Government loans $60 million to new Rex Airlines owners

The Albanese Government has unveiled a sweeping financial package to support the proposed sale of Regional Express Airlines (Rex) to U.S. buyer Air T Inc., pledging new loans, restructured debt and targeted relief for regional and council-owned airports, including King Island Airport.

The plan is designed to secure regional aviation routes, protect taxpayer investment and ensure the continuation of essential passenger and freight services across Australia’s regions as Rex emerges from voluntary administration.

Under the arrangement:

• The Commonwealth will restructure $90 million in existing debt owed by Rex and provide a new $60 million commercial loan to support engine maintenance and bring grounded aircraft back into service.
• Air T will inject $50 million in new capital, taking the combined support for Rex to more than $220 million, including previous government assistance to keep the airline flying.
• About $90 million in Commonwealth debt will remain in place under a profit-sharing arrangement as Rex returns to profitability.

Transport Minister Catherine King said the funding would safeguard regional connectivity while ensuring accountability.

“In exchange for this financing and to ensure value for taxpayer money, Air T has agreed to a range of commitments aimed at preserving essential regional aviation connectivity and improving governance,” Ms King said.

“To safeguard this public investment, the Government will retain its security over all Rex’s aircraft and flight simulator. This will ensure the Saab fleet cannot be sold without the Government’s permission and will continue to serve communities across regional and remote Australia.”

Air T - which operates in regional aviation and aircraft-parts supply internationally - has pledged to restore Rex’s fleet to “classic Rex levels”.

Currently, 32 of Rex’s 56 Saab 340 aircraft are in service; the new owner aims to return another 15 to operation over the coming months, bringing the total to 47. Air T said the aircraft - with an average age of 31 years -  would continue flying for another decade or longer through its engine-maintenance expertise.

Under the deal, Rex will also be required to:

• Increase the frequency of profitable flights across its network;
• Engage with state governments on service planning and connectivity; and
• Appoint independent Australian directors to its board to strengthen governance and oversight.

In a separate announcement, the Government will establish a $5 million Relief Program for regional and remote airports that were left out of pocket when Rex entered administration in 2024. The program covers local-government and council-owned airports, with eligibility based on the amount owed by Rex at the time.

For King Island Council, which owns and operates King Island Airport, the unpaid amount was about $8,000 - a small sum compared to other regional airports owed between $45,000 and $650,000.

Australian Airports Association chief executive Simon Westaway welcomed the announcement, calling it “wonderful news for our regional and remote airports.”

“Many regional airports operate at a loss, burdened by ageing infrastructure, rising security requirements and staffing costs,” Mr Westaway said. “Despite this, airports continued to support Rex and serve passengers across regional Australia.”

The package cements the Commonwealth’s role as Rex’s largest creditor and adds a new layer of protection for communities reliant on regular air services. For Tasmania, where regional air connectivity is critical for tourism, freight and medical travel, the move provides short-term certainty for routes serving King Island, Burnie and Devonport.

The Government’s retention of security over the Saab fleet means these aircraft cannot be diverted or sold without Commonwealth approval - a step welcomed by state and local officials as a practical assurance for continuity of service.

Rex’s creditors will vote on the Air T Sale and Implementation Deed on 11 November 2025. If approved, the deal will allow Rex to exit voluntary administration and enter a new phase under Air T’s ownership - with the Commonwealth retaining financial security and regional airports eligible for support.