Extended Opportunity to Attract Customers for Revamped ‘Rex 2.0’ Airline

Regional carrier Rex will undergo a transformation after its administrators received more time to attract a buyer despite a four-month search failing to secure a long-term solution for the struggling airline.

In July, administrators were appointed to five companies within the Rex group as the business accumulated approximately $500 million (US$321 million) in debt.

Despite an $80 million (US$51 million) loan from the federal government, the airline is still striving to find a buyer even though administrators from EY had previously painted a positive picture.

During a first meeting of creditors in August, Partner Samuel Freeman mentioned that there was significant interest in the airline and some parties had already signed disclosure agreements.

However, more than four months later, administrators are still in the process of securing a buyer and have provided a more pessimistic outlook.

They had to seek approval from the Federal Court to postpone a second creditors’ meeting until July 2025, with permission granted in mid-November.

Related Stories

“Based on the evidence before me, it was apparent it is presently unlikely that the administrators will be able to sell the regional business,” Justice Brigitte Markovic stated in a judgment published on Dec. 6.

Back in August, potential bidders received a “Rex 2.0 discussion pack” outlining various initiatives suggested by administrators to make the airline’s core regional business more appealing commercially.

Justice Markovic noted that several key challenges needed to be addressed before a binding sale could take place.

She indicated that Rex would have to be liquidated if the upcoming creditors’ meeting was not postponed as requested.

The meeting will involve a vote on whether to return the Rex companies to the current board, subject them to a deed of company arrangement, or liquidate them.

In addition to the regional business, administrators have struggled to find a buyer for the airline’s pilot academy.

However, they have managed to sell Rex’s aero-medical division Pel-Air Aviation, shares in fly-in-fly-out charter business National Jet Express, and two plots of land near Sydney Airport, one of which accommodates a flight simulator.

Opting for the postponement, Justice Markovic was informed that more time was necessary to enhance the regional business and improve the company’s assets.

The enhancements were expected to result in a higher sale price for the airline as explained to the court.

Despite grounding its Boeing 737 fleet on major metropolitan routes, Rex’s regional flights have persisted due to ongoing funding from private equity firm PAG Asia Capital.

The airline has faced challenges since its aggressive move in 2021 to compete on crucial capital-city routes against major carriers Qantas and Virgin Australia.

Established in 2002, Rex is Australia’s largest independent regional airline and operates approximately 1050 flights per week on 45 routes.