Australia Eyes Rex Acquisition as Backup Plan
The Australian government is preparing to acquire Regional Express Holdings, trading as Rex – Regional Express – if the carrier’s administrator fails to secure an alternative buyer. This contingency move, announced by Prime Minister Anthony Albanese’s office on February 12, underscores the government’s commitment to ensuring that scheduled passenger flights to regional and remote towns continue uninterrupted.
Rex, headquartered in Wagga Wagga and a vital air link for 53 airports around Australia, filed for voluntary administration in July 2024. The decision to potentially take over Rex comes amid mounting concerns about maintaining regional connectivity, especially as Rex is often the sole operator at many destinations. In a statement, Prime Minister Albanese stressed that while the government is not actively bidding in the upcoming sale process, it remains ready to step in if necessary. “The government is not a bidder in the upcoming sale process and would like to see a successful market-led outcome,” the statement read. “However, in the event there is no sale, the Albanese government will undertake necessary work, in consultation with relevant state governments, on contingency options, including preparations necessary for potential Commonwealth acquisition.”
In a bid to stabilize Rex during these turbulent times, the government has already injected AUD130 million into the carrier. This financial package included acquiring AUD50 million of debt from PAGAC Regulus Holdings Limited—Rex’s largest creditor—and providing a loan of up to AUD80 million to keep flights operating until June 30, 2025. These measures have been crucial in ensuring that Rex continues to serve regional communities, despite its ongoing financial challenges.
Rex’s administrator, Ernst & Young, has so far been unable to find a buyer for the airline’s regional operations. As part of the restructuring process, Rex has closed its loss-making Boeing 737-800 operations, returned those aircraft to lessors, and sold business units including Pel-Air Aviation and National Jet Express. Although Rex’s scheduled passenger services to regional and remote towns have generally been profitable, its fleet of 57 Saab 340B(Plus) and Saab 340B aircraft, with an average age of 31.3 years, urgently requires replacement—a significant cost hurdle that has deterred potential buyers.
Prime Minister Albanese emphasized that any prospective buyer entering negotiations with Ernst & Young would receive government support. “Terms of Commonwealth support will be subject to negotiation, but will be conditional on commitments by bidders to provide an ongoing, reasonable level of service to regional and remote communities, the need to provide value for money to taxpayers, and good governance,” the statement added.
This development comes at a politically sensitive time. With Australia’s federal election due by the end of May and the major opposition party gaining ground, ensuring that regional air services continue remains a hot-button issue. The government’s proactive stance on securing Rex’s future highlights the importance of regional connectivity to the nation’s economy and social well-being.
As the sale process unfolds, the government’s readiness to step in with a potential acquisition sends a strong message to stakeholders: maintaining air service to Australia’s outlying communities is a top priority. The situation remains fluid, and further details will emerge as negotiations with potential buyers progress and the government finalizes its contingency plans.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com