The federal government will take on $50m of debt from embattled regional flyer Rex Airlines after the company was placed into voluntary administration.
In doing so, the government will become the airline’s principal secured creditor, acquiring the debt from Rex’s largest creditor, AGAC Regulus Holdings Limited.
In a joint statement, Finance Minister Katy Gallagher and Transport Minister Catherine King said the move would allow Rex to continue to service regional and remote communities.
“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 statement said.
Previously, the Commonwealth pledged up to $80m to ensure Rex would continue operating its routes until June of this year, and allow access to employees to access their unpaid wages and entitlements through the Fair Entitlements Guarantee.
Updated figures from the government also revealed the Employment and Workplace Relations Department has received 306 claims and processed 302 claims from Rex, with more than $7.1m already provided to Rex staff through FEG.
Peter Dutton backed the government’s decision and said it was important for regional areas.
“We’d be happy to support the government in a bipartisan way to see Rex airlines fly again,” he said.
“It’s important for regional areas and it’s very important for competition in this country.”
The Coalition’s transport spokeswoman Bridget McKenzie agreed, however questioned why Ms King did not inform her of the decision.
“Having reliable and cost effective aviation services from our capital cities to the regions is important for the delivery of health services, education services, as well as connecting family and friends with the rest of the country,” she said.
“We have been calling for a more competitive aviation sector for the last three years, the government has been on the go slow.”
Rex is also facing a legal probe from the corporate watchdog over claims it misled investors on its financial health dating back to February 28, 2023, more than a year before Rex entered voluntary administration on July 30, 2024, with about $500m in debt.
ASIC alleged in December that former executive chair Lim Kim Hai and fellow directors John Sharpe, Lincoln Pan and Siddharth Khotkar “contravened their directors’ duties” and released a misleading ASX announcement on February 28 that said they had an optimistic outlook on its “positive operating profits”.
Originally published as Federal government to acquire $50m of debt from Rex, becomes Rex’s largest creditor