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Transport Minister Catherine King has suggested the federal government was forced to buy $50 million of Rex debt to stop the company from being liquidated.
Speaking at a press conference in Victoria on Thursday, King argued the previous biggest creditor, PAG, could have collapsed the airline “at any stage” and insisted the purchase was also necessary to make a second attempt to find a buyer.
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“Obviously, as a creditor, we would be seeking to get that money back through any second sale process, but that would be making its way through the voluntary administration,” she said.
King’s comments came hours after it was confirmed the federal government would acquire the $50 million debt owed to PAG, the Asian firm whose investment allowed Rex to launch capital city 737 flights in 2021.
Those services ultimately led to Rex entering voluntary administration at the end of July, with estimates the company owed around $500 million to thousands of creditors when the management of the carrier was transferred to administrators EY Australia.
Aside from the debt purchase, the Commonwealth has also propped up the carrier by guaranteeing its regional bookings, preserving its slots at Sydney Airport and loaning it a further $80 million. So far, though, no buyers have emerged.
The TWU praised King’s recent intervention but argued the Commonwealth needed to work on a “long-term solution” for the entire industry following the troubles at Rex and the demise of fellow carrier Bonza.
“This announcement is a relief to workers and the flying public, and a clear message that the Federal Government will not let Rex fail,” said Michael Kaine, the union’s national secretary.
“This is crucial in rebuilding the public’s trust in aviation, which was decimated after a decade of collapsing standards under Alan Joyce’s Qantas.
“We know that Rex is a lifeline to regional Australia: essential for healthcare, tourism, business and connecting families. While today’s announcement is an important next step, the constant instability in aviation hurts businesses and it hurts communities.”
The PAG debt move comes as Rex and its administrators face a fresh legal headache, with corporate regulator ASIC announcing last month it was taking the airline and four of its directors – including former executive chairman Lim Kim Hai and his successor as chairman, John Sharp – to court over allegations they misled the ASX.
While EY Australia has been unable to find a buyer for Rex’s regional operations since the collapse, 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.
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says:There is no question, we all know the importance of the remains of REX continuing to support our bush/country communities but at this time it appears that “business” is holding off any recovery action pending the Fed. Govt. actions and it would appear that EY are not as proactive as might they be. We have now plowed $130M of public funds into this enterprise with little if any positive result appearing. We need to know the actual market value of the serviceable assets in the REX stable and the Govt. can make a business decision from there. Seriously the current situation cannot be allowed to continue, procrastination is costly and leadership is now a mandatory requirement, no each way bets here!