Administrators Get More Time to Sell Rex, Further Funding Unlocked

An Australian Federal Court decision to grant the administrators of Regional Express (Rex) extra time to sell the airline has unlocked a further AUD30 million (USD 19.53 million) in funding from the Australian Government.

On June 24, the court approved an application by Ernst & Young to extend Rex’s administration period to December 5. The administrators say they need more time to talk to prospective buyers.

The Australian Government has previously lent AUD80 million (USD52.1 million) to Rex to keep it flying. It has also stepped in to guarantee ticket sales. In addition, the government has taken over AUD50 million (USD32.6 million) of debts held by PAG Asia Capital.

Ernst & Young had negotiated a further AUD30 million loan, subject to the court approving the extension of time application. The government says the money will help keep Rex operating.

“As a result of the extension of the voluntary administration, Rex announces that the Commonwealth Government has entered into amendments to its facility agreement with Rex to provide Rex with further financing of AUD30 million, should it be required,” a June 25 Australian Stock Exchange filing reads.

Rex continues to operate to 52 Australian airports with sixty Saab propellor aircraft, although half of those are out of service. The fleet has an average age of almost 36 years. Any buyer of Rex would need to spend millions on getting the aircraft back in the air and potentially hundreds of millions more acquiring new aircraft over the next few years.

You can read the stock exchange filing here.