Australia’s largest independent operator of regional flight services has noticed a handy win to extend their current contract with Ambulance Victoria by 12 years in a deal valued at more than $300 million to Regional Express (ASX: REX).
The deal is on similar terms to the existing contract granted to Rex subsidiary Pel-Air that commenced in 2011 but will include four new aeromedical aircrafts to be delivered in 2022 which will undergo upgrades to meet the requirements of Ambulance Victoria.
In addition to supplying the four aircraft, Pel-Air will also supply pilots and engineering support which will enable aerial transport of medical personnel and patients throughout Victoria into Tasmania, South Australia and Southern New South Wales.
Pel-Air Chairman, the Hon. John Sharp AM commented, “Coming on the back of a similar award by New South Wales Ambulance in February 2021, this award is a clear recognition of Pel-Air’s unparalleled ability to provide safe, reliable and high quality aeromedical services on fixed-wing aircraft at competitive prices. “
“We solemnly commit to the Victorian Government that we will spare no efforts in achieving the same outstanding service levels which Ambulance Victoria has enjoyed for the last decade.”
With its upgrades, the new fleet is expected to improve patient care capabilities for medical professionals while also reducing the transfer time between air and road ambulances. This has a flow-on effect that will enable both sets of crews to spend more time in transit and treat more patients.
As the largest independent operator of regional flights in Australia, Rex has seen a mixed response from the pandemic compared to other carriers, noting that Rex hasn’t directly been impacted by the shutdown of international borders.
While the border closures have reduced tourism in Australia, of which some customers would use Rex services upon arrival in the country, demand for the airline’s flights have increased as more Australians have turned to domestic tourism towards the backend of the pandemic.
FY21’s $3.8 million net loss after tax was still largely impacted by the pandemic but was a major improvement on the $19.3m loss incurred in FY20.
Further financial improvements are expected however, with Rex having resumed Melbourne-Sydney flights in March 2021 which were shortly then followed by Melbourne-Adelaide services.
While regional cities where Rex flies 1-3 flights a day have been the backbone of the carrier’s operators, demand for its services have also seen the airline open its Sydney-Gold Coast and Sydney-Canberra routes in April 2021. The addition of these routes even saw Rex employ pilots from rival carriers whose services were no longer required due to international border restrictions.
Brisbane was then added to their domestic network in November 2021, just in time for the Australian summer of domestic holidays, likely to be the last with Australia’s international borders closed.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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