The federal government will acquire Regional Express if the collapsed airline fails to find a buyer — a move which would make it the first nationally-owned carrier in three decades.
Regional Express entered voluntary administration in July last year, after it failed to expand its services to competitive capital city routes.
Administrators from EY were appointed to oversee the business, also known as Rex, but have so far been unable to secure a buyer for Australia’s third-largest airline.
The announcement comes ahead of a second attempt to sell the airline, with the government offering to work with bidders to ensure a “successful sale” that would provide reliable regional services.
However, if there was no buyer found for the company, the government would consider “contingency options”, including “potential Commonwealth acquisition”.
“When markets fail or struggle to deliver for regional communities, the government has a role to ensure people do not miss out on opportunities, education and critical connections,” Transport Minister Catherine King said in a statement.
“We are recognising that [today] and stepping in to keep these routes in the air.”
Rex’s regional services are still operating even though the company is in administration. (ABC South East SA: Sandra Morello)
Ms King had previously not ruled out nationalising the regional airline to save it from collapsing, after the government spent $50 million in January to become Rex’s largest creditor and have a greater say in its future.
Last November, the government spent $80 million to ensure Rex’s regional flights would still operate until June 30 this year.
The government has also intervened to ensure Rex will have access to its regional flight slots at Sydney Airport until October 24, 2026 by waiving the “use it or lose it” rule.
“Regional Australians rely on these important services and the Albanese government [is] making sure communities outside capital cities aren’t short-changed,” Ms King said.
Should Rex be nationalised, it would be the first time since 1995 that the federal government would own a stake in an airline after it privatised Qantas through a public share sale.
Administrators recouping costs
Since being appointed last July, administrators have sold off parts of the broader Rex business to repay creditors.
In October last year, its Pel-Air ambulance service was purchased by Toll Holdings for $47 million.
Its stake in charter flight business National Jet Express was sold for a reported $12 million to former Rex chairman Lim Kim Hai last December.
The company’s flight school in the southern New South Wales town of Wagga Wagga was also put on the market last year, with an estimated price of $17 million.
The airline is also facing a legal battle with Australia’s corporate regulator, which announced it was suing the company and four of its directors last December.
ASIC alleges that Rex, along with John Sharp, Lim Kim Hai, Lincoln Pan and Sid Khotkar made misleading statements to investors about the airline’s profitability.
The four men have indicated that they would defend the allegations, while Rex’s administrators have previously stated that it would be inappropriate to comment on the matter as it was before the courts.
Administrators from EY have until the end of June to find a suitable buyer for the business, after the Federal Court granted a second extension to the convening period last year.
