iscover
Rex’s $172.5 million sale to US firm Air T will go ahead after creditors voted to approve the deal.
The second meeting of creditors on Tuesday greenlit the Deed of Company Arrangement (DOCA) proposed by Air T, encompassing Rex’s regional Saab 340 operations as well as a number of the group’s subsidiaries.
This content is available exclusively to Australian Aviation members.
A monthly membership is only $5.99 or save with our annual plans.
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
These include its pilot training school, the Australian Airline Pilots Academy (AAPA); aviation service provider Australian Aero Propeller Maintenance (AAPM); and frequent flyer arm Rex Flyer. Rex Airlines Pty Ltd, the entity that had operated its failed 737-800 business, was placed in liquidation.
Administrator Sam Freeman from EY said the DOCA “provides a superior outcome for stakeholders with ongoing employment for the continuing employees of the Rex Group, ongoing trading with suppliers, and continuation of the Rex Regional Business connecting remote and regional communities.”
“On behalf of the Administrators, we wish to thank all of the staff who have ensured the seamless continuation of regular passenger services over the past 15 months, customers who have continued to support Rex through the Voluntary Administration, suppliers who have continued to support the business, and the Australian Government who have provided extensive support to enable this outcome,” he said.
Administrators will now work to fulfil the terms of the DOCA, after which Rex will formally be handed over to Air T as the new owner, with operational control and legal ownership expected to be transferred by the middle of December.
The approval comes despite ordinary unsecured creditors, including suppliers and airports, receiving no money from the sale, which the administrators had nonetheless recommended to them as enabling an ongoing business relationship with the airline.
Regional airports owed money by Rex will receive financial support from the federal government, which, as Rex’s largest creditor, had pushed for the deal.
Transport Minister Catherine King has also moved to safeguard Rex’s fleet and regional routes, with a restructuring of its debts and an extra loan being made contingent on Air T keeping the airline running. The government will also ensure Rex’s planes cannot be sold without its permission.
“In exchange for this financing and to ensure value for taxpayer money, Air T has agreed to a range of commitments aimed at preserving essential regional aviation connectivity and improving governance arrangements,” Transport Minister Catherine King said in a statement.
“This will include returning more aircraft to service and increasing the frequency of profitable flights across the Rex network.
“To safeguard this public investment, the Government will retain its security over all Rex’s aircraft and simulator. This will ensure Rex’s Saab fleet cannot be sold without the Government’s permission and will continue to service communities across regional and remote Australia.”
Air T says it will invest $50 million into recapitalising the business, including increasing the number of Saabs in service from around 30 to 44.
Want to see more stories from trusted news sources?
Make Australian Aviation a preferred news source on Google.
Click here to add Australian Aviation as a preferred news source.
[email protected]
says:There is no benefit in returning to the actions leading to REX’s downfall, it happened, the minister could have and should have intervened much earlier and the problem/s could have been solved, at best minimised. Today we have a new owner operator effective possibly mid December, Air T is reported to be paying AU$172M for the outfit with a further AU$50M for operational support. Whilst I am pleased that we have an outcome I am concerned for its future, I mean why would you pay that amount of money for an airline operation utilising almost at use by date equipment and about 25% of which is grounded/parked. Possibly the fact that Air T has in its portfolio many airframes and spares needed to revive REX, (at a cost) is a motivating factor to reduce their inventory back in the U.S.A. but then you still have an operational problem here in Oz, AGE which equals very high maintenance costs. There has to be a fleet type/ update /renewal plan for REX going forward, if not, we will be back in this space very soon only this time at more costs to this nation and dead set no benefit to our regional cousins.
allister polkinghorne
says:There are many good operators in Australia who haven’t had their hand out for taxpayers dollars who could have provided the services that REX were and continued to be sponsored to supply. This is the problem with government picking ‘winners’ who are losers.