The government has stepped in to save regional airline Rex after it went into voluntary administration with debts of around $500m.
Transport Minister Catherine King announced government funding for the airline on Thursday afternoon to provide certainty for regional travellers.
“The continuation of Rex is in Australia’s best interests, and the government is working closely with the trustees to ensure a strong regional aviation presence now and in the future,” it said in a statement.
The guarantee ensures that if any Rex Airlines booking to or from a regional destination is cancelled during the administration period, passengers will receive a full refund.
Includes all regional flight bookings after Rex entered voluntary administration at 9.31pm on 30 July.
In addition to financial support, Ms King said her department would continue to work with the administrator, EY, on plans for the airline’s continuity.
“We also expect the administrator to respect and prioritize the rights of Rex employees,” he said.
The Labour government has extended a lifeline to regional airline Rex
‘This guarantee is a message to regional Australia that we know how important reliable air services are to you and we will not allow your communities to be left behind.’
EY partner Sam Freeman said he was grateful to the government for providing a lifeline to the regional airline.
“The guarantee will help Rex to continue flying while we undertake the recapitalisation of the airline and secure its future,” he said.
“We are currently in the process of finding an investor committed to a sustainable regional business network.”
Last week, Mr Freeman told creditors that Rex’s debts amounted to about $500m, owed to lessors, airports, fuel suppliers, staff and tens of thousands of airline customers.
It also failed to pay final salaries and benefits to about 600 employees after they were laid off.
The airline has been in operation for 21 years and is responsible for carrying five per cent of domestic passengers, while Qantas and Virgin handle the remaining 95 per cent.
