Aviation sector near collapse: Rex

The Regional Express Group (REX) has warned on severe risks to the viability of Australian airlines after issuing a profit warning to the Australian Securities Exchange on Friday.

The regional airline foreshadowed first-half profit would come in 40% below the corresponding period last year as conditions in the local aviation soften.

The Rex downgrade follows similar recent statements from industry leaders Qantas Airways and Virgin Australia Holdings, but went further in its warning on the dire plight facing the sector.

"The entire aviation industry is financially haemorrhaging right now and approaching collapse,” Rex's Chief Operating Officer Garry Filmer said.

“Qantas' first half profits are expected to be registering a decline of over $450 million from a PBT of about $140 million in the prior period, to an expected loss of over $300 million. Virgin Australia shows a similar trend with a decline of about $80 million from a PBT of about $25 million, to an expected loss of more than $50 million.

"Regional aviation is even harder hit as the profit margins are slimmer.”

Mr Filmer noted that two regional carriers had already failed this financial year – Aeropelican and Brindabella Airlines – and “more will likely follow suit”.

“In the past decade there was an average of one regional airline collapsing every year," he said.

"We implore the Minister for Infrastructure and Regional Development (Warren Truss) to take immediate and forceful efforts to fulfil his election commitments to regional aviation outlined in the Coalition’s Policy for Aviation, as many regional carriers have little time left before they face the same fate as Brindabella.”

Rex is Australia’s largest independent regional airline.