Bonza had a different fate but the Australian federal government will take on $50m of debt from embattled regional flyer Rex Airlines after the company was placed into voluntary administration.
Catherine King, the Australian Minister for Infrastructure, Transport, Regional Development and Local Government, said in a press release:
The Albanese Government is ensuring Rex Airlines regional services will continue, supporting the administrators on next steps.
The Government will today acquire $50 million of debt from Rex’s largest creditor, PAGAC Regulus Holdings Limited (PAG), an important step to prevent an adverse outcome for regional communities, such as liquidation, and ensure the continued connectivity of Australia’s regional and remote communities.
In doing so, the Albanese government will become the airline’s principal secured creditor, acquiring the debt from Rex’s largest creditor, AGAC Regulus Holdings Limited.
In a joint statement, Finance Minister Katy Gallagher and Transport Minister Catherine King said the move would allow Rex to continue to service regional and remote communities.
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.
Whilst the accelerated initial sale process undertaken by the Administrators in mid-2024 did not find a suitable buyer for the airlines’ regional operations, the Government continues to work closely with the Administrators through the extended convening period.
Beleaguered Rex went into administration in mid-2024 with about $500 million in debts, after a push into Australia’s most competitive routes dominated by Qantas and Virgin.
Earlier, the Commonwealth pledged up to $80m to ensure Rex would continue operating its routes until June of this year, and allow access to employees to access their unpaid wages and entitlements through the Fair Entitlements Guarantee.
The ongoing administration period ends in June 2025 after the federal government granted an extension to administrator EY in November last year.
The latest move makes clear the Government’s ongoing commitment to maintaining access to aviation services for regional and remote communities, and recognises the critical role of the Rex network to local economies.
Catherine King's statement read further,
This announcement builds on previous action, including the Albanese Government providing a commercial loan of up to $80 million to the Administrators to keep Rex’s vital regional routes operating, granting early access to former employees of Rex Airlines Ltd (the Boeing-737 business) to the Fair Entitlements Guarantee, and providing a guarantee in relation to regional ticket sales during the voluntary administration.
To date, the Employment and Workplace Relations Department has received 306 claims and processed 302 claims from former Rex (RAL) employees, with over $7.1 million already provided to Rex staff through FEG.
These actions preserve important economic, medical and freight services, supporting regional liveability and regional economies.
The TWU (Transport Workers' Union of Australia) welcomed the move saying it is a step in the right direction to ensure Rex can keep flying and so that aviation jobs are protected, but must be followed up by an equity stake to ensure long-term stability.
TWU National Secretary Michael Kaine said that Rex is a lifeline to regional Australia, essential for healthcare, tourism, business and connecting families.
Rex is also facing a legal probe from the corporate watchdog over claims it misled investors on its financial health dating back to February 28, 2023, more than a year before Rex entered voluntary administration on July 30, 2024, with about $500m in debt.
ASIC alleged in December that former executive chair Lim Kim Hai and fellow directors John Sharpe, Lincoln Pan and Siddharth Khotkar “contravened their directors’ duties” and released a misleading ASX announcement on February 28 that said they had an optimistic outlook on its “positive operating profits”. ASIC is seeking to fine them and ban them from serving as directors.
ASIC alleges Lim contravened his directors’ duties between period February 28, 2023 and June 20, 2023 by drafting and approving the February 28, 2023 announcement that the company was “optimistic the group will have positive operating profits” for the 2022-23 financial year, “barring any further external shocks”.
It also alleges Lim failed to take steps to prevent Rex from breaching continuous disclosure rules by not alerting shareholders of the troubled state of company finances. Rex posted a loss of $35 million for 2022-23.
ASIC alleges further that the other three directors became privy to financial information from April 14, 2023, which should have led them to take steps to ensure Rex updated the market per its continuous disclosure obligations.
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