US aviation investor Air T, Inc., which operates a number of aviation businesses in the US, has agreed to acquire the Regional Express Airlines (Rex Airlines) and rescue the embattled company from administration with a recapitalisation proposed to get the business back to basics in servicing regional Australia.
The development takes place as four Rex-linked companies, including Australian Airline Pilot Academy, were placed into voluntary administration yesterday affecting campuses for pilot training in Victoria and NSW.
Current status is, No return to shareholders is expected and the company is no longer listed on the Australian Securities Exchange.
As per Australian Associated Press, Rex Airlines, which was placed into administration in August last year, is currently being supported by the federal government through an $80 million loan facility to maintain vital air links for regional Australia.
The level of support was boosted by $30 million this year after an extension of the administration period to December was secured, ensuring that Rex continues to operate during the process.
The federal government has welcomed the proposed sale to Air T as “a positive step towards bringing Rex out of voluntary administration”.
Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King said Tuesday’s announcement marked a positive step to bringing the airline out of voluntary administration.
The government has also entered an agreement with Air T around the restructure of financing arrangements in connection with the acquisition.
“The Australian Government has also entered into an agreement with Air T in relation to restructuring Rex’s financing arrangements in connection with the acquisition,” added Catherine King, the
“This will allow Rex to keep flying and maintain critical aviation links for regional communities."
King says as the sale process is still under way, the government does not plan to comment further.
The Australian government had already loaned Rex $80 million to maintain services, which included $7.1 million paid in entitlements to former Rex staff and ticket sale guarantees.
Administrators to Rex Airlines - Adam Nikitins, Samuel Freeman and Justin Walsh of Ernst & Young - revealed in June that they had received a number of offers to buy Rex Airlines.
The administrators have confirmed that they entered a sale and implementation deed with Air T, which they say will lead to the sale and recapitalisation of the business.
Air T owns 16 companies in the air services sector, including North American express-cargo operators Mountain Air Cargo Inc. and CSA Air, as well as air maintenance company Royal Aircraft Services.
The federal government has previously indicated that any potential support for a successful bidder was conditional on commitments to provide “an ongoing, reasonable level of service to regional and remote communities, the need to provide value for money to taxpayers and good governance”.
The sale is still subject to regulatory and creditors’ approval, with the administrators also pointing out that shareholders are likely to get no return on their investment in Rex Airlines.
Creditors will vote on the sale at their second meeting, which will be held before the administration period expires in December.
In tandem with the sale announcement, the Rex Airlines administrators placed three subsidiaries of the airline and its associated frequent flyer business into voluntary administration. The companies comprise AAPA Victoria Pty Ltd, Australian Aero Propeller Maintenance Pty Ltd, Australian Airline Pilot Academy Pty Ltd and Rex Flyer Pty Ltd.
AAPA operates flight training schools for pilots in Wagga Wagga and Ballarat, with the subsidiary established in 2007 by Rex to combat a severe pilot shortage that hit the industry that year.
Rex was placed into voluntary administration in July 2024, after acquiring $50 million in debt from its largest creditor at the time, PAG.
Display Picture Courtesy : Michael McCormack
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