Australian Government assumes $50 million in Rex debt

January 22, 2025 TruthUSA

The government intends to exert influence over the future of the airline.

The Albanese Labor government plans to acquire $50 million (US$35 million) of debt from Rex Airline’s major creditor PAGAC Regulus Holdings Limited (PAG).

Rex, a struggling regional carrier, entered voluntary administration in July 2024 with more than $500 million in debt, raising concerns about the future of regional travel in Australia.

The Federal Court extended the airline’s administration period to June 30, 2025, giving administrators Ernst and Young (EY) more time to find a solution.

In a joint statement on Jan. 23, Labor’s Finance Minister Katy Gallagher and Infrastructure Minister Catherine King stated that taking on the debt would give the government more control over the airline’s future.

“By acquiring the debt, the government will become the principal secured creditor and will seek to become a voting member of the Committee of Inspection,” the ministers said.

“This demonstrates the government’s ongoing commitment to ensuring access to aviation services for regional and remote communities, and acknowledges the vital role of the Rex network in local economies,” Minister Gallagher and King explained.

Prior to entering voluntary administration, Rex had decided to start offering flights in Australia’s “golden triangle” between Sydney, Melbourne, and Brisbane, which are some of the world’s busiest domestic air routes.

However, the profitability of a new airline is restricted by the number of available flights—or slots—in and out of Sydney’s Kingsford Smith Airport, Australia’s busiest airport. This slot limitation has hindered new entrants for many years.

Rex was previously listed on the Australian Stock Exchange (ASX) before halting trading in conjunction with the voluntary administration.

A screen shows cancelled Rex Airlines flights at Melbourne's Tullamarine Airport on July 31, 2024. (William West/AFP via Getty Images) — A screen shows cancelled Rex Airlines flights at Melbourne’s Tullamarine Airport on July 31, 2024. William West/AFP via Getty Images

Currently, all Rex domestic flights between major cities have been halted, and its fleet of Boeing 737 aircraft grounded.

However, regional flights are still operational across the country including Albany, Esperance, Burnie, Ceduna, Port Lincoln, Mount Isa, and Dubbo.

$80 Million Lifeline Already Offered

The Albanese government had previously provided Rex with an $80 million lifeline to assist in maintaining essential routes while offering former employees early access to the Fair Entitlements Guarantee.

“To date, the Employment and Workplace Relations Department has received and processed 302 out of 306 claims from former Rex (RAL) employees, with over $7.1 million already disbursed to Rex staff through FEG,” the government reported.

“These measures preserve crucial economic, medical, and freight services, supporting regional sustainability and regional economies.”

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