Advisors Consulted as Potential Taxpayer Bailout Considered for Rex
The federal government has enlisted a group of influential corporate advisors to consider a potential rescue plan for troubled regional airline Rex.
With its Boeing 737 fleet grounded on inter-city routes due to financial difficulties, Rex has continued to operate regional services under the administration of Ernst & Young (EY) Australia.
Rex has faced criticism for competing with major operators like Qantas and Virgin on well-served capital-city routes. Any government support or bailout would prioritize the airline’s ability to serve regional areas.
The federal transport department has appointed external advisors to explore support options for Rex. Norton Rose Fulbright will provide legal advice, McGrathNicol for financial guidance, and O’Connor Marsden for probity.
Transport Minister Catherine King has stated that all possibilities, including equity investment or financial assistance, are being considered for Rex’s future.
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“For regional consumers and communities, Rex is often their only lifeline, and it is crucial,” stated Minister Catherine King on Aug. 1.
Approximately a third of Rex’s workforce, totaling 2000 employees, are expected to be let go due to the suspension of inter-city flights.
When asked about the suggestion that Rex’s downfall was a result of public policy failure, Prime Minister Anthony Albanese defended the airline for expanding beyond regional services. However, former ACCC chair Rod Sims argued that Rex’s presence on major routes had benefitted consumers by lowering fares.
Sims emphasized the need for competition in the aviation market to drive down prices and improve consumer options.
The Australian Travel Industry Association echoed Sims’ call for industry reform, advocating for increased competition in the domestic aviation market.
In February, Rex reported a net loss of $3.2 million in the first half of the 2023/24 financial year, attributing it to expenses related to major-city operations.
