Home Australia Embattled Aussie airline Rex offered $50million lifeline from the government

Embattled Aussie airline Rex offered $50million lifeline from the government

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The federal government will assume $50 million of Rex Airlines debt to prevent its collapse

A $50 million debt lifeline for Rex will enable a fresh attempt to sell the embattled regional airline and allow it to continue operating.

The federal government will assume $50 million of the airline’s debt to its largest creditor, private equity firm PAG Asia Capital, to prevent it from forcing Rex into a liquidation and a sale of remaining assets.

Transport Minister Catherine King said preventing that possibility was vital to allowing Rex to continue running critical regional services.

“We are now putting ourselves in place, taking on the last remaining part of that substantial debt to provide an opportunity for a second sale process to continue,” he told reporters in Werribee.

“As a creditor, we would be trying to recover that money, that debt through any second sale process.”

The debt purchase will make the government Rex’s largest secured creditor and it will seek to become a voting member of the inspection committee.

No credible bidder was discovered in the initial sale process in mid-2024, after the airline went into administration with around $500 million in debt.

The latest move brings the government’s total investment in the airline to about $130 million.

The federal government will assume $50 million of Rex Airlines debt to prevent its collapse

Late last year, the government provided an $80 million commercial loan to Rex’s administrators to keep regional routes open, cover advance entitlements for former workers and guarantee tickets for regional routes.

In December, the corporate regulator announced it would take Rex and four directors to court for failing to disclose a $35 million deficit until days before the end of the financial year.

The Australian Securities and Investments Commission is seeking to disqualify four directors over alleged corporate governance failures.

The Transportation Workers Union said the $50 million debt purchase was a relief for workers and the traveling public, indicating the federal government would not allow the regional airline to cease operations.

Transport Minister Catherine King (pictured with Anthony Albanese) announced this $50 million purchase on Thursday saying the government would look to recoup the money following a successful sale.

Transport Minister Catherine King (pictured with Anthony Albanese) announced this $50 million purchase on Thursday saying the government would look to recoup the money following a successful sale.

“We know Rex is a lifeline for regional Australia – essential for healthcare, tourism, business and connecting families,” said union national secretary Michael Kaine.

‘While today’s announcement is an important next step, continued instability in aviation hurts businesses and communities.

“Without a long-term solution for Rex and the broader aviation industry, we will continue to see a vicious cycle of failed airlines.”

An October poll of 1,044 Australians, conducted by YouGov and commissioned by the union, showed 75 per cent thought the government should take an equity stake by bailing out failing companies like Rex.

Opposition transport spokeswoman Bridget McKenzie said the Coalition supported the measures but criticized King for not including it in plans to keep Rex flying.

“We have been calling for a more competitive aviation sector for the last three years, the government has been moving slowly,” the Nationals senator told reporters in the New South Wales regional city of Nowra.

“I would love for you to approach me to devise and develop a bipartisan approach, rather than postponing any decisions, as the $50 million does, until after the election.”

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