Rex buyer Air T plans to upgrade the engines on the airline’s fleet of Saab 340 turboprops. Photo: File.
The administrators for Rex have announced that a buyer from the US has been found for the beleaguered regional carrier.
The airline entered administration in July 2024 after the failure of its inter-city jet services and with $50 million in debt.
Ernst & Young Australia were appointed as administrators by the airline’s board of directors.
The 737-800 jets used on the capital city services have since been returned to their lessors, but the airline has continued to operate its fleet of 36-seat Saab 340 turboprop aircraft on its core regional routes through the administration.
The Federal Government has been underwriting these operations while the administrators searched for a buyer by loaning Rex $80 million to maintain services, including $7.1 million paid in entitlements to former Rex staff and in ticket sale guarantees.
On 22 October, the administrators announced they had found a buyer for Regional Express Airlines, entering into a sale and implementation deed with Minneapolis-based Air T.
Air T Inc was established in 1980, and described itself as an industrious American company “with a networked portfolio of powerful businesses”.
Its website reads, “We seek to invest in dynamic, talented individuals and teams; insightful doers in their business domains. We apply corporate resources to activate growth and overcome challenges — ultimately building great enterprises that flourish by ‘win-winning’ over the long-term.”
EY Australia issued a brief statement, saying, “The Administrators would like to thank the Australian Government for their support to date in assisting to facilitate the proposed transaction”, adding that the sale proposal would be put to creditors in “the next few weeks”.
“No return to shareholders is anticipated,” it added.
“An update will be provided ahead of the second meeting of creditors of the Group, which is currently anticipated to be held within the current convening period of the administration.”
Federal Minister for Infrastructure, Transport and Regional Development, Catherine King, said the government welcomed the announcement as a positive step towards bringing Rex out of administration.
“The Australian Government has also entered into an agreement with Air T in relation to restructuring Rex’s financing arrangements in connection with the acquisition,” she said.
“This will allow Rex to keep flying and maintain critical aviation links for regional communities.
“As the sale process led by the Administrators is still underway, the Australian Government will not comment further at this time.”
While in Washington DC on Tuesday, Prime Minister Anthony Albanese also welcomed the announcement.
“It’s a good thing we intervened to save Rex,” he told a media conference.
“These are vital services, and it’s a good thing that they will continue.”
If it proceeds, Air T will need to renew its fleet within the next decade, as the youngest of its Saab 340s is 27 years old, and the aircraft is no longer in production.
The average age of the fleet is around 30 years old.
Further, there are no comparable aircraft currently available, with the next size up being the ATR42-600, which is a larger and more complex aircraft.
A statement from Air T suggests it may instead upgrade the current fleet.
“Rex plays an essential role in connecting regional Australian communities,” Air T said in a statement to investors.
“Approximately 50 per cent of Rex’s routes are not serviced by any other airline.
“Air T likes the Rex Saab 340 program and will be funding Rex’s engine renewal program and returning its fleet to service. Air T believes it was selected to acquire the company in part because of its long-term investment horizon, experience in regional aircraft, and commitment to stabilising and growing Rex.”
The Transport Workers Union (TWU) welcomed the news of the sale, but stressed it was seeking assurances from Air T to safeguard the airline’s regional routes, as well as workers’ pay and conditions.
“The TWU will now seek a meeting with buyer Air T to pursue commitments around employee entitlements – with bargaining ongoing for ground workers at Rex – and answers on the future expansion of the airline, guarantees of routes and services, and diversification of its fleet,” it said in a statement.
TWU National Secretary Michael Kaine said little was known about Air T’s plan for Rex’s critical routes, and that significant questions remained around jobs and the continuation of services long-term.
“The Federal Government should be commended for its commitment to acquire Rex if no buyer was found, which ensured breathing space for regional Australia and workers,” he said.
“With a significant portion of the transaction process still to come, this contingency will continue to provide surety that Rex will keep flying, but the Federal Government must ensure it extracts further commitments from Air T on routes and services, and good jobs.”
