Rex wins a break in stolen aircraft lawsuit brought by US company Jet Midwest

A US company has been blocked from suing Rex for allegedly stealing four planes from an Arizona storage facility in 2020.

A US company trying to sue Rex Airlines for the theft of planes from an Arizona storage site has been told to back off by the New South Wales Supreme Court.

Jet Midwest first launched the action on July 18, 2024, 12 days before Rex was placed into voluntary administration with debts of $500m.

According to documents filed in the Supreme Court, Jet Midwest claimed Rex had taken four Saab 340s without permission in October 2020 after a contract to buy the aircraft had lapsed.

A 10 per cent deposit of $US200,000 ($304,000) had been paid but not the balance of the transaction and as a result Jet Midwest terminated the agreement in June 2020.

However the company was not aware the aircraft had been removed until early 2023 when the storage facility revealed they had been released to Rex via 340 Aviation.

The airline did not admit any involvement in the Saabs’ removal, but Jet Midwest was able to establish the aircraft had been disassembled, reducing their full value.

In response, the Kansas City-based company launched legal action against Rex in a bid to recover what they claimed was $US7.2m ($11m) in losses.

However New South Wales Supreme Court judge James Stevenson refused Jet Midwest’s application for leave to proceed against Rex under section 440D of the Corporations Act.

“The idea behind s 440D is to enable administrators to work out whether the company can avoid going into liquidation and to ‘maximise the chances of the beleaguered company staying alive’,” said Justice Stevenson.

He also pointed out that during an administration, the owner of property “cannot take possession of its property or otherwise recover it”.

A Rex Saab 340 over Melbourne Airport. Picture: William West/AFP

The judgment noted, that administrators EY had identified Rex had some items in its possession that appeared to belong to Jet Midwest, and were willing to hand them over.

In a letter to Jet Midwest’s solicitors, EY said parts including propeller blades, had been separated and quarantined at an Indonesian storage facility.

“What were once four aircrafts have now been split into parts which appear to be dispersed across the Rex fleet and elsewhere,” said the administrators.

“The administrators are willing to make these parts available for (Jet Midwest’s) immediate collection.”

Planespotters.net showed Rex had a fleet of 57 Saab 340s, of which 26 were currently parked awaiting parts including engines.

The Rex administration was working towards a deadline of November 25 for completion, although no date has yet been set for a second creditors meeting.

Although last week, Japanese company Toll Holdings was confirmed as the buyer of medical evacuations business Pel-Air for $47.1m, no buyer has emerged for the Rex regional airline and its ageing fleet of Saab 340s.

The federal government has indicated “no option was off the table” in terms of ensuring the regional airline survived.

Prior to the administration Rex had operated profitably for 20 years, until the pandemic hit and management decided to expand into major city routes with a fleet of leased Boeing 737s.

When borders reopened, Rex struggled to make money on those routes amid fierce competition from Qantas, Jetstar and Virgin Australia.

On July 30, EY was appointed administrators, and the 737 operation permanently grounded.