US’s Air T to Buy Regional Express

By Andrew Curran.

UPDATE: 20.00 AEDT. 21.10.25. Ernst & Young have confirmed entering into a sale and implementation deed with Air T Inc., which will result in the sale and recapitalisation of Regional Express. No return to shareholders is anticipated.

EARLIER IN THE DAY. United States-based aviation business Air T Inc. is in the final stages of a deal to buy insolvent Australian airline Regional Express (Rex). According to Nine Newspapers, an agreement and announcement may happen as soon as this week. However, any deal would be subject to approval by Rex’s creditors, which include the Australian Government.

Established in 1980, the NASDAQ-listed Air T has 16 business units across four core segments – overnight cargo flights as part of the FedEx feeder system; aviation fleet and facilities maintenance services; aftermarket aircraft, engines and spares; and digital solutions.

“We seek to invest in dynamic, talented individuals and teams,” the company’s website reads. “We apply corporate resources to activate growth and overcome challenges.”

According to Securities and Exchange Commission filings, in the 12 months to March 31, 2025, Air T’s revenues totalled USD291.85 million and its adjusted EBITDA was USD7.63 million. Despite this, Air T had a net non-operating loss of USD6.9 million for the 12-month period.

As of March 31, 2025, the Air T’s working capital amounted to USD30.8 million, including USD6.5 million in cash, cash equivalents and restricted cash.

Critically for Rex, Air T has access to a steady supply of aftermarket Saab 340 engines and spares through its aftermarket businesses. Rex operates Saab 340s, fifty-six of them, although 25 are out-of-service, according to the planespotters.net website. 

Access to spare parts for its aging Saabs, production of which ended in 1999, was a long-running problem for Rex even before the airline filed for administration in mid-2024.

Since then, the administrators, Ernst & Young, have sold off various parts of the Regional Express business. However, its core business, scheduled Saab 340 services to regional and remote towns around Australia, remains unsold.

Those flights continue due to the Australian Government deciding to pony up AUD80 million (USD52.1 million) in loans and acquire debts of AUD50 million (USD32.6 million). In the process, the government has become a significant Rex creditor and can veto (or approve) any bid to buy the airline.

The government is committed to keeping Rex’s flights operating, largely for political reasons. Any plans by a potential buyer of Rex to downgrade these services would likely be rejected by the government.

However, a proposal by Air T to tap into its existing pipeline of aftermarket Saab 340 engines and spare parts, would likely be viewed favourably by the government, which, at the time of publication, hasn’t commented on the Air T reports.

Getting more of Rex’s parked Saabs back in the air would only serve as a short to medium term fix for the airline. Rex’s average fleet age is 31.2 years. The oldest aircraft is almost 36 years old and the youngest is 29 years old.

Beyond the short to medium term, any buyer would need to embark on a costly fleet replacement program. The ATR42 is the only comparably sized aircraft in production. Typically, the ATR42 seats between 46 and 50 passengers, depending on an airline’s precise configuration requirements. The list price for a new ATR42 is around USD20 million.

Rex’s existing Saab 340s seat either 33 or 34 passengers and are well-suited, capacity wise, for the type of routes it operates. Even allowing for list price discounts, new aircraft capital costs are a big down the track financial commitment for any buyer of Rex.

But Rex’s Saab 340 flights (and the company) were profitable before the pandemic and some routes are subsidised by various Australian state governments. Rex’s downfall was venturing into B737-800 operations in 2021. The company bet that Virgin Australia, then in administration, would not recover, and Rex would fill the vacuum. Virgin Australia did recover, and Rex’s bet backfired.

The high cost of replacing Rex’s fleet has deterred some potential buyers of the airline and Air T’s bid is understood to include terms that require Rex to hit certain profit targets within an 18-month post-acquisition period.

Ernst & Young have until December 5, 2025, to find a buyer for Rex. The Australian courts have already extended the time to find a buyer and may not do so again, instead opting for liquidation. At that point, the government would step up as a buyer of last resort. 

Photo: Aero South Pacific.