Rex’s Administrators Head to Court Seeking More Time to Sell Airline

The administrators of Regional Express Holdings Limited, trading as Regional Express (Rex), filed an interlocutory application with the Federal Court of Australia on June 19, seeking orders to extend the administration period to December 5, 2025, as well as an order allowing an amendment to the existing finance agreement with the Australian Government and an order limiting the personal liability of the administrators concerning the amended finance agreement.

Regional Express Holdings Limited filed for voluntary administration in July 2024. The administrators from Ernst & Young are trying to find a buyer. Australian bankruptcy law, contained within the Corporations Act (2001), typically allows the administrators one year to do this. Any extension requires permission from the court supervising the administration.

“It remains our view that a sale or recapitalisation of the regional business as a going concern is in the best interests of creditors and the group’s stakeholders,” a June 20 letter to creditors reads. “The proposed extension of the administration also sees the almost one thousand Rex employees remain engaged in work, there is ongoing work for continuing suppliers of Rex and critical flight services to regional Australia are maintained.”

The administrators have already sold off some Rex business units, including a stake in charter airline National Jet Express, all of the aeromedical airline Pelair, a flying school, and pilot training simulators. However, the core business – the scheduled passenger flights operated by Rex’s fleet of Saab 340s, is proving at tricker divestment proposition.

Typically, Rex's scheduled flying makes money, although the Covid-19 pandemic and an unfortunate decision to start B737-800 flights, ended that streak of profitability. While some parties, including private equity funds and other airlines, are interested in buying what remains of Rex, the Saab fleet is old and needs replacing. This is a massive investment for any buyer and a potential deterrent.

Since filing for administration, the Australian Government has stepped in with a loan of AUD80 million to keep Rex flying and has offered another AUD30 million, contingent on the court granting the extension order.

The government has said it will not allow Rex to fail, going so far as to suggest nationalisation of the airline if no private sector buyer is found.

The government is also guaranteeing tickets and will continue to do so. However, last week, Transport Minister Catherine King said at this stage, the government was acting as an interested observer rather than a participant in the sale process.

“The Australian Government is not a bidder in the sale process but is undertaking necessary work on contingencies should a market-led solution not be achieved,” King said.

The minister also said any potential government support for a successful bidder would be 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 application hearing will take place at 10.15 am on June 24, 2025, at the Federal Court of Australia in Sydney.

You can read Ernst & Young’s June 20 letter to creditors and notice of filing and hearing here.

Photo: Aero South Pacific