August 6th 2024.
Rex, the regional carrier, is currently in discussions about a potential bailout. Its administrators have been working hard to find a solution, but they believe that the airline can still thrive without government support. On July 30, administrators were appointed to five companies within the Rex group, leading to the grounding of the airline's Boeing 737s on routes between major cities. However, regional flights are still operating as the search for a buyer or financial support continues.
The federal transport department has been in daily talks with the airline, and it is expected that the government will provide financial assistance, as long as the regional flights remain a top priority. According to Sam Freeman, one of the three EY administrators at Rex, they have been given indications from the government that Rex is considered critical infrastructure for regional Australia and will receive support if needed. However, the administrators believe that the airline can remain sustainable without a bailout.
Freeman stated that they have been working on various models to show that Rex can be a viable business in the future, but it will need to be reshaped. He also mentioned that there has been significant interest from potential buyers within the aviation industry since they took over. They are currently working with advisors to progress these potential deals in the coming weeks. The goal is to keep the reliable regional network strong and maintain a steady flow of bookings from customers to ensure a profitable and sustainable future for Rex.
Earlier in the day, Rex was in court for a vote by its tens of thousands of creditors to decide whether to revive or liquidate the company. The court was told that Rex has over 4,000 creditors, including its principal secured creditor, PAGAC Regulus Holding, a Hong Kong-based investment firm. There are also over 1,000 employees who are awaiting payment and others who have lost their jobs and are seeking their entitlements. Additionally, there are tens of thousands of passengers who are owed refunds for cancelled flights.
The court granted orders to allow for a virtual meeting of creditors to take place on Friday. The meeting was postponed to allow for a second creditors' meeting where a vote will determine the future of the Rex companies. The airline's director and major shareholder, Lim Kim Hai, had previously attempted to oust the other directors two weeks before the company entered administration. However, a meeting to elect a new board will not take place until after the second creditors' meeting.
PAG, the executive chair of PAGAC Regulus Holding, has agreed to fund the administrators, but the details of this agreement remain confidential. At Friday's first meeting, creditors will vote on a committee of inspection made up of representative creditors who will assist in the administration process. Rex, which emerged from the collapse of Ansett in 2002, offers various services, including passenger and freight flights, chartered flights, and flight training. However, it has faced financial struggles since expanding to compete with dominant operators Qantas and Virgin Australia in 2021. In February, the airline reported a net loss of $3.2 million for the first half of the 2023/24 financial year due to its aggressive expansion.
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