The federal government has stepped in to rescue Rex Airlines after acquiring $50 million in debt from its largest creditor.
The move is designed to prevent a potential collapse that would have severed vital air links for remote and regional communities across Australia.
The airline was placed into voluntary administration in mid-2024, after the failure of its expansion into capital city routes.
By taking on the debt from PAGAC Regulus Holdings Limited (PAG), the government becomes the principal secured creditor and will work with administrators on the next steps to protect regional connectivity.
Catherine King says regional communities must continue to have access to flights. (AAP: Lukas Coch)
Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King said the move demonstrated the government’s commitment to supporting regional communities and their access to vital services.
“This is necessary in order to make sure that we don’t have any adverse outcomes for regional communities,” she said.
“Of course the largest … creditor could at any stage have put the company into liquidation, and we have been seeking to do everything we can to avoid that.
“Because we want to make sure that regional communities continue to have access to these services, these much needed services.”
Bipartisan support
Rex provides transport for passengers, freight, and medical needs to regional centres across Australia.
Opposition Leader Peter Dutton today backed the decision, saying the regional carrier must remain in the air.
The federal government has stepped in to save regional air services. (ABC News: Alistair Bates)
“We would 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 as well.”
Government confident of recouping debt
Last year administrators revealed the airline was $500 million in debt.
The money was owed to 4,800 creditors, including former staff, suppliers, and investors.
The government has since loaned the company $80 million to maintain services, $7.1 million in entitlements paid to former Rex staff and ticket sale guarantees.
Rex currently services dozens of regional centres across the country. (ABC Four Corners)
“We’re really pleased that passengers are continuing to book on Rex Airlines and as well as supporting the administrators to keep Rex going,” Ms King said.
She said the government would also support the airline’s administrators as they looked for a buyer.
“As you’d be aware the accelerated sale process in 2024 was not successful — there were no credible bidders for the airline itself,” Ms King said.
“What this allows for is for the administrators to undertake a second sale process which they will start the process of doing.
“Obviously as a creditor we would be seeking to get that debt back through any second sale process, but that will be making its way through the voluntary administration.”
Why now?
University of Technology Sydney chief economist Tim Harcourt said the announcement could be politically motivated.
“The government’s got a close eye on the next election and the importance of regional seats to the outcome of the next government election,” he said
“Anything that gets a politician in front of a camera with a big check, you tend to see around election time.”
Mr Harcourt said the federal government was giving Rex an opportunity to “go back to focusing on rural and regional Australia”.
“They either let them go under or at least give them a chance to tread water while they can get some investors and get their house in order,” he said.
“The reason that Rex was popular was that it did look after regional airline travellers.”