Albanese government leaves open possibility of Rex bailout and equity stake but wants input
The Albanese government is leaving all options on the table to rescue Rex – including a stake in the airline and bailout – but wants a say in its future.
The Albanese government is leaving all options on the table to rescue Rex – including an equity stake in the airline or a cash bailout – but is warning it won’t give away “millions of dollars” of taxpayer funds without having a say in its future.
While Labor on Wednesday came under mounting pressure to intervene, the administrator for the airline, EY, was hopeful of a buyer within five weeks and vowing to retain regional flights through this period.
The Australian’s DataRoom revealed on Wednesday Asian-based private equity firm PAG was believed to be positioning itself to become the new owner of Regional Express Holdings, the parent company of Rex.
With more than 600 jobs expected to be lost, the federal government is backing Rex to remain a regional carrier and signalling it doesn’t think it should re-enter the capital city market despite saying it supports competition on those routes.
Declaring she believed Rex could survive, Transport Minister Catherine King told ABC radio: “What we don’t want to do is make the mistakes of the previous government, frankly, of throwing millions of dollars without government having a bit of a say about what happens in this sector and being involved.
“We’ll look at what that is, what the asks are and what the nature (of those asks) are, but we also want to make sure that we have a stronger aviation sector coming out of this.
“We really need to make sure that we get Rex through this. And really our effort is on making sure we’ve got regional services and regional connectivity. That was their core business, that’s what we want to make sure happens.”
EY partner Sam Freeman said several factors had contributed to Rex’s financial failure, including reduced flying by Saab 340 aircraft used for regional routes and a lack of passengers on city routes.
He said it was important travellers continued to book flights on regional services operated by Rex.
“It’s very much our intention not to have a prolonged administration period,” he said, adding they planned to present options to creditors on a sale within 25 working days, or five weeks.
Rex’s announcement to the Australian Securities Exchange on Wednesday that it had entered voluntary administration – in a move likely triggered by lenders calling in more than $350m worth of loans – sparked calls from the Australian Airports Association for the government to urgently take steps to make the aviation market more competitive.
The AAA wanted slots at Sydney Airport to be more accessible, an inquiry into potential anti-competitive behaviour and “strong recommendations” in the Aviation White Paper.
Albury mayor Kylie King, who also chairs advocacy group Regional Capitals Australia, said the possibility of losing Rex highlighted the vulnerability of regional aviation and called on the government to ensure the carrier’s regional routes continued at least at the same level of capacity.
“Regional airlines support a range of industries to thrive including tourism, mining, construction and broader professional services,” Ms King said.
“Supporting regional aviation should be a national priority, one that allows for equality of opportunity to be connected – regardless of where you live.”
National Rural Health Alliance chief executive officer Susi Tegen said regional Australia was a powerhouse when it came to economic output from the resources, agriculture and tourism industries but, because of its relatively small, scattered population, needed to be supported with essential services that the rest of the country took for granted.
She said losing affordable regional air connectivity would damage economic development and have a “domino effect” on local economies.
Opposition transport spokeswoman Bridget McKenzie said the government had failed to develop a response to assist Rex and give staff and communities confidence it was taking the issue seriously.
“The government needs to provide a guarantee to regional Australians that they will not be cut off or paying exorbitant airfares as a result of Rex going into administration,” she said.
“This appalling situation did not occur overnight, it’s been building for months and the government’s inaction and incompetence on competition reforms in the aviation industry have made it worse.”
Additional reporting: Bridget Carter
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