Services Australia – Regional Services.
Rex has also just announced leasing two more Boeing 737-800NGs, which will be launched after this fiscal year and the start of the following fiscal year. “The results are gratifying considering that domestic aircraft flights have only operated in a reasonably COVID-free environment since late February 2022,” stated Rex Executive Chairman Lim Kim Hai.
It is uncommon to attain profitability in such a short period under normal conditions.” The Group’s performance in the second half of FY23 is projected to benefit from the full potential of partnership agreements with large travel agency groups, more income from expanded activities, and a bigger cadet intake at the pilot schools. Rex believes that, barring any unexpected external shocks, the Group will achieve positive operational earnings for fiscal year 23.