The Regional Express Holdings Ltd (ASX: REX) share price has slipped into the red on Wednesday.
Shares in the domestic airline are on the way down after the company made an announcement concerning its operations.
Image source: Getty Images
What did 'REX' announce?
In a move that could weigh in on the company's share price, its board was "left with no option but to extend the suspension of (its) domestic services and reduce regional services up until 10 October 2021".
Regional Express had originally thought it would stand down until at least 12 September. However, given further extensions to lockdowns in Greater Sydney, the decision was made to continue the shutdowns and extend the furloughs until early October.
Regional's operations are impacted by lockdowns that affect domestic travel. And remember, NSW has announced a further extension of lockdowns for Greater Sydney until the end of September 2021 and for Regional NSW until at least 10 September.
Therefore Regional Express is unable to operate, due to these restrictions on travel. It is a tricky situation that is no doubt made more complex by the nature of the COVID-19 delta variant, which has seen case numbers spike in NSW and Victoria over the last few months.
How does this impact the Regional Express share price?
Regional's shares had originally made a swift recovery from the market selloff back in March 2020. By January of this year, they were at 5 year highs of $2.07 a share.
However, since then, amid the COVID situation in Australia and abroad, it's been a steep slide down and Regional Express now trades at $1.19 each.
As such it's been a difficult year to date for Regional's shares, posting a loss of 42% since January 1.
Despite this, the Regional Express share price is still 10% in the green over the last 12 months.
What's next for Regional Express?
A positive for the Regional Express share price is that the company's FY21 results were well received by the market on reporting yesterday.
In it, the company recognised a 41% decrease in passenger revenue, however, the underlying loss before tax came in at $18.4 million, which is an approximate $9 million improvement on FY20.
The company is also uncertain about the future of its operations and the aviation industry as a whole, and thus did not provide any specific earnings guidance for FY22.
