Australia's largest independent regional carrier Regional Express (Rex) has posted a 23% decline in net profit for the first fiscal quarter.

For the three months ending 30 September, Rex's net profit fell 23% to A$3.7 million ($3.4 million) from A$4.8 million, says Rex.

Passenger revenue dropped 15% to A$47.5 million from A$55.6 million and total revenue was down 16% to A$56.9 million from A$67.6 million, it says.

The airline benefited from a 23% fall in fuel costs to A$7.7 million from A$14 million, it adds.

"Rex's outstanding team effort resulted in only a 5.6% reduction in full-year earnings, which is an outstanding achievement by industry standards," says Rex deputy chairman John Sharp, referring to how the global economic downturn has adversely affected airlines.

He says Rex responded to the downturn by cutting capacity.

Rex subsidiary Pel-Air lost much of its overnight freight business due to the global financial crisis, which dried up demand for such services, but Pel-Air has replaced this by winning charter contracts from mining companies in Queensland, he adds.

Rex's main business is scheduled regional passenger services in New South Wales, South Australia and Victoria using Saab 340s.

It says during the period it withdrew from the Sydney-Mildura route because of indirect competition from Virgin Blue. This other airline in recent times has moved into regional routes using Embraer regional jets.

Rex's operating statistics show that for the first fiscal quarter, total passenger numbers fell 13% to 308,482 from 354,173.

Capacity, as measured by ASKs, fell 5%, RPKs were down 10% and the passenger load factor dropped 5.9 percentage points to 61.8% from 67.7%.

Sharp declines to give a profit guidance for the year ahead due to "the highly volatile economic outlook" but he says Rex expects that its charter business will continue to grow.

He also says "there are now signs of a recovery" but he fails to elaborate.

Source: Air Transport Intelligence news