Country airline Regional Express (Rex) has delayed the delivery of four more jet aircraft to fly between major cities, saying the travel industry remains too unstable to continue its domestic market expansion plans.
The ASX-listed group launched a Sydney-Melbourne jet service in March, followed by flights to the Gold Coast and Adelaide, after securing $150 million in private equity funding to challenge Qantas and Virgin Australia on domestic air services.
Rex, which flies to around 60 regional and rural destinations, has leased six Boeing 737s and in June said it would fast-track the delivery of four more jets from the end of 2021 to September after receiving a better-than-expected response to its new services.
But on Tuesday Rex’s deputy chairman, John Sharp, said the airline had delayed delivery of those four planes until it knew it could operate without border restrictions or lockdowns.
“We’ve always said that we’ll scale up and scale down according to the circumstance,” Mr Sharp said, after the group reported an underlying after-tax loss of $12.7 million for the 2021 financial year.
“So we’ve delayed those [planes] until such time as things return to normal.”
Mr Sharp said the new jets would probably arrive by the middle of 2022, but warned the outlook for the travel industry remained highly uncertain despite the progress of Australia’s vaccine rollout.
Countries with high vaccination rates like the UK, US and Israel had been hit with further waves of COVID-19 outbreaks that had resulted in some form of restrictions, he said. “We expect that vaccination rates are the answer to the problem; it’s just what level of vaccination across the country or across the state before premiers open up borders and remove lockdowns,” he said.
Mr Sharp said Rex’s new capital city services were performing better than expected before NSW and Victoria went into lockdown, but declined to reveal what average load factors (a measure of how full flights are) it was achieving.