Australian Government Consideration to Nationalize Regional Express Amid Ongoing Administration
If no buyer is found for Regional Express, the federal government may become the owner of the airline, marking its first public stake in a carrier since the sale of Qantas.
The Australian federal government is poised to acquire Regional Express (Rex) if efforts to find a buyer for the airline fail, which would mark the first instance of the government owning a national airline in thirty years.
Rex entered voluntary administration in July 2022 after it was unable to expand its services to competitive routes in capital cities.
Currently under the oversight of administrators from EY, Rex has struggled to attract a buyer, notably during a second attempt to sell the airline.
The government has expressed its intention to collaborate with potential bidders to secure a sale that ensures reliable regional services are maintained.
Transport Minister Catherine King stated that should no buyer be found, the government would consider "contingency options," including the possibility of a "potential Commonwealth acquisition."
Minister King emphasized the government’s role in maintaining critical connections for regional communities, stating, "When markets fail or struggle to deliver for regional communities, the government has a role to ensure people do not miss out on opportunities, education and critical connections."
Despite being in administration, Rex continues to operate its regional services.
The government has previously taken significant financial measures to support the airline, becoming its largest creditor with an investment of $50 million in January and providing $80 million in November to enable ongoing regional flights until June 2023. Additionally, the government has granted Rex access to its regional flight slots at Sydney Airport until October 2026, waiving the "use it or lose it" regulation.
The potential nationalization of Rex would be notable as it would be the first time since the sale of Qantas in 1995, following its privatization via a public share offering.
Since taking control, the administrators have sold off parts of Rex to recover funds for creditors.
They have achieved sales such as Pel-Air, the airline’s ambulance service for $47 million, and its investment in the charter flight business National Jet Express for approximately $12 million.
The company’s flight school was also placed on the market with an estimated value of $17 million.
Rex is currently involved in a legal dispute with the Australian Securities and Investments Commission (ASIC), which has filed a lawsuit against the airline and four of its directors for allegedly making misleading statements regarding the airline's profitability.
The involved parties, including former Rex chairman Lim Kim Hai and three other directors, have indicated their intent to defend against the claims.
Meanwhile, Rex's administrators have refrained from commenting on this ongoing legal matter, citing its pending nature in the courts.
Administrators have been granted until the end of June 2023 to find a buyer for the airline, following an extension by the Federal Court.
Rex entered voluntary administration in July 2022 after it was unable to expand its services to competitive routes in capital cities.
Currently under the oversight of administrators from EY, Rex has struggled to attract a buyer, notably during a second attempt to sell the airline.
The government has expressed its intention to collaborate with potential bidders to secure a sale that ensures reliable regional services are maintained.
Transport Minister Catherine King stated that should no buyer be found, the government would consider "contingency options," including the possibility of a "potential Commonwealth acquisition."
Minister King emphasized the government’s role in maintaining critical connections for regional communities, stating, "When markets fail or struggle to deliver for regional communities, the government has a role to ensure people do not miss out on opportunities, education and critical connections."
Despite being in administration, Rex continues to operate its regional services.
The government has previously taken significant financial measures to support the airline, becoming its largest creditor with an investment of $50 million in January and providing $80 million in November to enable ongoing regional flights until June 2023. Additionally, the government has granted Rex access to its regional flight slots at Sydney Airport until October 2026, waiving the "use it or lose it" regulation.
The potential nationalization of Rex would be notable as it would be the first time since the sale of Qantas in 1995, following its privatization via a public share offering.
Since taking control, the administrators have sold off parts of Rex to recover funds for creditors.
They have achieved sales such as Pel-Air, the airline’s ambulance service for $47 million, and its investment in the charter flight business National Jet Express for approximately $12 million.
The company’s flight school was also placed on the market with an estimated value of $17 million.
Rex is currently involved in a legal dispute with the Australian Securities and Investments Commission (ASIC), which has filed a lawsuit against the airline and four of its directors for allegedly making misleading statements regarding the airline's profitability.
The involved parties, including former Rex chairman Lim Kim Hai and three other directors, have indicated their intent to defend against the claims.
Meanwhile, Rex's administrators have refrained from commenting on this ongoing legal matter, citing its pending nature in the courts.
Administrators have been granted until the end of June 2023 to find a buyer for the airline, following an extension by the Federal Court.
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