Flight Centre Corporate welcomes REX’s $80m government loan

A Rex Airlines Boeing B737-85R plane, registration VH-MFM, landing at Sydney Kingsford-Smith Airport as flight ZL549 from the Gold Coast. In the foreground is the airport's security fence with a warning sign not to enter. This image was taken from near Kyeemagh Beach, Botany Bay on a cold and sunny afternoon on 27 June 2024.

By Zach Havard

The Federal Government has handed REX an $80 million lifeline to help secure the future of Australia’s regional network as the embattled carrier requests an extension on the voluntary administration to 30 June 2025.

FCTG weighs in (updated 12:10pm)

Flight Centre Corporate COO Melissa Elf has welcomed the news stating it reflects the growth and demand for regional travel and the importance of REX to the Australian economy.

“REX’s regional service is critical to communities and businesses across Australia, particular for mining, construction, health, government and not-for-profit industries,” she said.

“The demand for regional travel has not slowed, and it remains a very important component of the Australian economy. The proof is in the numbers – last quarter (July-September 2024) regional travel was up around five per cent compared to the previous year (July-September 2023).

“Flight Centre Corporate books tens of thousands of travellers into regional destinations every month, and Rex has long been a trusted carrier for those who frequent regional cities.

“I anticipate we’ll continue seeing an uptick in businesses travelling regionally into next year and beyond, as the promising growth of many regional communities will likely bring with it increased investment in infrastructure, technology, tourism, transport and housing that will prove rewarding for businesses.”

Earlier

Samuel Freeman, Justin Walsh, and Adam Nikitins of Ernst & Young Australia (EY Australia) – who are acting as joint voluntary administrators of Rex and its subsidiaries – have made the request to allow time for a strategic overhaul.

The loan was made possible by Federal Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King.

“On behalf of the EY and Rex teams, our customers and the communities Rex serves, I’d like to thank Minister King for her strong support for regional Australia,” Freeman said.

“This Australian Government financing facility will enable us to continue to support regional communities through an extension of the voluntary administration.”

Travel Weekly take: Was Rex failure the result of a market duopoly or internal politics?

Building a strong network for regional Australia

Freeman said that the facility and an extension of the voluntary administration would be used to invest in a business improvement program to help secure Rex’s commercial future. This includes significant investment in the performance of the Rex business including increasing the number of operational aircraft.

“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 to reposition the business for sale,” he said.

“We’re planning to increase the size of the operational fleet, while providing greater clarity for the Rex team and investing in strategic growth initiatives.

“Through this plan, we’re looking to increase reliability and capacity on the regional routes.”

The REX Group has also sold its aeromedical subsidiary (Pel-Air) along with other non-core assets allowing returns for secured creditors.

While the sale of the regional network remains underway, administrators are focused on implementing a business plan that furthers creditor returns and maintains key regional services.

Staff who were made redundant during voluntary administration will receive their Fair Entitlement Guarantee distributions.

“Importantly, as we’ve demonstrated throughout the voluntary administration – an extension will not disrupt the continued operation of the regional network, which is such a critical part of regional and rural Australia’s connectivity. The actions to be undertaken in the extension period are expected to enhance the network,” Freeman continued.

“This is all only possible thanks to our dedicated customers, the amazing Rex team members and the support of the Australian Government.

“We’d like to thank them, as well as our merchants and suppliers who have provided overwhelming support and made this possible.”

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