Regional Express (Rex) has stated that it is considering withdrawing from some marginal routes and retrenching staff, after issuing guidance for a 30% drop in net profit due to high fuel costs and weak demand.
In its first profit guidance for fiscal 2011, Rex said profit before tax would be around $23.5 million, about 10% down from the previous year's $26.2 million.
Executive chairman Lim Kim Hai said that in response to the challenging environment, Rex was reviewing its network. He said in a statement: "The aviation environment this year has been extremely toxic and we have seen all the major carriers in Australia announcing significant declines in profits.
"Looking ahead, we do not see the situation improving much with both the domestic and international economies threatened with much uncertainty and risk.
"Regional aviation in Australia is now extremely vulnerable and it does not help that the federal government is proceeding with plans to increase significantly the cost burden on regional carriers," he said.