Travel has been a point of contention following Covid. It has adopted the traits of a rollercoaster, moving up and down, taking airline companies, like Regional Express (ASX: REX), along for the ride. After providing a cheery update following its H1 FY23 results, the Company has wheeled back, citing external circumstances.

The Company has revised its interim profit guidance today, deviating from its initial projections made on February 28, 2023. Rex had previously forecasted an operational profit for FY23. However, it has been grappling with the global shortage of pilots and engineers, compounded by supply chain disruptions post-COVID. As a result, the airline has been compelled to make significant reductions to its flight schedules in recent months in order to align its available aircraft, pilot, and engineering resources.

Adding to its woes, the months of May and June witnessed a substantial decline in business travel, largely due to corporate travel budgets being depleted after witnessing exponential increases in international airfares. Because of this unsavory cocktail, Rex now anticipates a Group Operational loss of $35 million for the FY.

Nonetheless, it notes that the unaudited revenue from Rex’s regional aircraft Saab’s operations has surpassed pre-COVID levels observed in FY19, and the corresponding EBITDA has remained positive for the FY. Rex maintains a positive outlook for the future, banking on a group operating profit before tax for FY24 and beyond. This optimism stems from the airline’s ongoing expansion of its Domestic jet operations network, as well as the recent acquisition of various new contractual works* by its subsidiaries, including the joint venture in National Jet Express (formerly Cobham Regional Services).

In the H1 FY23 results, Rex highlighted the anticipated benefits from its partnership agreements with major travel agency groups, heightened revenue from expanded operations, and increased enrollment at its pilot academies (with Rex eagerly looking forward to graduation). These factors were noted to contribute positively to the Group’s performance during the second half of FY23.

Rex had concluded FY22 with a loss of $100 million, which was partially mitigated by the reversal of impairments, resulting in a post-tax loss of $45 million. While this does provide some glimmer of hope, Rex’s revised forecast may dampen shareholder morale, making it challenging to sustain optimism moving forward.

In the 2022 final report, the Company’s executive chairman Lim Kim Hai had compared Rex’s financial year to a character from Greek mythology— Sisyphus, where every time the Company made some progress, external storms came to push it downhill. Seems like, little has changed since, storm-wise at least, and perhaps Rex will have to change tact to make it to the top of the hill.