Jet Midwest turning up heat on Rex administrators over alleged theft of four planes

A US company claiming Rex stole planes from an Arizona boneyard has appealed a ruling it can’t sue while the airline is in administration.

A US company that has accused Rex Airlines of stealing four aircraft from an Arizona boneyard in 2021 is refusing to accept a court judgment that the case should not go ahead due to the current administration process.

Missouri-based Jet Midwest has appealed the decision of the NSW Supreme Court, arguing Rex is making use of property to which it is not lawfully entitled to, including engines and propellers.

“The administrators (EY) have quite properly acknowledged that components from those aircraft belong to Jet Midwest but are in Rex’s possession and being used to operate its fleet,” according to documents filed in the NSW Court of Appeal.

“It is Jet Midwest’s case that the Corporations Act does not authorise Rex to treat Jet Midwest’s property as its own.”

As long as Rex was using the aircraft components to support its ageing fleet of Saab 340s, there was a risk the parts may no longer be serviceable by the time the administration was completed, Jet Midwest argued.

Furthermore, because Rex acquired the property without Jet Midwest’s consent and without an agreement, Jet Midwest had no right to charge Rex for any rent for the use of the property.

“Jet Midwest is therefore in a worse position than a third party which agreed to lease its property to Rex prior to the administration,” said the appeal.

“That is a perverse result, which the primary judge failed to consider.”

Rex had a fleet of 56 Saab 340s that were used on regional routes. Picture: Supplied

According to court documents, Rex paid a US$200,000 ($312,000) deposit for the Saab 340 aircraft but allegedly never paid the balance of the US$2m ($3.1m) cost before the aircraft were disassembled and removed from a storage facility in Arizona and brought to Australia.

The parts, including wings and engines, were shipped by 340 Aviation Services, which told Jet Midwest it was under the belief the aircraft had been legally purchased.

Throughout 2023 Rex either failed to respond or denied it had taken possession of the aircraft in correspondence with Jet Midwest, which is now seeking $11m in losses.

In the original judgment made in October, Justice James Stevenson ruled that during an administration, the owner of property “cannot take possession of its property or otherwise recover it”.

Rex’s administrators opposed Jet Midwest’s appeal, and said they had offered to make available for immediate collection aircraft parts belonging to the company that were not being used.

Administrators said there was no urgency to progress the matter, given that it had already been four years since the deposit was paid by Rex before the lawsuit was filed.

The Court of Appeal has reserved its judgment in the case.

EY has begun a second sale process in the hope of finding a buyer for the Rex regional airline and its fleet of 56 Saab 340s, after the first attempt failed.

The Saabs have an average age of 30 years, and 27 remain parked at various airports awaiting maintenance or parts.

The renewed sale attempt followed an extension of the administration to June 30, and $80m in funding from the federal government to “enhance the assets of Rex”.

In the event no buyer emerged, the Albanese government has indicated it would acquire Rex to ensure vital regional connections continued.

Other parts of the business have been sold or are for sale, including its Wagga Wagga flight training school.

Originally published as Jet Midwest turning up heat on Rex administrators over alleged theft of four planes