The Australian government is stepping up its financial support for troubled regional carrier REX Airlines.
On January 23, 2025, it became known that the Australian administration is allocating A$50 million (around US$31.3 / €30.1 million) to purchase guaranteed debt from the airline’s largest creditor, PAGAC Regulus Holdings (PAG), a private equity firm. As a result, the Australian government will become the carrier’s largest creditor and will seek a voting spot on the airline’s Committee of Inspection.
With this move, REX will receive some financial breathing room, which should allow it to continue its regional operations while continuing to look for new investors.
The airline has already received public support in the form of an AU$80 million (US$52.3 million / €50.2 million) loan granted in November 2024 and the provision of guarantees to passengers for tickets acquired during the period in which the airline is in administration.
However, the debt now purchased by the Australian government is only 10% of REX Airlines total liabilities, which amount to about A$500 million (US$310 / €301.4 million).
Behind the government’s decision to step in to prevent REX Airlines’ financial collapse is the carrier’s essential role in providing air connectivity for many rural communities across Australia. This circumstance makes the continuity of the airline an extremely sensitive political matter.
In 2024, after the demise of low-cost startup airline Bonza and REX Airlines’ discontinuation of its B737 services, the Australian air travel market saw competition diminish and became a de facto duopoly.
Together, the two largest players, Qantas (and its subsidiary Jetstar) and Virgin Australia control more than 95% of the domestic market and provide service mostly on trunk routes. The two smaller, specialized carriers, REX Airlines and Alliance Airlines, cover niche, rural markets and service some remote mining communities.