Australia’s government on alert to support airline Rex as it hits turbulence

SYDNEY (Reuters) – The Australian government said on Tuesday it was standing ready to assist airline Regional Express Holdings, which serves rural towns, after a newspaper reported that the company had likely hired external restructuring experts.

Transport Minister Catherine King said the government had contingency plans to ensure airline services continue in rural areas but she did not promise any bailout packages for Rex.

“Rex is a pretty important part of the Australian aviation industry and (we) stand ready to work with them to see whether there’s any assistance or anything the government needs to do,” King told ABC television.

Bloomberg News, citing unidentified sources, on Tuesday reported Rex was set to appoint Ernst & Young as administrators, and could announce it as soon as Wednesday.

An airlines union said about 2,000 jobs were at risk if Rex collapsed. Rex did not respond to multiple requests for comment.

Rex, the only airline that flies into several rural towns, operates in a domestic market dominated by Qantas and Virgin Australia, which together control about 90% of Australia’s airline market.

It has accused Qantas of engaging in “price gouging” on domestic routes and of “pillaging” its regional pilots, allegations Qantas has dismissed.

The Australian newspaper in a report late on Friday said Rex had asked Deloitte to go through its books. Rex on Monday suspended trading of its shares pending an announcement.

The trading halt comes three months after budget airline Bonza collapsed, stranding passengers. Its fleet was later repossessed by creditors.

“Aviation is a pretty tough business, and we’re seeing that. Obviously we saw that with Bonza folding. We don’t want to see Rex fold as well, so we’re keeping a fairly close eye on it,” King said.

Rex reported a loss before tax of A$2.1 million ($1.37 million) in the first half of financial year 2023/24, down from a A$15.7 million loss in the same period year ago.

($1 = 1.5293 Australian dollars)