Regional airline Rex is set to enter administration, with Bloomberg reporting that Ernst & Young (EY) will be appointed as administrator.
Shares in the popular carrier were suspended this week and the financial news service said EY’s appointment was expected to be announced on Wednesday.
Rex shares were suspended from the ASX on Monday following recent boardroom turmoil and multi-million dollar losses.
The shutdown also came as Rex hired consulting firm Deloitte to review the airline’s accounts. Deloitte referred media inquiries to Rex, which declined to comment.
It would be the second major domestic airline to fail in Australia following the demise of Bonza earlier this year.
Rex is even more vital, flying to some 56 destinations across the country, and is a lifeline for some smaller regional communities.
Prime Minister Anthony Albanese said the federal government was “concerned” about Rex and would assess its options.
But he also noted that the airline had already received “substantial government support with no strings attached.”
Transport Minister Catherine King said the government was in contact with the airline and monitoring the situation hourly.
Concerns grew on Tuesday over the fate of regional airline Rex (plane pictured), with around 2,000 jobs “thrown into limbo”
Bloomberg reported that Rex was set to go into administration, with Ernst and Young (aka EY) expected to be appointed
“Regional Australians are counting on Rex,” she told Channel Seven’s Sunrise on Tuesday.
“It’s an extremely important airline. In many cases it’s the only airline that serves a number of small country towns and people depend on it enormously.”
“We are taking this situation very seriously and are remaining very vigilant about what is happening, monitoring the situation hour by hour.”
Rex has built a solid reputation since its inception in 2002 and has become known for its reliability.
The Bureau of Economic Research on Infrastructure and Transportation found in April that the airline had canceled just one percent of its flights, beating all competitors.
The national airline received international recognition at the World Airlines Awards in early July when it was awarded the title of Best Regional Airline in Australia/Pacific.
Passengers have expressed their fears for the airline’s future on social media. “Rex is one of the best airlines,” wrote Julia Bradley. “Hardly any delays. Staff are always very friendly and helpful.”
Another X user added: “This is hands down the best service airline in Australia. It deserves to be saved.”
Where Rex flies: The regional carrier is a vital link for regional communities – serving 56 routes
Minister King stressed that unlike Bonza, which recently collapsed, Rex owns rather than leases its aircraft.
“It’s up to Rex to inform her clients that she is offering services today,” she said.
“There has been some instability on the board recently… but I want to reassure people that Rex is an important airline… and we are monitoring the situation carefully.”
The carrier mainly serves regional cities, but in a shift in strategy it has recently added services between capital cities such as Sydney and Melbourne, routes dominated by larger rivals Qantas and Virgin Australia.
Many regional communities across the country rely on the operator, which emerged 22 years ago after the collapse of Ansett.
Since the Covid-19 pandemic, Rex has struggled to ensure profitability while the entire sector is struggling under difficult conditions.
Since the Covid-19 pandemic, Rex has struggled to remain profitable while the industry as a whole struggles under difficult conditions (pictured, Melbourne Airport)
Creditors voted to liquidate Bonza Airlines in early July. Passengers pictured at Sydney Airport
In February, Rex reported a net loss of $3.2 million for the first half of the 2023/24 financial year due to higher costs, particularly fuel.
But that’s an improvement on the $16.5 million loss in the previous corresponding period.
In June, Rex announced that long-time executive chairman Lim Kim Hai was stepping down, although he will remain on the board as a non-executive director.
In July, Mr Lim, a major shareholder, asked a general meeting of shareholders to remove a number of directors, including non-executive chairman John Sharp.
Rex shares have fallen 35% this year. The stock was trading at 56.5 cents last Friday. It was trading at 79 cents a month ago.
dailymail us
