Regional Express Faces Financial Challenges, Enters Trading Halt on ASX

Regional Express (Rex), a prominent Australian airline, has entered a trading halt on the Australian Stock Exchange (ASX) amid significant financial challenges and reports of a potential restructuring. The trading halt, which came into effect before the Sydney markets opened on July 29, was requested by Rex as it contemplates its next steps in the wake of ongoing financial difficulties.

According to reports from The Australian newspaper, Rex has engaged Deloitte for restructuring assistance, with Sal Algeri and Richard Hughes—known for their role in the Virgin Australia administration—tasked with aiding the airline. The report highlighted concerns that “without a successful restructuring, Rex may not be able to avoid administration,” signaling the severity of the airline’s financial predicament.

Rex has declined to comment further pending a market announcement, expected to be made by July 31. This move marks a critical juncture for the airline, which has struggled financially due to its expansion into domestic jet operations. This venture, which saw Rex competing against major carriers like Qantas and Virgin Australia on mainline routes, has led to substantial losses and an inability to secure more than a marginal share of the domestic market.

Historically, Rex has been successful with its operations involving Saab 340 aircraft on regional and remote routes, particularly in southeastern Australia. The airline also engages in freight, aeromedical services, and subsidised government contracts, and has expanded into fly-out-fly-out operations through a stake in National Jet Express. However, the shift to Boeing 737-800 operations during the pandemic has placed significant financial strain on the company.

The airline is also grappling with internal challenges, including supply chain issues, pilot shortages, and recent boardroom upheavals. These internal conflicts culminated in governance investigations by the Australian Securities and Investments Commission and a contentious boardroom struggle involving former chairman Lim Kim Hai.

As Rex navigates through these turbulent times, the aviation industry watches closely, given the airline’s critical role in connecting regional and remote areas in Australia. The upcoming market announcement is eagerly anticipated, as it will provide further clarity on the future direction of Rex and its strategy to overcome these unprecedented challenges.

Sources: AirGuide Business airguide.info, bing.com, The Australian, ch-aviation.com