Australia’s Rex Seeks Voluntary Administration Extension to Secure Future
Rex – Regional Express administrators have announced plans to apply to the Australian Federal Court for an extension of its voluntary administration period until June 30, 2025. The extension aligns with the Australian government’s confirmation of an AUD80 million (USD52.3 million) financing facility to support the airline’s regional flights during this period.
The additional time and funding will be used to implement a business improvement program, with the goal of securing Rex’s long-term commercial viability. The airline plans to increase its operational fleet, expand its network, and enhance the reliability and capacity of its regional routes.
Ernst & Young, the administrator managing Rex’s affairs, stated that the extension will allow the airline to build a stronger regional network while undertaking the necessary steps to reposition the business for potential sale. “The extension we are requesting will help us to build a strong network for regional Australia, enabling us to continue to operate the regional network while undertaking a business improvement plan,” said Sam Freeman, an Ernst & Young representative.
Rex currently operates a fleet of 57 aircraft, including Saab 340Bs and Saab 340B(Plus) models, servicing 53 airports across six Australian states. However, the airline has faced challenges with pilot shortages and supply chain issues, leading to several aircraft being out of service and prompting the suspension of some flights and trimming of frequencies on others. Rex entered voluntary administration in July following a failed attempt to expand into B737-800 operations.
In the midst of its ongoing administration, Rex recently sold its sister carrier, Pel-Air Aviation (PFY, Sydney Kingsford Smith), to Helicorp Pty Ltd, a subsidiary of Japan Post’s Toll Aviation (TFX, Brisbane Archerfield). Proceeds from the sale are being used to pay off secured creditors.
Additionally, the Australian government has agreed to grant early access to the Fair Entitlements Guarantee (FEG) for former Rex employees, ensuring that they can access their entitlements despite the airline’s voluntary administration status. Rex’s administrators, along with the airline’s main secured creditor, PAG, have also committed to paying the entitlements of employees made redundant during the administration period.
The Australian government will continue to guarantee ticket sales throughout the administration period, with the guarantee still in effect as of now. Freeman emphasized that the extension would not disrupt the regional network, which remains crucial to connectivity in regional and rural Australia.
In a separate report, the Australian Competition and Consumer Commission (ACCC) found that airfares on major Australian inter-capital routes increased by 13.3% in the three months to September 30, 2024. The ACCC attributed the spike in airfares to a less competitive domestic airline market following Rex’s exit from 11 of the 23 services between metropolitan cities. The reduction in seating capacity and the loss of Rex’s lower fares have contributed to rising ticket prices.
Despite these challenges, Rex remains focused on stabilizing its operations and growing its regional network in the coming months.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com