Australian Gov’t Discloses Regional Express Financing Deal

By Andrew Curran.

The Australian Government has revealed details of the financing it will provide to support Air T’s offer to buy insolvent commuter airline Regional Express (Rex).

Transport Minister Catherine King says Australian Government financing for Regional Express will total AUD150 million (USD97.3 million), including carrying forward an existing debt of approximately AUD90 million (USD58.4 million) and providing a new AUD60 million (USD38.9 million) commercial loan.

The November 4, 2025, government statement also reveals that Air T will contribute AUD50 million (USD32.4 million) towards recapitalising Regional Express.

Regional Express financing in exchange for commitments

In October, Air T, a publicly listed US aviation business, submitted an offer to the Regional Express administrators, Ernst & Young, to buy the airline. Rex filed for voluntary administration in July 2025 after an ill-fated decision to venture into B737-800 operations.

Ernst & Young have since sold off various Regional Express businesses but, until now, have failed to find a buyer for the core business – scheduled passenger flights to regional and remote towns using a fleet of Saab 340s.

In exchange for the financing and to ensure value for taxpayer money, King says Air T has agreed to various commitments to preserve essential regional aviation connectivity and improve governance arrangements.

This will include returning more aircraft to service and increasing the frequency of profitable flights across Rex's network.

In exchange for the financing, the Australian Government will retain first ranking security over all Rex’s aircraft and simulator. This will ensure Air T cannot sell the Saab fleet without government permission and will continue to fly to communities across regional and remote Australia.

While in voluntary administration, Australian Government financing for Regional Express included making available up to AUD110 million (USD71.4 million) in cash (which is not expected to be fully drawn against) and taking on AUD50 million (USD32.4 million) worth of pre-administration debt.

The new agreement will see Rex’s existing debt to the government carried forward on terms that allow for gradual repayments through a profit-sharing arrangement. The new loan, which will be made on commercial terms, will secure funds for Air T to complete an engine care and maintenance program and return more of Rex's Saab 340 aircraft to service, with a portion retained for general liquidity. There is no government funding for fleet renewal.

Air T to return more Regional Express aircraft to service

At the time of publication, Regional Express has fifty-six Saab 340s in its fleet, variously aged between 27.2 years and 35.9 years, with an average age of 31.3 years. Buying new aircraft was shaping up as a major capital cost for any Regional Express buyer. However, Air T says it has a sufficient parts and engine inventory and in-house know-how to keep the Saab 340s in the air for another 10 to 15 years.

As part of its offer, Air T has agreed to a turnaround plan and will apply its best efforts towards stabilising and improving Rex’s performance, including addressing a backlog of maintenance that has kept many Regional Express aircraft out of service.

King says Air T has committed to increasing the Regional Express aircraft in service from approximately 30 today to 44 over time, and increasing frequencies of profitable flights across Rex’s network.

In addition, the agreement will see the government receive regular reporting on the company’s performance, including whether Air T is abiding by its acquisition commitments.

Independent Australian directors will also join the Regional Express board.

Air T’s offer to buy Regional Express is subject to creditor and regulatory approval. However, with the government onboard, no significant push back is anticipated, and the deal expected to be finalised by the end of 2025.

You can read the Australian Government’s statement here.

Photo: AI-Generated.