Australia regional airline Rex gets $53 million government lifeline to keep flying

By Renju Jose

SYDNEY (Reuters) - The Australian government said on Tuesday it would provide up to A$80 million ($52.6 million) to airline Regional Express Holdings to help keep its regional routes running during an extended voluntary administration process.

Rex in July entered voluntary administration, Australia's closest equivalent to Chapter 11 bankruptcy, cut hundreds of jobs and closed its subsidiary that operated Boeing (NYSE:BA ) 737 flights between Australia's major cities.

Traditionally focused on servicing Australia's regional areas with small planes, Rex in 2021 began larger jet flights on the big city routes dominated by Qantas Airways and Virgin Australia but failed to dent their market share.

The company has continued using its fleet of ageing Saab 340 turboprop aircraft for regional flights after calling in administrators.

Administrators at Ernst & Young Australia said they intended to apply to the court for an extension of the voluntary administration through to June 30.

"The extension we are requesting will help us to build a strong network for regional Australia, enabling us to continue to operate the regional network while undertaking a business improvement plan to reposition the business for sale," the administrators said in a statement.

Employees of the regional business, who were made redundant during the voluntary administration period, will be paid their entitlements.

The financial support from the government and an extension of the voluntary administration would help to increase the number of operational aircraft, Ernst & Young said.

The government said the funding announced on Tuesday was "another demonstration of our commitment to maintaining regional aviation access, recognising the important role that Rex plays in regional communities right across Australia."

The Transport Workers' Union welcomed the government's financial support and urged authorities to buy a stake in the airline to guarantee regional routes and protect jobs.

($1 = 1.5214 Australian dollars)

Source: Investing.com