Rex Airlines: Rumours swirl about company’s future as Prime Minister questions flight route expansion

Rex Airlines’ expansion into major city routes has been questioned by the Prime Minister as concerns mount about the company’s fate.

Anthony Albanese said he would consider proposals to save the company, but added Rex already received substantial public funding with “no conditions attached”.

“One of the things I expressed concern about was having no conditions so Rex, for example, moved away from their traditional role of being a regional airline into flights, for example, from Sydney to Melbourne,” Mr Albanese told reporters.

Rex began servicing Sydney-to-Melbourne, one of the busiest routes in the world, in 2021.

As of Tuesday afternoon, Rex’s website showed no available flights from Wednesday onwards.

“Now Rex, as a regional airline, of course, provides important links with regional communities, and particularly between capital and regional communities, which is important for those local economies,” Mr Albanese said.

“We want to see the aviation industry in Australia continue to be one that provides services and access.”

Regional Express’ shares went into a trading halt on the Australian stock exchange following recent boardroom turbulence and multimillion-dollar earnings losses.

An announcement is expected by the opening of trade on Wednesday.

“In the meantime, it isn’t appropriate for us to make any further comments,” a Rex spokesperson told AAP.

The trading halt followed reports Rex called in consultancy firm Deloitte to review the airline’s books.

On Tuesday, the Australian Financial Review cited a letter from lawyers representing Deloitte’s aviation restructuring experts saying their clients were not seeking to be appointed voluntary administrators of Rex.

The Australian reported the Rex board was instead awaiting a report from consultancy firm EY.

Transport Minister Catherine King said the government was in contact with the airline.

“Regional Australians rely on Rex,” she said.

“It’s an incredibly important airline; in many cases, it’s the only airline going into a range of smaller country towns and people are heavily reliant on it.”

Rex employs around 2000 people.

“We are treating this very seriously and being very vigilant about what is happening, and keeping an eye on the situation hour by hour,” Ms King said.

Unlike Bonza, which recently collapsed, Rex mainly owns rather than leases its planes.

Its key fleet comprises 61 SAAB 340s and seven leased Boeing 737-800s, out of a total of 123 aircraft.

Many regional communities rely on the carrier, which emerged 22 years ago following the collapse of Ansett.

The Government was putting contingencies in place to ensure travellers could get services in those areas, Ms King said.

In the central west NSW hub of Orange, mayor Jason Hamling said he was grateful his community had multiple carriers including Qantaslink and Link Airways.

“We’re just keeping an eye on this, and we hope that they can sort this out and everything’s OK,” Mr Hamling told AAP.

Since the COVID-19 pandemic, Rex has struggled with profitability alongside other airlines.

In February, it reported a bottom-line net loss of $3.2 million for the first half of the 2023/24 financial year on the back of rising costs, especially for fuel.

However, that improved on the $16.5 million loss reported in the previous corresponding period.

In June, Rex announced that long-serving executive chairman Lim Kim Hai was stepping down.

He remained on the board as a non-executive director.

Earlier this month, Mr Lim, a significant shareholder, requested a general meeting of shareholders to remove directors including non-executive chairman John Sharp.

Rex shares last traded at 56.5 cents on Friday. They were at 79 cents a month ago.

TIMELINE

* Rex began flying in August 2002, resulting from the amalgamation of regional airlines Hazelton and Kendell, which were part of the Ansett group

* Rex listed on the Australian Stock Exchange in November 2005

* Rex began servicing the “golden triangle” between Sydney, Melbourne and Brisbane in 2021, after COVID-19 pandemic pressures forced Virgin into administration and significant restructuring

* Rex leased several aircraft formerly flown by Virgin and was reportedly considering buying the beleaguered airline

* In 2023, Rex posted an operational loss of $31.7 million due to reduced passenger demand, pilot shortages and legacy pandemic issues

* Trading was halted on Rex shares on Monday amid concerns about the carrier’s future

COMMUNITIES SERVICED

* Rex flies to 56 destinations, including capitals Sydney, Melbourne, Brisbane, Adelaide, Hobart, Perth and Canberra

* It services regional centres including Dubbo, Orange, Coffs Harbour, Albury, Mildura, Mount Is, Cairns, Mount Gambier, Wagga Wagga, Port Lincoln, Burnie and Esperance

BY THE NUMBERS

* Rex employs about 2000 staff

* Its fleet includes 61 SAAB 340s and seven leased Boeing 737-800s, out of a total of 123 aircraft

* In February, Rex posted a net loss of $3.2 million for the first half of the 2023/24 financial year, amid rising costs such as fuel

* It had posted a $16.5 million loss the previous corresponding period

* Rex shares are worth almost half of what they were a year ago, and were trading at 56.5 cents before being halted