REX 'well prepared for financial crisis'

The high cost of fuel has blown a hole in Regional Express Holdings Ltd's (REX) first quarter profit, but the carrier says it is looking forward to prices easing in the year ahead.

REX, Australia's largest independent airline, also reaffirmed its guidance on Wednesday for fiscal 2009, saying it expects a net profit in line with the prior financial year's result of $24.3 million.

REX posted an 18.6 per cent dip in net profit to $4.8 million in the first quarter of fiscal 2009, as higher fuel costs ate into its profits in the three months.

During the period covered by the results, crude oil, from which jet fuel is derived, hit a record price of $US147 per barrel and has since fallen by around 60 per cent.

On Tuesday, on the New York Mercantile Exchange, light sweet crude for December dropped 56 cents to close at $US54.39.

REX's cost of fuel in the first quarter climbed 29.6 per cent on the previous corresponding period to $14 million.

"I think we can look forward to fuel prices easing," REX chairman Lim Kim Hai said.

But Mr Lim said while the fuel price has already fallen significantly, the value of the Australian dollar against the US dollar has also, cancelling out some of the potential savings.

REX deputy chairman John Sharp said that the company was well prepared for the financial crisis after spending the past five years controlling costs and improving operations.

"If the current economic environment does not degenerate too sharply, we should be able to maintain the current momentum."

Mr Sharp said the airline had taken a conservative approach to growth and funded its capital expenditure with cash from operations leaving the group debt free.

In the quarter, REX delivered a 5.8 per cent increase in total revenue to $67.6 million, despite a 7.7 per cent decline in passenger numbers.

The boost in revenue was helped by an increase in yield, or the average fare price, which rose 14.2 per cent to $156.90.

The airline's load factor increased by 1.5 per cent to 67.7 per cent as it cut back on capacity.

REX has recently suspended services, such as Cooma to Sydney, Brisbane to Maryborough and Griffith to Melbourne, and has reduced the frequency of other services due to a shortage of pilots.

This month REX's subsidiary Air Link announced it would pull out of several western NSW routes.

REX shares closed five cents lower at 90 cents.