Coronavirus does not seem to have affected Regional Express much so far, but the airline expects the wider economy will take a hit.
"The devastating bushfires of the last three months and the COVID-19 outbreak since the end of January did not appear to have a very big impact on regional travel on Rex's network," executive chairman Lim Kim Hai said.
In its half-yearly financial report Rex said its board believed the outbreak, coming on the back of the "unprecedented" fires, would "have a significant negative impact on the economy" in the current half of the financial year.
"The board believes the environment is too volatile to give an accurate forecast, but is hopeful that the earnings would not deteriorate further."
Rex, which operates in regional areas around the nation, including the Burnie-Melbourne route, reported after tax profit of $6.9 million for the six months to the end of December.
That was down from a $9.8 million profit in the corresponding period a year earlier.
Passenger revenue fell by 0.2 per cent to $145.1 million, while total revenue climbed by 1.5 per cent to $166.2 million.
"Since the start of the financial year, the economy was severely impacted by the US-China trade war, with a series of natural disasters further compounding the situation," Mr Lim said.
"The very weak Australian dollar also impacted earnings severely.
"Although earnings were down by 30 per cent (in the half-year), we believe that the Rex group remains fundamentally strong to weather the temporary setback."
Passenger numbers eased back by 0.9 per cent to 659,053, while the average fare edged up by 0.9 per cent to $223.
Rex in February announced it would end its Sydney-Ballina and Adelaide-Kangaroo Island routes during 2020.
Subsidiary Pel-Air was recently awarded the New South Wales fixed-wing air ambulance contract.
Rex said its new academy with 160 students would bring added profits.
