Rex Airlines postpones B737-800 deliveries due to ongoing operational difficulties

The Regional Express (Rex) Airlines of Australia has postponed the deliveries of 4 Boeing 737-800 aircraft that were slated to take place by September end of this year. On August 31, Rex Airlines announced its FY21 results in which the total loss of $7.2 million Profit Before Tax (PBT) was reported. The revenue dropped down 20% to $256.2M as compared to $321.8M in the previous year, i.e., 2020. The COVID-posing airline market and logistics challenged the airline’s orders and deliveries for new aircraft.

The executive chairman of Rex stated the ravaging effect of COVID-19 being the worst hurdle in the airline industry as the passenger numbers dropped by 56% globally. In the prior year, Rex’s passenger number had a staggering drop of 29%.

The low demand in air travel and the ongoing operational difficulty have led Rex to decide to defer the delivery of Boeing B737-800s. The deliveries have been halted to mid2022 as per the reports.

‘Until the air situation comes back to normal, the airline will delay the delivery,’ John Sharp, Rex’s deputy chairman, said in a statement. Rex Airlines is scaling the aviation scenario according to the circumstances.

Rex Airlines has estimated that the first half of 2022 will struggle through the border closures and lockouts inside the country, whereas the second half will struggle through the looming risk of further waves of the pandemic as looking into other highly vaccinated countries who have gone through such experience. So, ‘unprecedented is the right word to describe the outlook for the year.

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In the present scenario, many airlines have deferred the aircraft deliveries from the aircraft manufacturers as the pandemic and lockdowns crimped the revenue. Australia is battling yet another devastating round of lockdowns induced by the Coronavirus pandemic.

The fleet of Regional Express Airlines

Currently, Regional Express owns a fleet of six Boeing 737-NGS and 60 Saab340s. Per Air Aviation, the subsidiary of Rex Airlines flies three S340A (F) aircraft for freighter purposes and 9 Beech King Airs on aeromedical evacuation service (medevac) contract in Australia’s Victoria and New South Wales.

Rex has leased six B737-800s, where three are from Virgin Australia and two from CastleLake. Banc of America Leasing Ireland has also leased one Boeing 737-800 to Rex.

The airline flies to the regional network in Australia. Rex Airlines forayed into the narrowbody market recently, having resolved to expand its operation beyond its classic regional networks the previous year in 2020. In March 2021, Rex commenced its mainline route from Sydney to Melbourne to rival Virgin and Qantas.

Rex’s domestic network expansion

Rex Airlines has one of Australia’s biggest regional route connectivity that has gained uninterrupted operational profits since 2003 by navigating the airline turmoil over the last two decades. Rex was set for the incremental extension to embark on domestic operations. As the expansion exceeded the customer demand more than anticipated, Rex accelerated the schedule of four Boeing 737-800s deliveries from late 2021 to September 2021.

But the lockdowns and pandemic spread ransacked the aviation industry; the same units are now targeted to be delivered by mid-2022. The loss of Australia’s Regional Express reflects the ongoing problem in a turbulent operating environment. Actually, Rex’s journey has been a rollercoaster ride for a year. It’s because last year, it got government aid to transport COVID-19 testing samples from regional areas to capital cities that saved Australia’s regional aviation industry. Then six months later, Australia recovered slightly in the domestic airline industry in which Rex commenced its mainline B737-800 flights to cater to the growing demand. But the fresh round of hard lockdown continues to wreak the airline’s financial performance. The leased aircraft of Rex had only taken into the skies in March, but they were grounded on the tarmac in July amid border closures and travel bans shrinking the passenger demand. To make these Boeings airborne, Rex tapped funding from PAG of nearly US $110 million. Given unfavorable circumstances, the planes are grounding, adding more costs to the already-in-loss airline’s financial statement and generating no revenue.

It’s not that Rex failed completely in financial performance. Rex Executives say that the airline has performed relatively well in a full year of pandemic operations. Yet, the airline is still reluctant to predict when things will reopen.

About Regional Express Airlines (Rex)

Regional Express (Rex) is an Australian regional airline based in Mascot, New South Wales operating its flights in all six states across Australia. It is the largest regional carrier of Australia that conducts both scheduled regional and domestic flights.

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