iscover
The federal government is reportedly planning to buy out investment firm PAG as Rex’s largest creditor.
The deal, as reported by The Australian Financial Review, would give the government a bigger say in the ultimate fate of the collapsed airline, and comes after it provided Rex with an $80 million funding injection to keep flying as administrator EY Australia works to make a sale.
This content is available exclusively to Australian Aviation members.
A monthly membership is only $5.99 or save with our annual plans.
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
Rex entered voluntary administration at the end of July, with estimates it owed around $500 million to 4,800 creditors after its failed venture into competing with Qantas Group and Virgin Australia on domestic jet operations.
The government has since propped up the ailing carrier, including by guaranteeing its regional bookings and preserving its slots at Sydney Airport.
As the largest creditor, the government – which has made it clear it does not want the airline to fail – would have a stronger voice in whether Rex is ultimately liquidated, returned to its directors, or placed under a Deed of Company Arrangement (DOCA) to stay operational.
The reports come as Rex and its administrators face a fresh legal headache, with corporate regulator ASIC announcing this week it was taking the airline and four of its directors – including former executive chairman Lim Kim Hai and his successor as chairman, John Sharp – on allegations of misleading the ASX.
If it goes ahead, the government’s move on Rex’s debt may also be a step towards taking an equity stake in Rex, which numerous voices, including the Transport Workers’ Union (TWU), have urged the government to do, particularly in the wake of the ASIC announcement.
“Though legal matters will take their course, it is crystal clear we cannot let Rex fail, and the Federal Government must step in with an equity stake to get this airline back to where the community needs it to be,” TWU national secretary Michael Kaine said.
“There is overwhelming public support for the Federal Government to step in and intervene with decisive action to save hundreds of aviation jobs, as well as critical regional Australian business, tourism, healthcare and community services.”
EY Australia has been unable to find a buyer for Rex’s regional operations since the collapse in July; however, it has sold aeromedical division Pel-Air to Japan-owned Toll Aviation and is reportedly looking to sell Rex’s flight school in Wagga Wagga.
Both PAG and the administrators declined to comment to the Financial Review, and Transport Minister Catherine King’s office has also been contacted.
[email protected]
says:Once the final approval is received by QATAR, there may well be movement in the REX kerfuffle.