Rex airlines profit down 10 per cent

[Section28- BE]

Ex SMH- Today

Rex airlines profit down 10 per cent

February 27, 2008 - 3:17PM


Regional Express Holdings Ltd failed to declare an interim dividend after the rural airline posted a 10.4 per cent dip in half year profit because of rising fuel costs and flight cancellations from a shortage of pilots.


Net profit fell to $10.3 million for the six months ended December 31 from $11.5 million in the previous corresponding period even though revenue rose by 23.5 per cent to $128.9 million.


The number of passengers carried rose by 9.8 per cent to 772,837.


Rex said its profit was hurt by fuel costs, flight changes due to pilot shortages and the cancellation of its services between Olympic Dam and Adelaide in South Australia.


"Fuel unit costs increased 23 per cent in November and December, leading to an increase in total spending on fuel by $1.4 million," Rex said.


There was also a one-off increase in engineering costs of $3 million as a result of a clustering of major scheduled maintenance and weather-related maintenance.


"Acute pilot shortages, with a 60 per cent annualised attrition rate, resulted in an increased number of flight cancellations, route suspensions and service disruptions," Rex said.


"Consequently, there was also increased recruitment and training costs."
Rex also carried start-up costs of a pilot academy in Victoria.
The total cost of these additional expenses are estimated at about $1 million.


Rex lost a contract with BHP Billiton to supply the Olympic Dam services to another carrier.


"The loss of the Olympic Dam service resulted in a reduction of overall network yield as the redeployed activity and new routes will not immediately achieve the same yields," Rex said.


Rex shares were down two cents to $1.20 by 1511 AEDT Wednesday.
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[puff]

Interesting considering they have spent all these big $$s setting up the flying school and I know of some guys with ME-CIRs, 250-300 TT who have applied yet hear nothing when they are available NOW, and have more hours than the pilots that come out of the school will have?

Again QFlink's idea of getting people with at least 3/4s of the quals then getting them is surely cheaper but also in these day of the 'shortage' most importantly QUICKER.

[flyitboy]

Are we surprised here? I doubt it!

We shall see much more of this sort of thing because it will take a long time to rectify their ill doings.
I feel for their employees, they will suffer at the hands of the poor long term planners.


F

[KRUSTY 34]

puff,

I know what you are saying and on the surface it appears rediculous, but remember this. The role of First Officer on Regional turboprop operations has been traditionally filled by Pilots with thousands of hours experience and many years working in the industry. Over the years the industry has grown and so has the complexity of the operation. Now we have a situation where the supply of such pilots has all but dried up. One solution is to lower the requirements and take on less experienced people. The problem is that with the growth of regional services, the position of Regional airline pilot has become more akin in job description to a Domestic airline pilot rather than what was essentially a scheduled charter driver.

Because the Training and Checking process at REX and other large Regionals now more closely resemble that of the larger airlines, we are now seeing a much higher failure rate amongst candidates than previously was the case. Whilst these candidates are of a much lower level of experience to years gone by, they still posess significantly more experience than a bare CPL with MER! I would suggest this is the reason they are not looking closely at bare CPL'S.

Cadets are a different matter, according to the magicians who are the architects of these schemes. They believe the cadet will be better able to adapt to the role because they have been trained as an airline pilot from the word go. Whether or not this will bear fruit in REX's case still remains to be seen.

So I guess what I am trying to say is, we all know there is shortage, and REX are desperate for pilots, but history has shown that one must first learn to walk before attempting to run!

P.S. Sorry for the thread drift!

[Kev9]

More like drivel

[haughtney1]

Because the Training and Checking process at REX and other large Regionals now more closely resemble that of the larger airlines, we are now seeing a much higher failure rate amongst candidates than previously was the case. Whilst these candidates are of a much lower level of experience to years gone by, they still posess significantly more experience than a bare CPL with MER! I would suggest this is the reason they are not looking closely at bare CPL'S.


Which Krusty is a failure of REX's training department, pure and simple.
Cadets are one answer, but they are long-term and only part of the solution. Having said that, I am an advocate of the cadet process...:eek:

[Capt Wally]

I see that in todays 'Australian' aviation section there is good reading on just this topic. Now inc QL cancelling flights due along with other reasons a pilot shortage.
Of course GD was giving all the right answers.......NOT !!


CW

[flyitboy]

I was passing thru YMAY recently & found out that the jungle jet is whooooing people away from the 'boat drivers' for the AY-SY trip. So much so that REX cancelled a couple of flights recently due to the obvious & QL are suffering also. And this I am lead to believe is just the tip of the iceberg. The flights that are taking pax from REX & QL are the midday flights & not prime business flights that leave early in the morning to SYD. "Jungle Jim" airlines don't 'swing' out of AY as yet first thing in the morning but if they do it might be by by to props !. Props are for boats anyway:E

Just heard the above from someone else that's all, this is a rumor file afterall!




F

[KRUSTY 34]

Quite correct flyitboy.

History has shown that to introduce a jet service to what was once an all turboprop run may not have the disasterous effect that one may think. DJ operate into both Coffs and Ballina, and these ports continue to be prime earners for both QLink and REX respectively. In fact if the middle of the day is taken up by the lower cost "leisure" market, it may be the excuse REX are looking for to reduce it's services during these leaner periods. One thing is for certain, REX will have to reduce more services as the year goes on.

Now if DJ decide to overnight an aircraft then that's a different story altogether. The decision to do that would I imagine be based on utilisation of a very expensive peice of equipment balanced against the yield/load factor that such a move would produce.

If DJ do decide to O'nite a Jet at any of the current REX or QLink outports then I would say the turboprop operators would be "Toast"! The trick for DJ would be to avoid going broke in the process.

[Capt Wally]

Good points there by 'flyitboy' & 'krusty 34'

I was once told by a few business men that often travelled intra-state & they said they dislike having to go on a prop plane. Noisy, slow, dangerous(in their eyes) & even look old & risky. They(business types) don't pay for the airfair themselves (unless self emp) so they would rather a jet service anyday regardless of cost. It's a bit like an operator doing RPT runs with a PA31 for Eg & along comes someone with a Metro ( as ugly as that sounds) & bingo the PA31 is now defunct!

I also heard not unlike flyitboy did another story recently (word gets around fast in this game!) that some 'suits' where visiting YMAY from YMIA to see if they too could consider the costs/set-ups etc. of operating a jet service. Cute plane that Jungle jet, damn quiet.

Maybe one day 'soonish' that familiar sound of a Saab barely above LSALT droning away slogging it out against H/W's will be the thing of the past for intra-state runs.

CW