Rex will “stay in its lane” and not try again to compete with Qantas and Virgin on domestic jet services, new owner Air T has indicated.
Airfinance Global has reported that Air T will be focussing reactivating Rex’s Saab 340B fleet and restoring more regional routes, in exchange for securing the Australian government’s support of the acquisition.
Speaking to Airfinance Global this month, Nick Swenson, chief executive at the US-based aviation firm, said that Air T will focus on stabilising the ship and does not plan to drastically overhaul the regional carrier’s business model following the approval by creditors of its $170 million takeover bid.
The investor says it learned a lesson from the regional airline’s failed venture into B737-800 operations to compete with Qantas (QF, Sydney Kingsford Smith) and Virgin Australia (VA, Brisbane International) on major domestic routes.
Air T also intends to keep Rex’s current management team in place, as it has been during the administration process. “We knew they were solid and professional, and they are staying in place. We are focused on bringing back ‘classic Rex’,” Swenson said. “The management team buckled down and guided the company through the crisis. They are the unsung heroes of the story.”
US-based Air T struck a deal with creditors at the beginning of November, with operational control and legal ownership of the airline expected to be transferred by the middle of December.
In a restructuring of Rex’s debts, $90 million owed to the government will be carried forward in a profit-sharing arrangement, while another $60 million loan will be extended to help with engine care and maintenance in bringing more Saab 340Bs back into service.
“In exchange for this financing and to ensure value for taxpayer money, Air T has agreed to a range of commitments aimed at preserving essential regional aviation connectivity and improving governance arrangements,” Transport Minister Catherine King said earlier this month. “This will include returning more aircraft to service and increasing the frequency of profitable flights across the Rex network.
“To safeguard this public investment, the Government will retain its security over all Rex’s aircraft and simulator. This will ensure Rex’s Saab fleet cannot be sold without the Government’s permission and will continue to service communities across regional and remote Australia.”
The government is also setting up a new relief program, capped at $5 million, for regional and remote airports that “supported Rex through the administration process”, which are owed between $45,000 and $650,000.
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