Rex Airlines is seeking to offload land, buildings and aircraft parts as administrators work to keep the financially struggling airline afloat.
Professional services firm EY Australia has been called in to rescue the five Rex Group companies since the airline grounded its fleet of Boeing 737s on major metropolitan routes.
Rex’s regional flights have continued thanks to ongoing funding from private equity firm PAG Asia Capital as the airline desperately searches for a buyer or financial lifeline.
EY partner Samuel Freeman told Rex’s first creditors meeting on Friday that administrators had launched the asset sale programme as part of recovery efforts.
Mr Freeman said company land and buildings, spare parts and even a flight simulator could potentially be at stake.
EY had also begun contacting “a large number of potential interested parties” to find a buyer or investor for the airline.
“Some are already executing disclosure agreements… there’s been quite a bit of interest, which is really positive,” Freeman said.
EY says the airline, which is about $500 million in debt, is in daily talks with the federal government over the situation.
Rex Airlines is looking to offload company land, buildings and aircraft parts as administrators work to keep the airline afloat (pictured, a Rex Airlines plane in Sydney)
Labor representatives have said they will support Rex as long as he prioritizes regional flights.
An initial investigation by EY revealed that competition in the domestic “trunk route” market was a key contributor to the financial problems, Freeman said.
The airline had struggled since an aggressive move in 2021 to compete on key capital city routes against major carriers Qantas and Virgin Australia.
Other contributing factors included a shortage of pilots, leading to “suboptimal fleet utilization,” supply chain issues and maintenance problems, administrators said.
The airline operates a fleet of older Saab 340 aircraft on regional routes.
A second creditors meeting, yet to be scheduled, will include a vote on whether to return the Rex companies to the current board, place them under a corporate arrangement deed or liquidate them.
Founded in 2002, Rex is Australia’s largest independent regional airline, operating around 1,050 flights a week on 45 routes.
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