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Federal Transport Minister Catherine King has said Rex would likely have collapsed without government help.
Speaking to media after the announcement this week of the airline’s sale to US-based aviation group Air T, the transport minister said she “didn’t think Rex would be flying today” had the government not stepped in to shore it up, including buying the lion’s share of its debt and guaranteeing its operations.
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“I think that’s been really important. I think we also didn’t just want to throw money at it,” she said.
“It is an investment the Commonwealth has made to keep the administration going, to put in place a customer guarantee, to make sure that we can continue to get that service opportunity and
“I think it’s really important to have faith that Rex is flying … [that] it’ll continue to fly to the regions and be Australia’s regional aviation backbone alongside a lot of other smaller regional airlines that also do fly into [regional] areas, and that there’s confidence that we do have a regional carrier here in Australia.”
The federal government has propped up the ailing carrier during its administration, including by guaranteeing its regional bookings and preserving its slots at Sydney Airport, and in April bought $50 million of its debt to ensure a larger say over its future.
It had also injected $80 million in funding into Rex late last year to keep the airline’s vital regional air services in operation.
Minister King also moved to calm concerns that Air T was looking to part out Rex’s Saab 340 fleet, saying the government had “done its due diligence” and noting the firm had in its Nasdaq announcement this week said it would return the rest of the aircraft to service.
“The government stepped in to allow the administration time to find a credible buyer for Rex. It will now be up to the creditors to determine if they’re comfortable with that plan, and they’ll have a creditors’ meeting to see whether Air T can do it,” she said.
“We’ve done our due diligence on the company. I think the good thing, and there’s a lot of reports about this today, is it is an aviation business. It’s an aviation business that buys other aviation businesses for the long haul to stay in and invest.
“I’m assured by the assurances given yesterday by Air T in its release that they’re looking forward to being in the Australian market with a passenger airline and servicing all of the regions that it now services.”
According to the minister, the government has also sought guarantees that the airline’s network would continue to be serviced and its jobs preserved.
“Whilst this will be an overseas owner, it will be an Australian company that is subject to Australian employment law. I’m pleased to hear that they intend to keep all of the workers and to keep the management team in place as well,” she said.
“I look forward to – if the creditors agree that this is the right option for Rex to go forward, we as a government obviously think that it is, but that will be up to the creditors – making sure that all of the unions are involved with this airline, because we want to keep not only the regional routes going, but we want to keep great jobs in aviation in our regions as well.”
Air T expects to close the Rex purchase by year’s end, subject to creditor and other approvals.
