Australian Government Considers Controlling Stake in Rex Airlines

In a significant development for Australia’s regional aviation sector, the Australian Government, led by Prime Minister Anthony Albanese, is considering purchasing a controlling stake in Rex Airlines, a move that could be announced as early as February 12, 2025. The beleaguered regional carrier, which serves many smaller and more rural communities across the country, has been struggling financially since entering voluntary administration in July 2024.

Rex’s financial troubles were triggered by a failed attempt to compete with major carriers like Qantas/Jetstar and Virgin Australia on trunk routes between state capitals, using its small fleet of Boeing 787-800 aircraft. After this operation ceased, Rex was left with 58 Saab SF340 turboprops and has been unable to recover. Despite administrators working to find a buyer, no deal has been secured, and the government’s involvement is now seen as a possible lifeline.

The Australian Government is expected to announce its plans to assist in the sale process, which could include working with shortlisted bidders to maximize the chances of securing a buyer. However, any potential government support will likely come with conditions, including ensuring continued service to regional and remote communities. Additionally, the government has emphasized that any assistance must represent value for taxpayers, and bidders will need to provide assurances of good governance.

While the government is not currently a bidder in the ongoing sale, it is preparing contingency plans in case a long-term buyer cannot be found. A source familiar with the process told The Conversation, “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 for potential Commonwealth acquisition.”

Rex’s immediate survival has already been bolstered by government support, including an extension of its exemption from the “use it or lose it” rule for slots at Sydney Airport (SYD) until October 2026. This extension ensures Rex can continue operating its regional flights from the airport without the risk of losing access to these critical slots.

Moreover, the Australian Government has provided Rex with significant financial aid, including an AUD $80 million loan to ensure continued operation of regional flights until June 30, 2025. Additionally, the government bought out AUD $50 million worth of debt from Rex’s largest creditor, PAGAC Regulus Holdings Limited, making the Australian Government Rex’s largest creditor.

Prime Minister Albanese affirmed the government’s commitment to regional aviation, saying, “We are working collaboratively with the administrators of Rex to ensure that regional services continue beyond June 2025, including looking at what support the Commonwealth can provide.” Australian Transport Minister Catherine King echoed this sentiment, emphasizing the government’s role in supporting regional communities: “When markets fail or struggle to deliver for regional communities, the government has a role to ensure people do not miss out on opportunities, education, and critical connections.”

Historically, the Australian Government has not owned shares in any airline since it sold its stake in Qantas in 1992. However, a potential investment in Rex would secure essential air links for rural communities that depend on the airline for access to healthcare, business, and family connections with larger cities.

As Rex’s future hangs in the balance, the government’s decision could play a pivotal role in ensuring that regional Australians continue to have access to reliable air travel options.

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