The Federal Government is pledging its support for regional aviation travel by acquiring a $50 million debt from REX’s largest creditor, PAGAC Regulus Holdings Limited (PAG).
Taking up the debt makes the government the principal secured creditor, allowing them to become a voting member of the Committee of Inspection. This will give them greater power over the current voluntary administration.
The current administration period ends in June 2025 after the federal government granted an extension to administrator EY in November last year.
Transport Minister Catherine King described the move as an “important step to prevent an adverse outcome for regional communities, such as liquidation, and ensure the continued connectivity of Australia’s regional and remote communities.”
Whilst the accelerated initial sales process in mid-2024 did not lead to a buyer for the airline, the government continues to work closely with administrators through the administration period.
This is just the latest actions of the government to secure REX’s future. Back in November, the government provided an $80 million loan to the administrators of REX to help it keep its operations functional and increase the number of operational aircraft.
This move was largely supported by the industry, with Flight Centre Corporate COO Melissa Elf saying at the time “REX’s regional service is critical to communities and businesses across Australia, particular for mining, construction, health, government and not-for-profit industries.”
“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).
The Albanese government has also supported REX by granting early access to former employees of Rex Airlines Ltd (the Boeing-737 business) to the Fair Entitlements Guarantee and providing a guarantee in relation to regional ticket sales during the administration.
To date, the Employment and Workplace Relations Department has received 306 claims and processed 302 claims from former Rex (RAL) employees, with over $7.1 million already provided to Rex staff through FEG.
In the update published today, Minister King notes that “these actions preserve important economic, medical, and freight services, supporting regional liveability and regional economies.”
https://travelweekly.com.au/article/atia-ceo-dean-long-on-governments-rex-intervention-rex-cannot-fail/
Simon Westaway, Australian Airports Association CEO said “We note the Federal Government’s announcement to acquire $50 million of debt from Rex’s largest creditor.
The AAA’s focus remains on keeping regional and rural Australia connected with sustainable air services.
Our airport members have continued to support Rex’s regional operations and many have taken on large amounts of debt to keep the airline going.
We would welcome assistance for these airports for the key role they have undertaken in this process.
While administrators keep searching for a buyer, the AAA urges the Albanese Government to consider contingency plans in communities where air connectivity is under threat.”
