Feds acquire $50m piece of Rex

The Federal Government has acquired $50 million of debt from Regional Express Airlines’ (Rex) largest creditor, PAG, to secure ongoing regional and remote flights after Rex entered administration in the middle of last year.

Rex currently provides air links from King Island to both Melbourne and Tasmania.

Transport Minister Catherine King and Finance Minister Katy Gallagher stated in a joint release: “By acquiring the debt, the government will become the principal secured creditor and will seek to become a voting member of the Committee of Inspection.” Ms. King emphasised: “What this allows for is the administrators to undertake a second sale process … we’re trying to make sure we provide that with every opportunity of success.” She further explained the government’s role: “We are stepping into the shoes of PAG to avoid any adverse event such as the company being put into liquidation.”

The Government had previously provided an $80 million loan to keep regional routes operating until mid-2025. Shadow transport minister Bridget McKenzie expressed support for efforts to secure regional aviation but criticised the lack of bipartisan collaboration, stating: “Catherine King has not picked up the phone to talk to me as the shadow minister for transport about her plans to keep Rex flying. I would welcome the call … to actually come up with and develop a bipartisan approach.”

The Transport Workers’ Union (TWU) welcomed the government’s intervention but urged a long-term strategy. TWU National Secretary Michael Kaine warned: “While today’s announcement is an important next step, the constant instability in aviation hurts businesses and it hurts communities. Without a long-term solution for Rex and for the broader aviation industry, we’re going to keep seeing a vicious cycle of failed airlines.”

Rex’s financial troubles included losses on major city routes and legal action from ASIC, which alleged the airline misled the market about its profitability in 2023. Senior executives, including former executive chair Lim Kim Hai, were accused of breaching directors’ duties.

PAG, the airline’s largest creditor, thanked the government for its intervention. A spokesperson stated: “Since Rex entered Administration, PAG has sought to safeguard Rex’s essential services for regional Australia by providing an extra A$20 million to fund Rex in Administration, actively guiding and supporting the work of EY as Administrator, and arranging for Virgin Australia to fly Rex’s major city customers to limit passenger disruption.”