The administrators of Rex - Regional Express (ZL, Wagga Wagga) have announced they intend to apply to the Australian Federal Court to extend the voluntary administration period to June 30, 2025. This coincides with the Australian government confirming that it will provide an AUD80 million Australian dollar (USD52.3 million) financing facility to keep Rex's regional flights operating during this time.
Administrator Ernst & Young says the additional time and money will be invested in a business improvement programme to help secure Rex’s commercial future. This includes increasing the number of operational aircraft.
"The extension we are requesting will help us to build a strong network for regional Australia, enabling us to continue to operate the regional network while undertaking a business improvement plan to reposition the business for sale," said Ernst & Young's Sam Freeman. "We're planning to increase the size of the operational fleet while providing greater clarity for the Rex team and investing in strategic growth initiatives. Through this plan, we're looking to increase reliability and capacity on the regional routes."
Rex operates a fleet of 57 aircraft, including twenty-two Saab 340Bs and thirty-five Saab 340B(Plus) types. The aircraft service a network of 53 airports across six Australian states. However, pilot and parts shortages have resulted in many of these aircraft going out-of-service and Rex suspending flights on some routes and trimming frequencies on others. Rex filed for voluntary administration in July after a failed venture into B737-800 operations.
Rex’s administration continues, with the recent sale of Rex sister carrier Pel-Air Aviation (PFY, Sydney Kingsford Smith) to Helicorp Pty Ltd, which is owned by Japan Post subsidiary Toll Aviation (TFX, Brisbane Archerfield). Proceeds from the sale are being used to repay secured creditors.
The Australian government has also agreed to grant early access to former Rex employees to the Fair Entitlements Guarantee (FEG) while the airline is in voluntary administration. This will ensure that the voluntary administration extension does not delay employees accessing entitlements. In addition, Rex’s administrators and main secured creditor, PAG, have advised they will pay the entitlements of former employees of the regional business who have been made redundant during the voluntary administration period.
The government will also continue to guarantee ticket sales made throughout the voluntary administration period, should the Federal Court agree to the extension application. The guarantee has been effective so far but has yet to be used with flight bookings holding up well.
"As we’ve demonstrated throughout the voluntary administration, an extension will not disrupt the continued operation of the regional network, which is such a critical part of regional and rural Australia’s connectivity," said Freeman. "The actions to be undertaken in the extension period are expected to enhance the network."
Separately, the Australian Competition and Consumer Commission’s latest Domestic Airline Competition report released this week found that the average airfare on all major Australian inter-capital routes increased by 13.3% in the three months to September 30, 2024.
“The recent spike in airfares corresponds with a less competitive domestic airline sector after Rex’s exit from 11 of the 23 services between metropolitan cities,” ACCC Commissioner Anna Brakey said.
The number of seats on services between metropolitan cities fell by 6% since July, while passenger numbers on these routes remained relatively stable. "Passengers were no longer able to access the lower fares that Rex offered, and airline seating capacity decreased following Rex’s exit. This, in turn, has contributed to higher airfares,” said Brakey.
