The federal Labor government will prop up the struggling Rex Airlines to the tune of $80 million (US$52 million) in an effort to keep the regional icon flying.
In a statement on Nov. 12, Transport Minister Catherine King and Workplace Minister Murray Watt announced the funding would be necessary as the government continued working on longer term solutions.
Rex went into voluntary administration in July this year as the company struggled with profitability and under $500 million in debt.
Samuel Freeman, Justin Walsh and Adam Nikitins of Ernst and Young Australia (EY Australia) were appointed as joint and voluntary administrators in an attempt to secure help or a lifeline for the airline’s remaining regional services.
Rex had delved into the busy Sydney-Melbourne-Brisbane markets in an attempt to compete with Qantas and Virgin.
In July, King announced her department had engaged with the administrators to try maintain services in rural and remote parts of the nation.
Rex currently operates flights to places like Coober Pedy, Birdsville, Winton, Julia Creek, Ceduna, and Monkey Mia.
“Rex is an important airline for regional and remote communities and Rex’s continuation is in the best interests of regional Australians, the travelling public, its workers and the aviation sector,” King said at the time, noting the government would work closely with the airline to bring about a solution.
In her Nov. 12 statement, King said the airline’s services were critical for rural areas.
“Rex’s administration process is progressing, with the recent sale of Pel-Air Aviation Pty Limited to Helicorp Pty Ltd, part of Toll Aviation, with proceeds from the sale being used to repay secured creditors,” she said.
“The financing will support the business to continue offering critical services for regional communities, with Rex’s administrators intending to apply to the Federal Court of Australia to extend the voluntary administration to June 30, 2025.”
The government has agreed to allow former employees to access the Fair Entitlements Guarantee.
In addition, Rex’s administrators and main secured creditor PAG have advised they will pay the entitlements of former employees of the regional business, who have been made redundant.
