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The federal government reached out to Virgin Australia to buy Rex, according to reports.
Sources said to be “familiar with the discussions” told The Australian that the office of Transport Minister Catherine King had lobbied Virgin to take over the stricken carrier earlier this year, but found no success. It comes as Rex marks one year of its voluntary administration.
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According to the sources, Virgin – which was at the time preparing for its June IPO – had been turned off by the need to take on Rex’s ageing Saab 340 fleet, which has been a sticking point in administrator EY Australia’s efforts to sell the airline, as the aircraft are no longer being manufactured and parts are scarce.
“Due to the commercial in confidence nature of the ongoing sale process, the government cannot provide further commentary,” a spokesperson for Minister King told the newspaper.
In a statement, a Virgin spokesperson would not comment on whether it had been approached to buy Rex, but said the carrier would be prepared to “engage” with any new buyer.
“Virgin Australia supports the Federal Government’s efforts to find a new private sector investor in Rex, given the critical role it plays in connecting regional and rural Australians,” the spokesperson said.
“When Rex entered voluntary administration last year, we signalled our intention to explore codeshare or interline arrangements on the airline’s regional routes, providing Rex’s customers with seamless access to Virgin Australia’s domestic and international network.
“One year on from Rex suspending its jet operations, we are proud to have rebooked 135,000 disrupted Rex customers on the Virgin Australia network free of charge. We have also welcomed more than 150 former Rex employees to the Virgin Australia team.”
The voluntary administration was earlier this year extended by another six months, meaning EY Australia will now have until 5 December to wrap up the second sale process, which was slated to end on 30 June.
It is the second extension to the administration period, and came as the administrator indicated potential buyers were waiting in the wings.
The federal government has previously indicated it would look into purchasing Rex itself if the current sale process falls through, making it the first nationalised airline in Australia since the privatisation of Qantas in the 1990s. The February announcement came after $80 million in funding and the purchase of $50 million in Rex debt from financier PAG.
Rex entered voluntary administration at the end of July last year, with estimates that 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.
EY Australia has sold the airline’s aeromedical division, Pel-Air, to Japan-owned Toll Aviation and was in November reportedly looking to sell Rex’s flight school in Wagga Wagga. FIFO airline National Jet Express has been snapped up by former Rex executive chairman Lim Kim Hai.
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says:We have an airline that has gone bust, a fleet of aircraft of which approx. 50% are parked, not produced anymore and with little if any hope of getting parts for them and the previous management team/owners by all counts not concerned about their needed provision for replacement but instead, against all advices, they proceeded with an attempt at mainline jet operations which as expected followed their regional ops into oblivion and now they walk away under the umbrella of insolvency plus one or more members of that team I believe now hold a senior position within another airline, the mind positively boggles. Currently we have E.Y clearly the puppet of the Fed. Govt still looking for a buyer. Seriously, this problem is not going to just vanish, re-equipping/training and setup will take years if, at all. The only solution now is to seek advice from the industry, dissect the routes to other operators willing to partake and liquidate the remaining assets. The reality is, sadly, Rex is dead and will not be reincarnated.