The federal government continues to throw regional carrier Rex Airlines a lifeline, after taking on its $50 million debt from its largest creditor PAGAC Regulus Holdings Limited.Rex has been fighting for commercial survival after entering voluntary administration on June 30 last year, with Ernst and Young (EY) appointed administrators.Transport Minister Catherine King and Finance Minister Katy Gallagher today announced the government would acquire some of Rex's debt to prevent liquidation, which they said would harm regional and remote communities that rely on the carrier.
The federal government has acquired $50 million of Rex Airlines' debt from its largest creditor. (Nine)"By acquiring the debt, the government will become the principal secured creditor and will seek to become a voting member of the Committee of Inspection," the pair said in a joint statement this morning."Whilst the accelerated initial sale process undertaken by the administrators in mid-2024 did not find a suitable buyer for the airlines' regional operations, the government continues to work closely with the administrators through the extended convening period."This makes clear the government's ongoing commitment to maintaining access to aviation services for regional and remote communities, and recognises the critical role of the Rex network to local economies."EY has a little over five months to secure Rex's commercial future after the Federal Court late last year granted an extension of the voluntary administration to June 30.The extension was supported by the federal government's $80 million commercial loan.
Transport Minister Catherine King. (Alex Ellinghausen/SMH)EY said the loan, and the extension, would be used to invest in a business improvement program including increasing its fleet."We're planning to increase the size of the operational fleet, while providing greater clarity for the Rex team and investing in strategic growth initiatives," EY administrator Samuel Freeman said in November."Through this plan, we're looking to increase reliability and capacity on the regional routes."The collapsed airline has been able to sell its ambulance business Pel-Air to logistics giant Toll for $47 million. Other asset sales are ongoing.The government also guaranteed ticket sales until June 30, meaning it would cover any chargebacks and refunds owed by the airline in the instance a flight is cancelled and not rescheduled.
EY has a little over five months to secure Rex's commercial future. (Bloomberg)Former airline employees were granted early access to the Fair Entitlements Guarantee, with 306 claims received so far and all but four granted.More than $7.1 million has already been provided to those staff."These actions preserve important economic, medical and freight services, supporting regional liveability and regional economies," King and Gallagher said.
