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- Regional Express has told shareholders it now expects profits for the 2020 financial year to be lower due to a challenging economic environment
- Following a sluggish first quarter, forecast profits for the year were downgraded 20 to 30 per cent
- The regional airliner cited natural disasters in regional areas, a weak Australian dollar and global uncertainty from the US-China trade war as contributors
- Shares are down almost five per cent after the announcement and are trading at a two-year-low of $1.24 apiece
Regional Express has downgraded its forecast profit for the 2020 financial year by as much as 30 per cent, citing a challenging economic environment.
The regional airliner informed shareholders at its AGM that sluggish passenger numbers in the first quarter look set to continue and, subsequently, the company lowered its expected profit by 20 to 30 per cent.
Among the external pressures named were the wide spread natural disasters in Australia, impacting regional travel and the ability of regional Australians to travel.
The weak Australian dollar was flagged as a source of an expected rise in costs. Already, fuel prices are higher, having risen by 30 per cent during the 2019 financial year.
Globally, many countries are experiencing a downturn amid ongoing uncertainty stemming from the US-China trade.
In light of the revised forecast and global economic uncertainty, Regional Express announced it will not pay shareholders the interim dividend.
The company assured, however, it remains committed to the final dividend for this financial year, as long as economic conditions don’t deteriorate further.
It’s not all glum news for Regional Express, however, with the company finalising the acquisition of Aviation Training Academy Australia (ATAA) and its subsidiary ST Aerospace Academy earlier this week.
ATAA is accredited to the civil aviation authority of Australia as well as China and Singapore with a forecast increase in international cadet enrolments.
Shares are down almost five per cent after the announcement. They’re currently trading at a two-year-low of $1.24 apiece at 3:50pm.
