Hopes are fading that regional airline Rex will attract a buyer, two months after it went into voluntary administration with debts of $500 million.
A source close to the company has revealed there is little interest in the airline, putting major regional cities at risk of being cut off from the rest of Australia.
“Rex has always been a bit of a Frankenstein business that was set up so it was kind of inevitable that the business would split up,” the source said. The Australian.
“It’s also understandable that it’s been a slow process, but I think things are starting to move…finally.”
The source said they were “a bit surprised” there had been no bid and that concerns about their Saab 340 fleet are “somewhat exaggerated”.
“These Saabs have largely flown short distances over a long period of time, so people like to talk about age in terms of years, but in terms of kilometers flown, it’s not that old of a fleet,” they told the publication.
“People might be waiting to see if the government could offer some kind of guarantee or support to companies to allow them to intervene.”
Consulting giant EY was appointed voluntary administrator of Rex on July 30.
EY is still looking for a buyer to get regional airline Rex flying again
It has since sought an extension of the administration until November 25 in a bid to achieve a better outcome for more than 4,800 creditors.
An extension is unlikely, and the source suggests things will be finalized in the coming weeks.
While there have been no buyers interested in the airline as a going concern, the source said a number of assets had been sold to raise much-needed money to pay creditors.
They include the sale of a Boeing 737 flight simulator, spare parts and non-core real estate, including a small house near Sydney Airport bought by former chairman Lim Kim Hai, who was ousted by board members in June.
Rex’s latest revelation comes the same week feuding former bosses Lim and John Sharp spoke out about the airline’s collapse.
Rex’s latest revelation comes the same week feuding former bosses Kim Hai Lim (pictured) and John Sharp spoke out about the airline’s collapse.
The blame game continued as former airline bosses reflected on what went wrong for the regional airline on an episode of the ABC show. four corners program.
Lim and Sharp, a former transport minister in the Howard government, built the airline and ran it for almost 20 years.
However, they no longer speak.
“I didn’t know anything about airlines. If I had, I wouldn’t have gotten involved,” Lim said.
Sharp said he felt it was the “right time” to launch Rex two decades ago.
“Now clearly, as history shows, that didn’t work out the way we wanted it to,” he said.
Rex’s first flight from Melbourne to Sydney will begin in 2021. However, by the second half of 2023, it was losing almost $1 million a week.