UPDATED: REX staff stood down and payout delay likely, says administrator

UPDATED: REX staff stood down and payout delay likely, says administrator
Edited by Travel Weekly


Rex administrators have told hundreds of employees they are unlikely to receive their wages or any redundancy payouts for “months” with airlines expected to cease operations by the end of the day.

Rex Airlines was placed into voluntary administration on late on Tuesday night after it entered a trading halt on the Australian Securities Exchange on Monday.

In a recording of the meeting sent to the ABC, administrators told Rex Airlines employees, the entity which operates the domestic routes between capital cities – that the business is in a “very perilous financial position and has access to almost no funds”.

“The business, to be very frank, is simply not viable, and administrators, after working very hard, have formed the view that [Rex Airlines] is not in a position to pay the wages of its employees moving forward,” administrator Justin Walsh told the meeting.

“Put simply, I guess the company is unable to meet the costs that it will need to incur to keep operating,” he told staff.

“With the business not operating and unlikely, almost certainly, not able to recommence operations in the future, it’s unfortunately the administrators view that the position of each of the staff of the company on this call needs to become redundant.

“The simple fact that I have access to insufficient funds to pay your wages, leaves the administrators with no choice but to conduct that consultation process over a very short period.”

Administrators have told Rex Airline employees the consultation period will end at 2pm on Wednesday – after which a decision will be made about the future of the airline and its staff.

A total of 360 people with Rex Airlines will be made redundant, with an additional 250 employees to be made redundant in its Regional Express division which operates regional and rural Australia flights.

Payout clause update for CEO

The developments follow news yesterday of a $350k+ payout for its CEO and halt of trading as well as the collapse of Bonza earlier this year.

Rex CEO entitled to $352,600 pay-out after his employment terms were updated just days before trading halt

A spokesperson for EY had earlier said “the aim was to restructure the business so it can continue to service regional Australia”.

“Further statements made about who is impacted and what it is going to take to turn things around,” they said.

Virgin Australia has offered to rebook passengers impacted by grounded flights onto an equivalent service fee of charge, asking flyers to reach out before 14 August to claim the offer.

The Financial Review reported EY is expected to work with investment bank Houlihan Lokey to run a sale process for the Rex.

It comes after the airline’s private equity backer, PAG Asia Capital, funded new money to the administrator on Wednesday to allow the regional flights division of Rex to go into administration, according to sources with direct knowledge of the situation.

Melbourne Airport statement

“Melbourne Airport is deeply disappointed by the suspension of Rex jet services and stands ready to assist passengers where we can,” it said in a statement.

Rex services from Melbourne to Sydney, Brisbane, Adelaide, Canberra, Hobart, the Gold Coast and Perth have been cancelled.

Affected passengers will be reaccommodated on Virgin Australia flights free of charge.

Passengers due to travel on these services within the next 48 hours are advised to contact Virgin Australia on 13 6789 for rebooking.

Other passengers with Rex jet bookings should visit the Virgin Australia website for a rebooking form.

Rex regional flights to Mildura, Merimbula, Mt Gambier, King Island, Burnie, Devonport and Wagga Wagga continue to operate as scheduled and passengers booked on these services should proceed to the airport as normal.

“Melbourne Airport was proudly home to Rex’s largest 737 jet base and our thoughts are with the staff affected by this announcement,” it said.

“The team at Melbourne Airport will continue to work hard to facilitate new entrants to the Australian market because of the benefits they bring to consumers.”

Sydney Airport statement 

The Rex Airlines administration is a difficult day for Australian aviation, and evidence that action needs to be taken to improve competition and efficiency, Sydney Airport said in a statement.

“Our first thoughts go to the Rex passengers and employees that will be impacted by the administration,” Sydney Airport CEO Scott Charlton said.

“We are pleased to see that the Administrator will continue regional operations to and from Sydney during this period as these services are critical for many regional communities.

“What this situation demonstrates is that we need to change some things in the Australian aviation market for competition to thrive, because recent history suggests the barriers are too high.

“We have a rare opportunity to get this right with the proposed slot reforms at Sydney Airport and through the imminent Aviation White Paper, and we remain ready to work with the Government on implementing both.”

ATIA statement

ATIA CEO Dean Long said: “Rex Airlines has been a lifeline for much of regional and rural Australia, ensuring these communities stay connected to the rest of the country.

“Rex’s entry into administration is a significant blow not just for these areas but also for the competitive landscape of Australian aviation. We remain hopeful that Rex is able to navigate this challenging period and emerge to trade again. In the meantime, your travel professional is doing everything they can to work through your options.”

PM’s response

Prime Minister Anthony Albanese has announced the government is keeping an eye on the situation while minister for transport Catherine King said the government is ‘putting some contingencies in place’ in an effort to ensure people in regional centres continue to receive service.

This is a developing story which we will continue to be updated. 

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