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The federal government will have a larger say over the future of Rex after confirming reports it would acquire $50 million of the collapsed airline’s debt.
The move will see the Commonwealth buy out the remainder of the money owed to PAG, the Asian firm whose investment allowed Rex to launch capital city 737 flights in 2021.
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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. So far though, no buyers have emerged.
Acquiring the debt would make the federal government the largest creditor and give it 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 confirmation follows a report in The Australian Financial Review last month and allows the Commonwealth to seek to become a voting member of the Committee of Inspection.
Separately, Transport Minister Catherine King also revealed the move to fast-track access to the Fair Entitlement Guarantee had led to sacked staff being paid more than $7 million across 306 different claims.
“Whilst the accelerated initial sale process undertaken by the Administrators in mid-2024 did not find a suitable buyer for the airlines’ regional operations, the Government continues to work closely with the Administrators through the extended convening period,” King said in a statement.
“This makes clear the Government’s ongoing commitment to maintaining access to aviation services for regional and remote communities, and recognises the critical role of the Rex network to local economies.”
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.
The government’s move on Rex’s debt may also be a step towards taking an equity stake in the carrier, 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 previously.
“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.”
Administrator 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.
