IN the words of Rex chairman Lim Kim Hai, the regional airline weathered a "veritable tsunami" to record an 8 per cent rise in third quarter profits, to $8.2 million.
And what a maelstrom it was -- and still is. We all know about the effect of still-rising fuel costs, which account for close to 20 per cent of Rex's total expenses.
But the real dilemma for Rex is those bus drivers, er, pilots which keep ejecting as quickly as new ones can be trained. Pilot attrition is running at 50 per cent, with the figure expected to peak at 60 per cent this year.
Under the circumstances, Rex has every right to be pleased with its performance. “This airline is performing stronger and better each and every day,” proclaims deputy chairman John Sharp.
Rex is showing the right trends with revenue (up 9.3 per cent) growing faster than non-fuel costs (5.4 per cent). It's also leading on punctuality, which given the frequent whinges about Qantas flyers, this probably isn't saying much.
According to Sharp, the third quarter is traditionally the worse quarter because January school holidays and business does not pick up until late February. Easter -- a quiet time -- also fell during the quarter.
A positive feature of Rex is that 31 out of 36 routes are not used by any rivals, either because it's not economic or because their planes are too big.
Rex is confident of meeting the full-year forecast of a net profit similar to the previous year's $23.6 million. “Bookings for the last quarter are strong, translating into high load factors,” Lim said.
Earlier the airline expected a 10 per cent increase, but a poor first half put paid to that.
But as Lim points out, Rex will make more money in the second half than Virgin Blue will make for the whole year.
Long-time Criterion readers would be well aware of your columnist's aversion to airline stocks.
But given Rex's share price slide -- down from the $2.50 a share level of six months ago -- we're happy to rate the stock a long-term buy.
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The Australian